Per the Gibbs Law Group press release provided further below “federal prosecutors and the Federal Bureau of Investigation [FBI] are investigating Arbor Realty’s “lending practices and the company’s claims about the performance of their loan book.” According to Ningi Research: “Arbor Realty Trust, Inc. (“ABR”, “Arbor”, “Arbor Realty Trust”, or “the company”) is a New York-based but Maryland-incorporated real estate investment trust specializing in real estate financing, particularly bridge loans. The company is not an equity REIT but a so-called mortgage REIT.” Insights about Arbor Realty’s purported fraud from Ningi Research, Gibbs Law Group, left-leaning Bloomberg and others are provided below in Parts I and II. Meanwhile, in Part III of this report are updates on Chimene Van Gundy, the self-proclaimed “Queen of Mobile Homes,” who was apparently involved in a different fraudulent scheme involving manufactured homes that MHProNews previously reported at this link here. The U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Van Gundy in a San Antonio federal court. Van Gundy purportedly embezzled funds to pay existing investors, undisclosed sales commissions, and fund her lifestyle and was accused of taking approximately $18.5 million from at least 600 investors. Her company, Outstanding Real Estate Solutions (OREM), and others were involved in the alleged scheme. While these are clearly different types of cases with no known direct ties other than the fact that both involve manufactured housing, why combine them into one article? Several reasons, including the point made time and again by MHProNews and our MHLivingNews sister site. Namely, that firms and individuals who seemingly had ‘good reputations’ now stand credibly charged with masking problems that belied their image. That is a lesson that manufactured housing pros, and the public more broadly, seemingly needs to let soak deeper into our consciousness. Because the day may come when sizable to even giant firms involved in manufactured housing may end up charged or on the losing end of litigation with wrongdoing at a scale and scope that could break some firms, shake markets, investors, consumers, taxpayers, and others in their impact.

The Lesli Gooch for Congress videos and related items are found in Part II.

Part I from a press release via Berkshire Hathaway owned BusinessWire is the following

Lost Money in Arbor Realty Trust, Inc.? Gibbs Law Group Investigates Potential Securities Law Violations

July 12, 2024 09:34 PM Eastern Daylight Time

OAKLAND, Calif.–(BUSINESS WIRE)–Shares of Arbor Realty Trust, Inc. (“Arbor Reality”) dropped nearly 17% in intraday trading on Friday, July 12, 2024, following a Bloomberg article, which reported that federal prosecutors and the Federal Bureau of Investigation are investigating Arbor Realty’s “lending practices and the company’s claims about the performance of their loan book.” This follows two short seller reports, which raised concerns about Arbor Realty’s practices and disclosures, and alleged that Arbor Realty had a distressed loan book.

Gibbs Law Group is investigating a potential Arbor Realty Trust, Inc. Class Action Lawsuit on behalf of shareholders who lost money in Arbor Realty Trust, Inc. (NYSE: ABR).

What Should Arbor Realty Trust, Inc. Investors Do?

Learn more about the Arbor Realty Class Action Lawsuit Investigation here or call us toll-free at (888) 410-2925 to discuss how you may be able to recover your losses. Our investigation concerns whether Arbor Realty Trust, Inc. has violated federal securities laws by providing false or misleading statements to investors.

What is the Arbor Realty Securities Lawsuit Investigation About?

On July 12, 2024, Bloomberg published an article entitled “Arbor Realty Probed by DOJ Over Lending Practices, Loan Book.” The article claims that federal prosecutors and the Federal Bureau of Investigation are investigating Arbor Realty’s “lending practices and the company’s claims about the performance of their loan book.”

Prior to the Bloomberg article, two short seller reports previously raised concerns about Arbor Realty’s practices and disclosures, and alleged that Arbor Realty had a distressed loan book.

One report, published by Ningi Research in March 2023, claimed that Arbor Realty “has been hiding a toxic real estate portfolio of mobile homes with a complex web of real and fake holding companies for more than a decade.” Another report, published by Viceroy Research in November 2023, alleged that Arbor Realty’s “entire loan book is distressed and underlying collateral is vastly overstated.”

According to Bloomberg, federal investigators are now probing the New York-based company following these reports, citing sources close to the matter.

Following this news, shares of Arbor Realty dropped nearly 17% in intraday trading on Friday, July 12, 2024, causing significant harm to investors.

About Gibbs Law Group

Gibbs Law Group represents investors throughout the country in securities litigation to correct abusive corporate governance practices, breaches of fiduciary duty, and proxy violations. The firm has recovered over a billion dollars for its clients against some of the world’s largest corporations, and our attorneys have received numerous honors for their work, including “Best Lawyers in America,” “Top Plaintiff Lawyers in California,” “California Lawyer Attorney of the Year,” “Class Action Practice Group of the Year,” “Consumer Protection MVP,” and “Top Women Lawyers in California.”

This press release may constitute Attorney Advertising in some jurisdictions under the applicable law and ethical rules.

Contacts

EILEEN EPSTEIN
PHONE: 510.350.9728
EMAIL: EJE@CLASSLAWGROUP.COM##

Part II – Additional Information Related to the Above, Including Insights Cited by Gibbs Law Regarding Ningi Research

From a document linked above and here are the following Ningi Research statements.

1)

1. Company overview
“Arbor Realty Trust, Inc. (“ABR”, “Arbor”, “Arbor Realty Trust”, or “the company”) is a New York-based but Maryland-incorporated real estate investment trust specializing in real estate financing, particularly bridge loans. The company is not an equity REIT but a so-called mortgage REIT. Arbor went public in early 2004 and used to be a diversified REIT with significant equity investments. But in the aftermath of the great financial crisis, this led to substantial losses and dividend cuts.1 Nowadays, Arbor covers the entire value chain in the mortgage sector: from loan origination and securitization to mortgage servicing. In recent years, the company has focused on mortgage servicing and bridge financing in the multifamily industry. As of yearend 2022, loans in the multifamily segment accounted for 91 percent of all loans, followed by single-family built-to-rent at 7% of its loan portfolio and 98 percent of all loans were bridge financing.2 Since its inception, a well-established and closely-knit management team headed by CEO Ivan Kaufman has been leading Arbor Realty Trust.”

2) In statements from Ningi Research linked here and referred to by Gibbs Law Group dated 03/14/2023 are the following statements. The yellow highlighting is added by MHProNews, but the text is otherwise as published by Ningi Research.

We are short Arbor Realty Trust, Inc. (NYSE: ABR), because, in our opinion, Arbor hid its toxic mobile homes portfolio to manipulate its stock price and avoid insolvency, $599 million of Arbor’s escrows evaporated overnight, the company’s escrow balances and revenue are fake, in an Archegos-like situation $2.5 billion of repo facilities are subject to margin call provisions, Arbor’s funding through repo desks is drying up, the CECL allowances and provisions have been severely understated to boost earnings, Arbor’s financial statements for the last twelve years cannot be trusted, and auditors, as well as the board, turned a blind eye on misstatements and misconduct. We estimate a median downside of 52% and, at worst a 67 percent downside for Arbor’s stock. In our opinion:

• Arbor has been hiding a toxic real estate portfolio of mobile homes with a complex web of real and fake holding companies for more than a decade,
• Arbor disguises its off-balance liabilities of $582 million as bad boy guarantees,
• Arbor invested several million dollars in maintenance for the portfolio and did not account for it on its income statement,
• If the portfolio had been consolidated, Arbor would have been insolvent in 2011,
• Up to 2017, Arbor had a negative book value per share and would not have been able to survive,
• Consolidating the Lexford debt today leads to a fair value of $9.54 per share,

• Lexford generated hundreds of millions of profit, but Arbor shareholders only received a fraction of it, and the rest of the cash is missing,
• In November 2022, Arbor started secretly selling parts of the Lexford portfolio, but the net sales profits of $15.2 million were not distributed to Arbor Realty Trust as well,
• Arbor lowered its off-balance escrow balances for yearend 2021 retroactively by $599 million in Q3 2022 and adopted the change in its annual report, which should not be possible,
• The escrow accounts don’t show the true picture, as the balances of the second and third quarters of 2022 differ by several hundred million dollars despite being escrow deposits,
• The reported escrow balances of $1.25 billion and escrow revenue, totaling $65.8 million in the last five years, are fake and accounted for on Arbor’s balance sheet as interest and fee receivables in other assets,
• Arbor does not disclose coherent information about its repurchase and credit facilities,
• it’s an Archegos-like situation because, as a matter of fact, neither investors nor counterparties have fundamental information about the parties, conditions, agreements, and risks involved in the repurchase and credit facilities,
• Arbor even collateralized its servicing revenue to obtain a $75m credit facility, which is not reflected in its debt obligations,
• At the end of 2022, about $2.5 billion debt of its repo facilities are subject to margin call provisions at the repo desk’s discretion, and the provisions are up 80x from $30 million at the beginning of 2022,
• Arbor does not account for a reasonable amount of CECL provision and allowance on its books,
• For its $13 billion multifamily loan portfolio, the company recorded an allowance of $37 million, and that is just $1.5 million higher than in 2020 when Arbor’s multifamily loan portfolio amounted to only $3.8 billion,
• At the same time, multifamily loans assigned a “Special Mention”-rating rose to $4 billion,
• Arbor never recorded or accounted for a CECL allowance and provision for its $1 billion single-family built-to-rent loan portfolio, and the company’s auditor never noticed it,
• The CECL allowances and provisions are severely understated to boost Arbor’s earnings,
• The reported low allowances and provisions will lead to a rude awakening in the near future,
• Arbor’s net interest income, other revenue, and other expenses have to be adjusted for the fake revenue and missing CECL allowances which lead to significantly lower net income, basic EPS, and diluted EPS for the past five years,
• Arbor’s non-GAAP metric, distributable earnings per share, is lower as well,
• Based on Arbor’s peer group, the downside for its stock is between 39 and 67 percent, and the median downside for Arbor’s share price is 52 percent,
• An additional $51 million of debt is due in the next twelve months, and maturing bonds, as well as repurchase facilities of $1.2 billion, will lead to significant liquidity issues in Arbor’s cash flow,                                                                                    
• Ernst & Young and the Chairman of the audit committee will be celebrating their 20th-anniversary auditing and supervising Arbor’s financials and the failure of such duties,
• Ernst & Young failed its duties, and at least Arbor’s financials of the last twelve years cannot be trusted,
• Both parties turned a blind eye to the misstatements and misconduct by the company and its management,
• It’s not the first time Arbor and its management have been alleged of improperly transferring money, as they have been in material litigation for more than a decade, which was settled in late 2022,
• The litigation’s expenses, which were never disclosed in Arbor’s reports, total about $49.4 million, which were paid for by Arbor’s shareholders,
• All misstatements and misconduct will lead to restatements, and counterparties, as well as bondholders, will force repayment of Arbor’s outstanding debt,
• A single margin call will lead to an immediate dividend cut, and deleveraging Arbor’s balance sheet will corroborate a suspension of dividends for a longer time.”

More details are found in the document obtained by MHProNews that is linked here.

2) According to the Arbor website: “Arbor offers a total nationwide solution for your multifamily finance needs, including Fannie Mae, Freddie Mac, FHA and Bridge loans, among many other flexible option.”

3) Per the Arbor website, the New England Real Estate Journal (NEREJ) has spotlighted the firm in a favorable way. “NEREJ 2024 Rising Stars, Ryan Kraynak, Arbor Realty Trust, Inc.”

4) Also per Arbor’s website, the New York Real Estate Journal: ” NYREJ Commercial Real Estate Visionaries 2023, Howard Leiner, Arbor Realty Trust, Inc.”

5) If the allegations prove true, then the above and this item about Arbor may in hindsight seem like an echo of the favorable publicity that purported fraudster Chimene Van Gundy earned for years: “NYREJ Women in Commercial Real Estate Spotlight 2023, Maria Elefante, Arbor Realty Trust, Inc.”

6) There are multiple other favorable media mentions of Arbor and their team’s members that are boasted about on their website.  Note the video below defending Arbor Realty Trust is by someone who claims to hold a lot of shares in the firm. FWIW.

Part III – Chimene Van Gundy, Self-Proclaimed “Queen of Mobile Homes,” Case Updates from Sources as Cited

1) Information organized from sources cited by left-leaning Bing’s AI powered Copilot are as follows. Note that MHProNews edited in OREM in brackets below, which were not part of Copilot’s synopsis.

Here are the key details from the news article about Chimene Van Gundy, the self-proclaimed “Queen of Mobile Homes,” who has been involved in a fraudulent scheme:

• Lawsuit and Allegations:
  • The U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Chimene Van Gundy in a San Antonio federal court.
  • The lawsuit alleges that Van Gundy committed fraud through a “Ponzi-like” scheme.
  • She embezzled funds to pay existing investors, undisclosed sales commissions, and fund her lifestyle.
  • Van Gundy raised approximately $18.5 million from at least 600 investors.
  • Her company, Outstanding Real Estate Solutions [OREM], was also involved in the alleged scheme.
  • Three salespeople employed by her company were named as defendants.
  • Investors were promised annual returns of 15 to 20 percent, but the SEC claims that only six out of 248 mobile homes were actually owned by Van Gundy’s company.
  • She used identification numbers of mobile homes owned by other retailers to give the appearance of legitimacy.
  • Van Gundy falsely claimed that FEMA awarded her a contract to sell mobile homes for hurricane-displaced individuals.
  • She and her employees acted as unregistered brokers1.
• Recent Developments:
  • Van Gundy avoided contempt of court and jail time.
  • However, she is subject to electronic monitoring for at least the next few weeks2.

This summary captures the main points from the article. …”

MHProNews notes that the article in question was the San Antonio News Express.  The Quorum Report recently featured the Van Gundy saga, noting the following.

2) According to the Holland & Knight SECond Opinions Blog Summer Series (HKLaw) post by Jasmine S. Chean and Jessica B. Magee are the following insights about the “Queen of Mobile Homes.” The apparent typo below is in the original, and related remarks will follow later.

Holland & Knight’s SECond Opinions Blog is excited to continute its Summer Series featuring posts written and researched by the associates in the Securities Enforcement Defense Team. This blog comes from New York Associate Jasmine Chean, who focuses her practice on commercial and real estate litigation, government investigations and enforcement actions, white collar defense and internal investigations. Jasmine has guided individual and corporate clients through investigations and litigation matters involving criminal, civil and regulatory compliance issues.

A recent enforcement action from the Fort Worth Regional Office of the SEC reminds one of the agency’s investor-protection mission and continued focus on those who deceive retail investors in the private offer and sale of unregistered securities. Although the facts alleged hew to a long-established pattern of offering frauds, the case is noteworthy for the staff’s newfangled approach to meeting jurisdictional requirements and the relationship with the ongoing private litigation for breach of contract, fraud and vicarious liability commenced by investors in a Texas state court.

Facts

The SEC on May 31, 2023, charged self-proclaimed “Queen of Mobile Homes” Chimene Van Gundy, her now-defunct company and three other individuals with violating various registration and antifraud provisions of federal securities laws based on an alleged multiyear scheme through which they raised $18.5 million from at least 600 investors on false promises to profitably purchase, fix and flip mobile homes, allowing them to generate guaranteed returns of 15 percent to 20 percent for investors.

The complaint alleges that between June 2018 and November 2021, Van Gundy and her company, Outstanding Real Estate Solutions Inc. (ORES), along with salespeople Santos Kidd, Maria Tosta and Michael Trofimoff, secured investments using a series of material misrepresentations and omissions in offering documents, advertisements and other solicitations directed at investors – most of whom were unsophisticated, unaccredited and inexperienced with private investments – who were led to believe that they would commit money to the improvement and resale of one or more specific mobile homes in exchange for guaranteed returns.

Among the allegations, the SEC claims that CEO and founder Van Gundy and ORES touted a track record of more than 400 successful flips and promised investors they owned specific homes to be flipped. Yet, the SEC contends, they owned just six of 248 mobile homes connected to them, often misrepresenting homes as under their control when, in fact, they belonged to other retailers. In addition, investors were misled to believe that their money would be used to fix and flip specific properties and that their investments were protected by liens on the homes when, in fact, no monies were used to fix or flip properties and no liens existed. Van Gundy and ORES also allegedly committed the same homes to multiple investors without disclosing that fact to the various investors. According to the SEC, Van Gundy and ORES also falsely claimed that investors would be listed as beneficiaries of key-man insurance policies on Van Gundy’s life and that she secured a contract to sell mobile homes to the Federal Emergency Management Agency (FEMA) for hurricane-displaced individuals. The SEC further alleged that Van Gundy and ORES continued to mislead investors as the scheme fell apart by blaming delayed payments on a fictional merchant payment processor, claiming to have been locked out of accounts and the like, and reassuring prospective new investors – to keep the scheme afloat – that an investment was “safe” and “recession-proof.”

Meanwhile, the complaint alleges, Trofimoff solicited investors through his own company, Georgia Mobile Home Investing, Kidd distributed offering materials and investor presentation to investors while encouraging them to apply to a home equity line of credit to fund their investments, and Tosta solicited investors with false promises of guaranteed returns on investments when there were ongoing material delays in payment of interest proceeds, all while each was receiving undisclosed sales commissions paid out of investor funds.

The SEC alleges that Van Gundy and ORES did not use investor money as promised, either. Rather, the complaint contends that they paid $1.1 million in undisclosed sales commissions to Trofimoff, Kidd and Tosta and used $11 million of investor monies to make “Ponzi-like” payments to existing investors. Van Gundy allegedly misappropriated the remainder to fund her lifestyle, including a nanny and private school tuition for her children, boarding costs for horses and shopping, not to mention a $7,000 weekly salary.

Charges

The SEC charged:

• Van Gundy and ORES with violations of the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act)
• Van Gundy, ORES, Trofimoff and Kidd with scienter–based and non-scienter-based fraud under Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder
• Tosta with non-scienter-based fraud under Section 17(a)(3) of the Securities Act
• Van Gundy, Trofimoff, Kidd and Tosta for acting as unregistered brokers in violation of provision of Section 15(a) of the Exchange Act

Interestingly, the SEC seeks to satisfy jurisdictional requirements under the Securities Act and Exchange Act by alleging that the defendants’ offer of investments in mobile homes through mobile home lien purchase agreements, service agreements and promissory notes falls under the definition of “security” pursuant to descriptions of investment contracts and notes. Throughout the complaint, the SEC was careful to allege that the defendants used phone, email, text, investor presentations and offering materials to solicit the investment of money from individuals with the promise to pay profits for a term of five to eight years arising from the defendants’ efforts to purchase, fix and resell mobile homes.

Tosta agreed to settle the case at filing and consented to permanent injunctive relief and payment of approximately $178,000 in disgorgement, interest and penalties, subject to court approval. The remaining defendants are challenging the SEC’s allegations and, as of this posting, intend to litigate. Notably, in addition to seeking standard injunctive relief and financial remedies, the SEC is asking the court to enter a conduct-based injunction preventing the individual defendants from ever again engaging with others in the offer or sale of securities and, going a step further, seeking a permanent officer-and-director bar against Van Gundy.

Parallel Private Action Against Defendants

The SEC’s enforcement action follows a private action filed by a group of investors pending in Texas state court against Van Gundy, ORES, Trofimoff and Trofimoff’s company, Viridis Holdings LLC, d/b/a Georgia Mobile Home Investing. In that action, commenced on Dec. 6, 2021, the investors brought claims for breach of contract, fraud and vicarious liability based on allegations that the defendants defaulted on their obligations to make quarterly interest payments and repay loans pursuant to certain promissory notes. On April 19, 2022, the court placed ORES into receivership. According to a May 16, 2023, receiver’s report, ORES is insolvent, and an investigation continues to identify all assets that could potentially be recovered for the benefit of the receivership and defrauded investors.

Key Takeaways

• Although assets and consumer goods – such as mobile homes – are not themselves securities, they can become the subject of a securities enforcement action when they are at issue in transactions and instruments that meet the definition of “security” under federal securities laws. According to the complaint, the mobile home lien purchase agreements and service agreements offered by the defendants have the characteristics of an “investment contract” under the U.S. Supreme Court’s Howey test¹(a recurring theme in ongoing digital asset token enforcement actions), while the promissory notes offered by the defendants have the characteristics of a “note” under the Supreme Court’s Reves² We will continue to monitor the case to see if defendants move to dismiss for lack of jurisdiction on the premise that the transactions at issue did not involve a “security” but instead involved a direct financial interest in a physical asset.
• Federal securities laws cover private companies and the offer, purchase and sale of securities. Private companies and their directors, officers, employees and third parties they work with (brokers, gatekeepers) are subject to the SEC’s oversight and enforcement reach.
• Though rare, the SEC sometimes will seek to permanently bar individuals from ever serving as public company officers or directors in the future, despite a lack of any prior public company experience, where the underlying conduct demonstrates that high degree of unfitness.
• The SEC can and regularly does pursue enforcement actions – including injunctive relief and financial remedies – notwithstanding pending private litigation such as shareholder class actions, derivative actions and lawsuits based on non-securities theories such as breach of contract by some investors in ORES. In such instances, the SEC can use discovery tools during its nonpublic investigations – and later in litigation – to subpoena information from the private plaintiffs and other parties involved in parallel or similar proceedings.
• The SEC and the state-court-appointed receiver for ORES may agree to share information and resources in the best interest of investors. Typically, however, private parties cannot tap into the SEC to gather evidence and information, as securities laws and prior case precedent typically prevent private parties from subpoenaing information from the SEC, including the investigative file, or intervening in the agency’s enforcement actions.

The SECond Opinions Blog will continue to monitor this action and related developments and we will provide additional updates. If you need additional information on this topic – or any topic related to securities enforcement or investigations – please contact the authors or other members of Holland & Knight’s Securities Enforcement Defense Team.

Notes

¹ See S.E.C. v. W.J. Howey Co., 328 U.S. 293 (1946).

² See Reves v. Ernst & Young, 494 U.S. 56 (1990).

Original post linked here: https://www.hklaw.com/en/insights/publications/2023/06/prefabricated-facts-sec-charges-queen-of-mobile-homes-others

3) According to Bloomberg Law on May 24, 2024: ‘Queen of Mobile Homes’ Owes SEC Nearly $14 Million, Court Says

The SEC is entitled to a default judgment against a Texas woman who allegedly ran a mobile home investment scam, a federal court said in ordering almost $14 million in disgorgement, interest, and penalties.

Chimene Van Gundy is also subject to injunctions prohibiting her participation in the offer or sale of securities, Judge Fred Biery said in the order docketed Thursday in the US District Court for the Western District of Texas.

• The Securities and Exchange Commission alleged that Van Gundy, who marketed herself as “the Queen of Mobile Homes,” ran an $18.5 million Ponzi scheme, using the investors’ money …

4) MHProNews has previously reported in depth on the Van Gundy case at this link here.

5) MHProNews notes and editorially stresses that manufactured housing is a vital affordable housing product particularly needed by those with lower incomes or who desire to have a lower cost permeant housing option that is built to perform much the same as conventional housing but only at a fraction of the cost.

Per HUD’s website: “HUD establishes a nationwide building code and serves as the building code oversight and enforcement body for all manufactured housing…”

• “The standards are performance-based and as such compliance remains, as with all other standards, the responsibility of the home manufacturer.  This may be demonstrated, although not exclusively, through test or inspection or both.”
• To elaborate on the above, Google AI (Gemini) said: “The U.S. Department of Housing and Urban Development (HUD) Code for manufactured homes is performance-based, which means it allows manufacturers to use products that work best with their factory-building process.”
• According to the HUD website: “HUD estimates that there are 6.9 million manufactured homes currently in use, and more than 8 million homes built under the program since 1976.”

So, millions of households are living in far more affordable housing than conventional housing, thanks to performance-based federal standards provided by HUD Code manufactured homes. Based on other research, it is likely that sizable numbers of those residents would not be able to afford other forms of conventionally built rental or resident-owned single family housing.

6) Despite the apparent need and desirability for millions that post-HUD Code (meaning, manufactured homes built on or since June 15, 1976) manufactured housing obviously has a potential to do far more. Given the enormous cost-saving benefits that the program has yielded, which HUD has said attracts people from around the world to the U.S. to better understand and study what the industry has accomplished, manufactured housing is still stigmatized in this country. MHProNews has spotlighted research that demonstrates the realities as well as the stigmas, citing sources like Richard Genz, the National Association of Realtor’s report by CRE Scholastica “Gay” Cororaton, what has been described as the first Ph.D. in years based upon manufactured housing focused research by now Dr. Lisa Tyler, Ph.D. that is focused on the public perceptions issue, and of course the important praised brought forward by Eric Belsky.  There are years of reports by third-parties to manufactured housing found at this link here.

7) Nevertheless, from time to time, members of the Manufactured Housing Institute (MHI), including Clayton Homes, admit that there is a stigma issue. This flashback to a prior report that focused on the tepid results Clayton obtained in that video’s case.

Of course, the flip side of that video has to be considered, as in the form of “Pissed Consumer” videos, where actual homeowners are complaining about their Clayton Home. Per that video: “Clayton Homes Reviews – Lied, Scammed and Taken A Full Advantage Of…”

Among the comments posted on the video above are the following. Note that Oakwood is a Clayton Homes owned brand. Typos in what follow are in the original.

@tinaboone9987

3 weeks ago

My husband and I had a horrible experience with Clayton Homes. Those people are far from true to their word. We have had constant issues and problems since day 1. It’s been 8 years if we could do it all over again we would have definitely stayed away from Clayton Homes…”

@delwingoss8242

3 weeks ago

FYI many years ago I bought a brand new Oakwood Home. Had a lot of issues during the warranty period. I had to file a complaint with the State of Texas to get them to fix the issues. During my conversation with the State Inspector he told me it wasn’t just my home or its brand. The short version is they are all cheap built piles of crap and they get away with it because the mobile home industry has a very powerful lobbying machine in most of the state capitols. They have special laws and regulations written by those lobbies and passed by state officials who are more or less bribed by that lobby. These things are built to appeal to the most vulnerable and least educated homebuyers ….and disguised as “affordable houseing” I’ll never buy another one of any brand after my discussion with that inspector…what I researched and learned on my own and my 18 years of ownership. People would be better off in the long run living in an apartment or their parents basement until they can save enough $$$ to buy a real home. Those things are basically oversize RVs not built to be lived in for over a decade. Cheaply built peices of Bull manure. …”

Obviously, there are positive reviews of Clayton’s too. But one wonders if some involved in MHI don’t deliberately allow negative stereotypes to gain the upper hand in the public perception? After all, Kevin Clayton himself bragged that the industry was ready to do a national GoRVing style image campaign in 2011. Kevin also said that “Warren” Buffett, chairman of Clayton Homes, personally told him he could get whatever financial support (“capital”) they needed. How is it that over a dozen years later the industry’s still operating under the cloud of stigma, with tepid efforts to change it that don’t grab hold in the public consciousness?

 

8) What aspect of real estate or housing has the sort of image that manufactured housing all too often has? Yet, individuals involved in manufactured housing like Nathan Smith, Frank Rolfe, and others have played up the negative side apparently for their own benefit.

 

 

 

9) MHI promoted what was dubbed “tricks of the trade” for one of their ‘award winners.’  Note that since that report, Yes Communities is among those named in a class action lawsuit involving several other MHI members and/or members of MHI state association affiliates.

 

 

 

As numbers of industry pros know, Yes! Communities has its roots as a spinoff from Clayton Homes after Buffett-led Berkshire bought the firm. Perhaps the plan was to stir up negative media from the start of the Berkshire foray into manufactured housing, because the claim was made early on that Buffett didn’t want to be seen as ‘raising the rents on grandma.’ But it isn’t just consumer complaints, there are apparently plenty of unhappy employees of those so-called “predatory” firms, per their remarks to sources such as Indeed. Case McGee jumped shipped in fairly short order after coming on board as Clayton’s “Chief People Officer.” One day, McGee is touting the firm, and not so long after coming on board, he left Clayton for apparently what Case must have thought were greener pastures.

 

 

10) Besides the lack of proper promotion of the industry, despite years of promises to do so by ‘industry leaders’ associated with MHI, there is also the point that Buffett led Berkshire Hathaway used to own dozens of newspapers across the country. As MHProNews previously reported, it would have been a relatively easy thing to do even an article weekly or monthly in such mainstream news publications based on facts that could have debunked and slowly begin the process of changing a negative perception into a positive one.  It is likely entirely coincidental, but after MHProNews featured those Berkshire media properties in reports with that theme, Buffett spun that division off, despite saying his favorite holding times if ‘forever.’

 

Depending on your device, to see this image below in a larger size,
click the image and follow the prompts.

Depending on your device, to see this image below in a larger size,
click the image and follow the prompts.

 

11) The tale of Chimene Van Gundy is not yet complete, but it appears to be heading in a bad direction for her and her associates in the purported scam. Van Gundy was able to stir up positive media. The “Queen of Mobile Homes” earned accolades, perhaps not unlike those that Dr. Lesli Gooch, MHI’s CEO has garnered. For years, Van Gundy had a positive, not a negative, image. So, one possible lesson is that just because someone seems to have a positive aura, that can be caused by the illusory effect that MHProNews has reported on several times, because it could be applied to some purported wrongdoers involved in manufactured housing.

 

 

12) Gooch’s ‘almost a woman of influence’ ‘awards’ from HousingWire beg the question. Awards for what, exactly? How has the industry authentically advanced since Gooch arrived at MHI?  Isn’t there an ‘illusory truth effect’ style scam being played on manufactured housing pros? While the purposes are somewhat different, as Gooch draws a salary and Van Gundy’s pay was based in part on getting more and more people into her purported Ponzi-style scheme, the similarities appear to be there too. Faux praise is still faux. 

 

13)  The illusory truth effect has apparently been used by presidents of both major parties and benefited corporations that later went up in smoke, legal actions, and in some cases prison time. Sam Bankman-Fried (SBF), see second report linked below, was for some time a celebrated Democratic mega donor. Once the illusion was shattered, SBF was found guilty and sentenced to prison.

 

 

 

14) What will happen with Arbor is unclear and time will tell. The fate of Van Gundy might find some miraculous and successful appeal to a sympathetic judge, one never knows. But at this time, Van Gundy’s charade appears to be coming to a close. What will happen with Gooch, and several individuals and purportedly corrupt and predatory corporate interests involved at MHI is not yet clear either. They may ‘get away with’ their purported ploys, or they may not. But it will be recalled that MHProNews cautioned industry pros and investors that big class action style litigation was coming, and other forms of legal woes may follow. Several months later, the first of a series of national class action lawsuits were launched.

 

 

From the YouTube page where the video above is posted are the following remarks about Gooch. Didn’t the MHI committee that hired her find such breadcrumbs? Did they hire her despite the evidence or because of the evidence?

15) An array of illusions, exist in modern America. It isn’t just limited to manufactured housing. When some 70 percent of the country believes that the system is rigged, that should be a reason to think twice about what is authentic and what is illusory.  Manufactured housing has favorable federal laws. The recent Supreme Court ruling could make those favorable laws even easier to enforce, according to an analysis by the Manufactured Housing Association for Regulatory Reform (MHARR). So, what is keeping MHI from doing is own claimed job properly? Why are so many larger firms willingly accepting the industry’s underperformance during an affordable housing crisis? The issues are both simple and complex. It appears that some firms think it is to their benefit for the industry to underperform, to act as a sort of “moat” to keep new competitors out. Whatever the motivations may be, they could well violate a range of antitrust laws, but civil and criminal according to research by third-parties to the industry.

16) Gooch appears to have willingly acted as the mouthpiece for a MHI member firm that is being challenged again on a legal question that was settled unfavorably for Hometown America before.

17) There are good companies. There are bad ones. Then there are companies, individuals, and organizations that create an illusion of being good, when a closer look reveals something quite different.

18) When God the Creator of all warns humanity against the dangers that flow from deceptions and lies, where aren’t more people paying attention?

It seems that MHI CEO Gooch’s run for Congress was every bit as successful as has been her advocacy on behalf of manufactured housing industry growth.

MHProNews plans to continue to monitor and report on apparent scams involving manufactured housing, and other possible lessons to be learned from con artists and fraudsters who may appear in a suit, dress, or otherwise appealing array, but who upon closer examination appear to be taking a page out of the fictional Godfather movie’s insightful lesson: never give up the con. Liars can tell big lies, and for a time, they can get away with it. ###

Again, our thanks to free email subscribers and all readers like you, as well as our tipsters/sources, sponsors and God for making and keeping us the runaway number one source for authentic “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)

By L.A. “Tony” Kovach – for MHProNews.com.

Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.

For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

This article reflects the LLC’s and/or the writer’s position and may or may not reflect the views of sponsors or supporters.

http://latonykovach.com

Connect on LinkedIn: http://www.linkedin.com/in/latonykovach

Related References:

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