Nearly $5 million worth of real estate from the failed Falls condominium and shopping center development is slated to be auctioned off at sheriff's sales in the coming weeks after one of the developers pleaded guilty to money laundering in federal court.
Between 2006 and 2008, Swann bilked investors out of about $5 million to invest in The Falls, according to court documents. He promised returns as high as 20 percent, as well as an ownership interest in the development once it was built, but instead used the money to pay off early investors and to help fund a lavish lifestyle, according to court records.Swann pleaded guilty in February to one count of money laundering in U.S. District Court in Oklahoma City as part of a plea agreement with federal prosecutors. He faces a maximum 10 years in prison and a $250,000 fine, or twice the amount of any ill-gotten gains involved in the case."There are number of second mortgages out there, as well as liens on the properties," he said.Many investors in The Falls development have yet to be repaid and have some claims to the land, according to court documents.The land fell into foreclosure after developer Derek C. Swann used money from investors in the project to pay for memberships to tony Gaillardia Country Club for him and his business partners, as well as to lease several BMWs, according to court records.A building that once belonged to the Oklahoma Municipal Power Authority at 2300 E. Second St., appraised at $1.9 million, is headed for a sheriff's auction Thursday at the Oklahoma County courthouse. More than 22 acres of land, valued at $2.9 million, involved in the case are headed for the auction block on April 7.Swann is free on $10,000 bond while awaiting sentencing, according to court documents. His attorney, David Ogle, could not immediately be reached for comment on Monday.In court documents, VanHoose wrote that he decided to accept a plea agreement to "(accept responsibility for) my conduct" and because of a "desire to avoid potentially more serious and/or more numerous criminal charges."He faces up to five years in prison and $250,000 fine and is free on $5,000 bond while awaiting sentencing."There are a number of people out there and entities who apparently loaned The Falls money or the principals owed them some money," said Ray Zschiesche, an attorney who is representing lender Allegiance Credit Union in one of the foreclosure lawsuits against The Falls developers.Swann filed for Chapter 7 bankruptcy in 2009, reporting $16.3 million in liabilities, against $7.5 million in assets. Most of Swann's assets were in real estate pegged for The Falls development, outside of a 2007 BMW and a $1,200 set of golf clubs, according to U.S. Bankruptcy Court records.One of Swann's business partners, Mark A. VanHoose, pleaded guilty in January to one federal charge of conspiracy to make a false statement to a bank. VanHoose conspired with his business partners to created false financial statements that inflated his net worth to persuade Citizens Bank of Edmond to loan him $50,000, according to court documents.Some of land was cleared and graded several years ago, but construction never began on the $40 million Falls development near E. Second Street and Vista Lane in east Edmond. The project was supposed to include 130,000 square feet of office and retail space and 194 condominiums with amenities like granite countertops, gas fireplaces, wet bars and 42-inch plasma TVs.
In court documents, VanHoose wrote that he decided to accept a plea agreement to "(accept responsibility for) my conduct" and because of a "desire to avoid potentially more serious and/or more numerous criminal charges."
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