HUD Archives: News Releases

HUD No. 04-077
Brian Sullivan
(202) 708-0685 x 7527

For Release
August 5, 2004

Court-ordered fund established to help consumers victimized in land scam

WASHINGTON - A federal judge in Norfolk, Virginia this week ruled that three real estate sales agents working for a Virginia-based land developer participated in an elaborate land scam that fleeced an estimated $30 million from more than 1,300 people in 29 states and the District of Columbia. Operating under the name Buyers Source, the company and its agents victimized more than 500 senior citizens. In four cases, the developers targeted people over one hundred years old.

Jeffrey Votaw of Bridgeport, West Virginia; George Haydu of Clarkesville, Georgia; and Dawn Mock of Norfolk, Virginia are barred from engaging in fraudulent trade practices and were ordered to pay over $500,000. The Court also ordered Buyers Source and five other sales agents to pay more than $31 million into the compensation fund. Federal Judge Henry C. Morgan, Jr. established the fund and appointed Donna J. Hall, an attorney with Troutman Sanders LLP, to manage it and collect the judgments.

Following the ruling, HUD announced settlements with six other individuals who owned and operated Buyers Source. Under the terms of these agreements, the owners will pay up to $1 million into the fund and, in the case of one individual, will be banned from selling real estate for life. Should the developers fail to satisfy these terms, HUD will seize their homes and other personal assets.

"Scams that bilk people out of their life's savings and prey upon senior citizens will not be tolerated," said HUD Secretary Alphonso Jackson. "The court-ordered victims' fund and monetary settlements HUD negotiated will help to compensate people for the nightmare they've been living."

Seven months ago, HUD announced agreements with two Massachusetts-based lenders that financed these developers - Litchfield Financial Corporation and Developer Finance Corporation agreed to offer various loan cancellation and restructuring options to save the victims as much $38 million. Taken together, today's settlements and those involving the lenders are expected to help reimburse many of these victims.

Background on Buyers Source

Last year, HUD and the Justice Department filed a 32-page lawsuit against Buyers Source, accusing the company and its agents of violating the Interstate Land Sales Full Disclosure Act. HUD immediately shut down their operations and froze the personal and business assets of several defendants, including alleged ringleaders, Lannie "Mex" Campbell and Henry Montgomery.

HUD claims Buyers Source, and other similarly named businesses, sold more than 1,000 parcels of land in Florida, South Carolina, Ohio, Arkansas, Texas and Missouri at prices that far exceeded their value, sometimes by as much as 3,000 percent. In some cases, Buyers Source sold property that the company did not own. The Department alleged Buyers Source used a direct mail and telemarketing campaign, offering to purchase timeshares from their owners for cash with the false promise of tremendous profit and even gifts should the victims agree to purchase lots of land.

Each of the developers is prohibited from ever using timeshares as a marketing inducement in the course of selling undeveloped lots of land. To read the settlement agreements or to obtain additional information about the victim compensation fund, visit HUD's website. The following is a summary of some of the settlement agreements announced today:

  • Lannie "Mex" Campbell of Portsmouth, Virginia, head of Buyers Source sales operations, agreed to pay a maximum $282,000, forfeit any undisclosed assets up to $3 million, and is prohibited from selling any form of real estate for the rest of his life.

  • Tom Brewer of Suffolk, Virginia, President of Buyers Source, agreed to pay approximately $212,500 in cash and property and forfeit any undisclosed assets up to $3 million.

  • Frederick Blake of Newport News, Virginia in charge of Buyers Source finances, agreed to pay up to $167,000 and forfeit any undisclosed assets up to $3 million.

  • Susan Gard of Suffolk, Virginia, co-owner and President of Belmont Properties, agreed to pay as much as $250,000, forfeit any undisclosed assets up to $1 million, and is permanently prohibited from selling lots in subdivisions for the rest of her life.

  • Henry (in charge of marketing for Buyers Source) and Susan Montgomery (partner), of Howard, Ohio, agreed to pay $105,000 and forfeit any undisclosed assets up to $1 million.

Buyers Source obtained mailing lists of persons who contacted timeshare resale agencies seeking to sell their timeshares. The company would then send these owners a post card offering to buy their shares "for top dollar" and "without any tricks or gimmicks." Consumers would be directed to meet with Buyers Source salespersons in motel rooms where they were told they had to purchase land from Buyers Source in exchange for completing the transaction. The company would sell lots of land for as much as $32,000 after paying only $1,000-to-$5,000 to acquire the lots only weeks earlier.

When victims of this timeshare exchange expressed concerns that they could not afford the property, Buyers Source's salespersons used high-pressure sales tactics and promised consumers the lots were excellent investment opportunities capable of generating substantial profits within 18 months. Victims were also instructed to use the proceeds from the sale of their timeshares to make payments on the lots. HUD estimates that the average consumer in this scheme would have paid $60,000 in principal and interest for a lot worth between $1,000 and $8,000.

HUD also alleged Buyers Source failed to properly register the properties with the Department and failed to give consumers property reports that describe the condition of the land as required under the Interstate Land Sales Full Disclosure Act.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and

Content Archived: April 22, 2010