- Bill Radford
- Jenny and Scott Gohsler with Varick, left, and Harrison at the home they had to vacate.
For Scott Gohsler and his new wife, Jenny, the pitch was intriguing.
"Buy a new home now without bank qualifying for a huge down payment..." the advertisement read. "Stop wasting your money on rent ... or living in a house which doesn't meet your needs."
Jenny was pregnant and the Woodland Park house they were in was definitely not meeting their needs, as they say it was infested with black mold. They were in a hurry to find a new place, but Scott was engaged in litigation with his ex-wife, his credit and finances battered by the lengthy divorce fight.
And so the Gohslers, Jenny specifically, entered into a deal for a home in Divide — "lots of windows and fantastic views of Pikes Peak," according to the listing — with Richard Roop and his Woodland Park-based company, Bottom Line Results. The price was $179,500. And the vehicle to get the house was an Installment Land Contract, or ILC, an alternative for prospective homebuyers who might have trouble securing a conventional mortgage — but an option that is seen as having fewer protections for the buyer than traditional financing.
The Gohslers' dream of home ownership would become a nightmare, though, with their deal swept away by the ripple effects from an alleged Ponzi scheme by Roop.
They settled into their new house in early 2010. Seven years later, they say they're out nearly $80,000, with no home to call their own. Scott calls his family, and an unknown number of others in similar circumstances, "collateral damage" from Roop's schemes and the state's efforts to compensate his investors.
For the first five years after they bought their house, the Gohslers made their payments and life went on. Their son Harrison was born in July 2010, followed about a year later by Varick, who was born with Down syndrome and a host of health problems; his first couple of years, Jenny says, were filled with surgeries and hospital stays. After Varick was born, Jenny retired from her 21-year career as an Army nurse.
"The uh-oh moment" as far as the house was concerned, Scott says, was when they learned Roop had been accused of securities law violations. The complaint filed in 2014 by the state Division of Securities alleged he had engaged in securities transactions even though his licenses as a broker-dealer and sales representative had been revoked.
The complaint said investors were lured to invest in promissory notes offered by Roop promising an annual interest rate, typically 10 percent. Funds from the sales were used to purchase distressed real estate properties without proper disclosure of risk to investors, the state said. In raising more than $1.6 million from at least 25 investors, Roop ultimately resorted, the complaint said, to "a classic Ponzi scheme strategy" of paying returns to older investors with newer investor funds.
In March 2015, Roop and Bottom Line Results were permanently barred from offering or selling securities in Colorado and a receiver was appointed "to collect all assets related to the conducts of Bottom Line Results." Later that year, Roop was sentenced to 60 days in jail for contempt of court for violating the injunction and the receivership order.
Scott says their ILC was to come to "maturation" after five years, a time frame that was spelled out in a related transfer of land contract. The plan, Scott says, was to shift to a conventional mortgage at that time or use the help of private investors Scott says he had on board. But with an injunction at first, followed by the receivership, Scott says there was no way to finish the deal.
The receiver was to assess and administer 38 properties in El Paso, Teller and Park counties; the Gohslers stopped making house payments a few months into the receivership because the trustee failed to respond to their requests concerning the sale of the home, Scott says. The legal quagmire deepened when Chapter 7 bankruptcy was employed by the receiver as the way to liquidate the properties. After that, Scott says they were told by the bankruptcy trustee that their contract was no longer in effect. In March, they received a letter from the trustee saying their "tenancy" in the house was being terminated. Faced with the threat of eviction, they fled.
Melanie and Eric Schwanke's 2010 deal with Bottom Line Results for a home in Divide included "sweat equity."
They were a young couple and didn't have good credit, Melanie says, so a traditional mortgage seemed out of reach. "It was part of the contract for a down payment to do work," Melanie says, but they didn't realize the extent of repairs needed. There was no heat in their house, she says. There were water issues, electrical issues, and an addition that was "falling apart."
Once the receivership took hold in 2015, Melanie says they were told to stop working on the house. After that, she says, "we wrapped plastic around the whole house to keep it warm and livable."
After the case shifted to bankruptcy court, they too stopped making payments. In November, after five years in the house, they left; Melanie found a friend who was willing to rent them a place. They're trying to fix their credit, she says, and figure they're out $30,000 that they pumped into the house.
Laura Pierson says she worked for Roop for a time as assistant to the office manager. "Everybody in the office trusted him," she says.
Roop sold her and her husband, Charles, a Florissant property with a mobile home under an ILC in 2005, she says. The place was "trashed," she says, so they provided sweat equity too. "We were making payments to Bottom Line Results for 11 years," she says, before they learned of Roop's legal troubles.
"Then they tell me it is in bankruptcy and doesn't belong to me," she says. Pierson, though, worked with the trustee and says they secured a deal for the property for about $40,000 on top of the roughly $100,000 in payments they had already made; that was still less than she ultimately would have paid to Bottom Line Results, Pierson says, since "we had to pay out the nose for interest."
"The mobile home is worthless," she says, but she savors sitting on the deck and looking at the back of Pikes Peak.
"So my deal is done, thank God," she says. But that doesn't mean she's a fan of Roop. She tried to start a Bottom Line Results victims group, but those efforts stalled. "It got to be where everybody was just giving up left and right," she says.
While Pierson calls herself "a happy camper" after striking a deal, an agreement seems out of reach for the Gohslers, who after a plea on a crowdfunding site, generosity.com, found "a soft landing" with an acquaintance in Divide to buy time to figure out their next move.
Scott says they received a call from a broker offering to sell them the home for $253,000; it is now listed for $259,900, more than $80,000 over what they had contracted to pay seven years ago. Scott acknowledges that higher price is likely a reflection of a much hotter housing market than in 2010, but also notes that the difference is roughly equal to how much money they put into the house. The listing agent did not return a call for comment.
"That's our equity," Scott says. "That's our money."
The bankruptcy trustee, David E. Lewis, did not return a phone call and email seeking comment on how many homebuyers have been affected by the bankruptcy action or were able to keep their homes. Securities Commissioner Gerald Rome says the trustee works to be as fair as possible in "marshalling the assets of Roop," but acknowledges, "there is no absolutely fair way to do it."
It all, he says, "goes back to Richard Roop and the giant mess that he created, and the fraud that he perpetrated on his victims."
Roop could not be reached; numbers listed for him and his businesses have been disconnected. But he has repeatedly denied wrongdoing. "I followed all the rules I was aware of and never tried to break any of them," he told the Gazette in 2014 after the Securities Division filed suit against him. In a press release, he accused the division of "numerous inaccurate and misleading statements" concerning his real estate business.
Meanwhile, Rome filed charges this month against Roop's attorney, William Bronchick, and his businesses for alleged violations of the licensing and anti-fraud provisions of the Colorado Securities Act. Bronchick's LegalWiz.com proclaims that "Colorado Installment Land Contracts and lease options are great!" (The Real Estate Commission does not have a commission-approved form for real estate brokers regarding ILCs; the state Division of Real Estate urges people to seek "competent legal advice" before entering such contracts.)
At this point, if the Gohslers could get the house, they'd use it as an investment property, they say; with Varick's many therapy appointments in the Springs, they want to move to town instead of driving up and down the pass. They have filed a claim with the bankruptcy trustee, but they aren't hopeful of recouping much money, if any. Roop's investors are being made whole to the detriment of those who weren't taking a risk, who were just trying to secure a home, Jenny says.
"I don't understand how this is justice," she says. "I don't understand how this is OK."