Firm’s investors likely to get only a fraction of original investments
Valley Investments investors might get back as much as 5 percent of their money as the company’s bankruptcy begins, one investor concluded at the company’s first creditors meeting.
No one could paint a brighter picture for the more than 400 investors who pumped more than $30 million into the company, which was shut down a year ago by state regulators.
About 80 investors and other creditors attended the meeting at the Grand Junction City Council chambers.
A receivership was appointed soon after the state closed down Valley Investments, 1445 N. Seventh St., but it decided eventually that bankruptcy presented a better opportunity to liquidate Valley Investment’s assets, which are spread out over three states and one foreign country.
After adding up the estimated value of the assets and subtracting pending costs, including attorney fees, Ray Ives of Snowmass told the attorneys the potential return didn’t justify him hiring an attorney to protect his interests.
“Retain counsel with what?” another investor, Augustin Reyes of Grand Junction asked, when attorneys said they couldn’t represent individual investors.
“It just makes me sick,” investor Carolyn White said of the prospect of getting any of her thousands of dollars back.
Kirk Rider, whose law firm Rider and Quesenberry was appointed receiver and now the debtor in possession of Valley Investments, said his firm has made every effort to identify assets believed purchased with investor money so they can be used to compensate investors.
Negotiations are under way with Valley Investments owner Philip Rand Lochmiller, as well as members of his family, including his son, also Philip Rand Lochmiller, to gain possession of those assets.
The Lochmillers and an employee, Shawnee Carver, face federal criminal charges in the collapse of Valley Investments.
Valley Investments, which was characterized as a Ponzi scheme by Joanne C. Speirs of the Office of the U.S. Trustee, offered returns as high as 16 percent to investors over two-year investment periods and told them their money was secured by land in affordable housing projects in Colorado, Idaho and Utah. Much of that land was “overly overencumbered” by multiple deeds of trust, Rider said.
The bankruptcy proceeding will allow him to more easily deal with conflicting deeds and actions in three states that were inhibiting the receivership’s efforts, Rider said.
U.S. Bankruptcy Judge Sidney Brooks will have to approve all major actions to liquidate the company’s assets.
While he is confident that all the assets purchased with investor money have been found, Rider said he was unable to say with any comfort when Valley Investments became a Ponzi scheme.
Investigations into the company have shown that Lochmiller hadn’t secreted any money away or have any offshore bank accounts, Rider said.
Poor decisions, however, appear to have been frequent, he said.
Company records showed that the younger Lochmiller spent about $25,000 on a 1971 GMC pickup. After the receivership took possession of the vehicle, it has been unable to attract even a $10,000 bid after two tries on eBay, Rider said.
After working to find the elder Lochmiller’s 1994 GMC pickup, he learned that it had been repossessed by the lender, Rider said. The truck was worth about $5,000 more than what was owed, so the lender applied it to other Lochmiller debts, Rider said.
About half of the $30 million to $34 million invested with Valley Investments was returned to investors, Rider said.
It’s possible that he’ll pursue so-called “clawbacks,” or efforts to get back money returned to investors for the benefit of all the investors, Rider said.
He’ll do that only in the “most notable, egregious cases,” Rider said.
Anyone who got money back should face a penalty that would benefit the other investors, Ives said.
Investors must file claims to get any money back from the bankruptcy proceedings. Forms can downloaded from http://www.valleymortgagereceivership.com or via the U.S. bankruptcy courts.
No deadline to file claims has been set.