$5.5 million left after Valley Investments failure
By GARY HARMON
The investors in Valley Investments who pumped about $33 million into the failed company might have more than $5.5 million left to divide up, a report says.
Valley Investments, which was closed down by state regulators in May, and its owner, Philip Rand Lochmiller, are at the center of investigations by state securities investigators and the FBI.
In its first quarterly report to the Denver District Court, the receivership, the Grand Junction law firm of Rider & Quesenberry, said it is too soon to tell when the estate can be sold off and its assets distributed to investors.
The $5.5 million Valley Investments estate could grow as the receivership asserts rights to assets owned by Lochmiller, his son, also Philip R. Lochmiller, and his daughter, Crystal Lochmiller, “that appear to have been purchased with investor funds,” the receivership said in the report.
The receivership also is considering “claw-back” claims against third parties, the report says.
Investors were put on notice weeks ago that those whose money was returned when their investments matured could find themselves being pursued for the money by the receivership.
The receivership considers money to have been lost when it was first invested with Valley Investments, Rider told investors in a conference call.
The value of Valley Investments’ assets also depends on whether the court agrees to void all claims to the company’s assets, allowing the receiver to sell them off and distribute the proceeds back to investors based on the amount of money they invested.
Some investors have filed suit as holders of first-trust deeds to assets held by the company.
Many investors who believed they had first position on deeds, however, might not be in a strong position after all, the reports said.
“The receiver has found an almost infinite variety of title problems affecting most (Valley Investments) property, all created by the business practices” of the company, the report said.
The receiver’s investigation showed that about half of the investors received no recorded security for their investments and that many of the supposed first deeds of trust were stacked on single parcels.
“An uncertain number, but definitely a significant number, of trust deeds were released upon forged investor signatures,” the report said.
Valley Investments owns five mobile-home parks in three states, including Country Living Park in Mack, Blue Mountain Village in Dinosaur and The Meadows Mobile Home Park in La Junta.
Valley Investments bought Country Living Park in 2000 for $700,000, and 38 lots are held by the company as collateral for nearly $8.9 million in investments, the report says.
The company bought Blue Mountain Village in Dinosaur for $300,000 in 2004, and the 89-lot park is encumbered with 117 trust deeds representing $5.7 million in investments.
Investors invested more than $1.9 million in a park in Pocatello, Idaho, which Valley Investments bought for $1.1 million, the report says. The report doesn’t say when the park was purchased.
Valley Investments still owes about $150,000 on the purchase of the La Junta park, bought in 2006 for $555,000, the report said. A title search shows six investor mortgages representing $265,000, the report said.
Another asset purchased with investor funds, a condominium unit in Mexico, is proving difficult for the receivership to control, the report said.
All told, the report said, Valley Investments’ books reflect $33 million in investments and $1.45 million in debts to sellers or lenders who weren’t investors and $250,000 in debts to unsecured creditors.
The receivership owed more $250,000 to law firms and accountants in Grand Junction, Denver, Utah, Idaho and Mexico as of Sept. 30.
The receivership will pay those professional fees once it has money from the assets, the report said.