One by one, the houses that were purchased by Marlena Jareaux and Gail Proctor are going under. Well, actually, they’ve been “under” for quite some time since they are no longer worth what they were purchased for. Back in 2004, two women decided to pool their financial resources together in order to purchase investment properties in the fine city of Baltimore Maryland. They sat down at the settlement table 8 times in a one year and seven month period in order to purchase those houses. Each of them were likely starry-eyed as they forked over their hard-earned monies and cashed out stock accounts in the hopes of creating a solid financial future backed by the American dream of real estate investment. Where else can one purchase a 3 bedroom home that is rent-ready for $53,000 that is so close to our Nation’s capitol?
Well, as it has always been said, there is no “sure thing” except death and taxes. Well, and for some people, taxes aren’t even a sure thing, but we’ll save THAT story for another post. Real estate is not a sure thing, just ask the many many investors who bought in Baltimore (and other places) and lost their shirt as they got pulled under by the housing crisis that anyone who can see or hear has surely heard about. This post isn’t about the “derivatives” that were created by bankers to package and sell mortgages to investors as securities. This post isn’t about the deplorable MERS system created by those same bankers, that robbed local land records offices nationwide of fees that could have gone to pay for vital local government services (but instead lined the pockets of greedy mortgage bankers). Note: is that slander? Hm.
No, this post is about what can go wrong with a business partnership. You MUST be able to trust your business partner. More importantly, you MUST do your due diligence to ensure to the best of your ability that your business partner is actually trustworthy. That means, you should be able to rely on their word. You should be able to know who you going into business with, and what they are bringing to the table. Particularly, when you are investing ALL of your money that you slated for your child’s future college needs. Ouch!! Yes, yes, the world unfortunately has its’ share of Bernie Madoffs who are intent on using those who they think are weak and vulnerable, in order to further their own selfish agendas at YOUR cost.
What would you do if someone that you trusted with your savings nest egg did the following:
- Bought houses with you, seemingly with money that was theirs to pledge
- Worked right along side of you painting, etc in those houses when things were “good”
- Form a company (an LLC) with you to handle the processing of tenant rent payments and expenses for those houses
- Stopped working in the houses when communications were “bad”
- Disappear and cease all communications with you for almost two years, making you wonder if they were even alive. Essentially leave their investment unattended.
- Reappear when you file suit to try to sell the houses, once you realize that it’s too much work for one person to do all by themselves and you are tired of being the only one putting your money into the houses when there are two people who are supposed to be responsible for them
- Convince you to stop the forced-sale of the houses by the Baltimore City judge, and promise to work along side of you again until the houses can be sold in order to protect each others’ credit (and promise you that you will be reimbursed for the personal investment you made above and beyond theirs)
- Sign with you to list the houses for sale, watch while they don’t sell because they are no longer worth what is owed on them, and then say that they don’t agree to doing short sales on the houses because they don’t want to be forced to sell off their own assets in order to pay deficiencies (meanwhile, you have none because you put them all into keeping the houses going for years)
- File a $500,000 lawsuit against you, three months after the conversation in point #8 above, on behalf of the company you cofounded with them (alleging that YOU are the reason for the financial ruin that is coming because you’ve decided to cease putting your time and money into the houses to your detriment). Persist with the suit after it was thrown out by a Judge, then refile by reducing the ridiculous amount to $150,000 instead (still ridiculous)
- Remove you from the company bank account; file charges with police and the State’s Attorney’s office insisting that the company credit card that they themselves opened up and were also using was instead opened by you alone fraudulently AND that a Suntrust home equity line that was opened up by the both of you on one of the houses was instead opened up and used by you fraudulently (and to your own financial detriment by the way since you still owe money on that line)
- Stop making payments to Suntrust Mortgage and Wells Fargo on those seven mortgages and one equity line, while continuing to deposit tenant rent monies into an account now solely controlled by them
- Spend the money from those rents (not on mortgages though), despite the Federal 1-4 Family Rider that was attached and executed on each of the mortgages since they were investment properties that said that you both agreed to hold tenant rents for the benefit of those mortgage companies
- Insist that the rent money somehow belongs to the company, instead of the owners of the houses (or the mortgage companies)
- Collect over $40,000 in tenant rent payments and deposit into the company bank account, while ironically NOT pay the required Maryland personal property tax return that enables it to be a legal entity operating in the State of Maryland
- File personal bankruptcy, and thereby avoid your lawsuit where you filed against them in Baltimore City for only half (your share) of those rent monies collected on houses that you co-own
- Report that they don’t really remember any details of having sat down at the settlement table with you to buy the houses, that it was all “a blur”, and that it was YOU who was taking advantage of THEM all the time when they were gone as they were flying to California to seek alternative therapies for an alleged mental impairment sustained as a result of service to our country in the military (unbeknownst to you until you read it in the court filings they authored)
You may spend time:
- Wondering why the person you sat down at the settlement table with won’t expend anywhere near the same amount of time, energy or money as you did to keep the houses going as you did for years without them.
- Defending yourself in the legal system by spending even more money hiring a defense lawyer while you are waiting for the person to come to their senses that you at some point wonder if they even ever have
Or you may do both, and then realize that sometimes, people will go to great lengths to start fires all over the place, so that everyone will be focusing on everything BUT what they themselves did to create the mess in the first place. That takes a different breed of person that can stay-up in the wee hours of the night devising a plan of how to leave their unsuspecting (but now very-prudent and wiser) business partner hanging out to dry. We here at To Catch A Fish know that those people exist in the world. We’re count ourselves fortunate to be on the list of those who are in good health, surrounded by people who genuinely love us, and able to look ourselves in the mirror everynight before having a good night’s sleep! You can do those things when you live with integrity, despite what others attempt to do to drag you down to their level.
Oh, some housekeeping: a certain someone got the great idea to send anonymous letters to friends and family members of Ms. Jareaux regarding the $500,000 lawsuit described above as well as the foreclosure on her personal residence which has already occurred (along with one of her own investment properties at 2106 Herbert Street in Baltimore). Marlena had already had a party in DC about a year prior to that, announcing to everyone who was there (included friends and strangers) that she was in personal financial ruin as a result of the housing meltdown and the lawsuit with her prior business partner, so it wasn’t REALLY news to anyone. But the idea was a great one after all: please, feel free to go to the Howard County Circuit Court in Ellicott City Maryland, and give the file clerk case number 13-C11085869. There are three rather large file jackets on this case, so you’ll be there for a while. But you should pay close attention to the affidavits that are on file for both Ms. Jareaux and Ms. Proctor. As that letter indicated that was sent anonymously, if you want to see for yourself what has been going on, go there, and make copies of whatever you wish. We will be posting a few of those documents here, well, since they ARE public information! You can come back to this site then, and confirm for yourself what is true and what is not. In the meantime, here are some supporting documents for things written above:
And then, the biggest mistake of all!