Kristine Guerra

kristine.guerra@indystar.com

On a visit to Indianapolis two years ago, Lesley Pinnick stopped by her old house, which she expected to be empty.

It wasn't.

Cars were parked in the driveway. There were two big dogs in the kitchen. Who were these people? It didn't make sense. The house was supposed to be for sale. As far as she knew, she still owned it.

"So I honked my horn," Pinnick said, and when a woman came out, Pinnick soon learned that her home had been rented without her knowledge.

Pinnick is one of several Indianapolis homeowners who were victimized by a corrupt Realtor, prosecutors say. Her agent, a purported man of God, and, as Pinnick said, a proclaimed "self-made millionaire," is now in jail facing nearly 30 felony counts of forgery, theft and corrupt business influence.

Prosecutors say David Garden, 56, persuaded several financially strapped homeowners like Pinnick to sign over their property titles, leaving them holding the mortgage on houses they no longer owned. He advised them to move out, saying he would arrange a short sale with their bank. But instead, prosecutors say, he rented their homes and kept the money for himself.

In some cases, prosecutors say Garden persuaded homeowners to file for bankruptcy, saying it was in their best interest. But the bankruptcy filing only removed their properties from sheriff's sales and allowed Garden to keep tenants in the homes, continuing to collect payments.

Deputy Prosecutor Cathy McCallum said a lot of the documents he used were legitimate — complete with notarized signatures from Garden and the homeowners.

"The problem is he created those documents with the intent to defraud the victim," McCallum said, adding that there were instances where the signatures were forged.

The Indiana Real Estate Commission revoked Garden's license in April. He was arrested last month and is being held on a $50,000 bond in Marion County Jail. A bond review hearing is scheduled for June 20.

Garden declined an interview request from The Indianapolis Star. If the allegations are true, his case stands as a warning to financially desperate families. Such scams occasionally crop up, experts say, when jobs are scarce and foreclosure rates rise, as they did during the recent housing market crash. And Indianapolis, whose foreclosure rate is twice the national average, may be particularly vulnerable.

Steve Hofer, an Indianapolis consumer lawyer, calls them "We Buy Homes" scams.

And his advice to homeowners who are getting behind is simple: Don't panic. Or you could end up making a bad situation worse.

'He spoke of God a lot'

Pinnick bought the house on West Morris Street from Garden in 2008. She said he seemed like an honest man.

"I thought he was a Christian man," Pinnick said. "He spoke of God a lot."

She decided to put it up for sale three years later. She had gotten behind on her mortgage because of expensive repairs to the house, which flooded every time it rained.

"I had no clue as to how I was going to get out of it," she said.

Her lender told her that a short sale was her best option. In a short sale, a home is sold for less than the amount owed on the mortgage. Such a sale must be approved by the lender. Pinnick reached out to Garden.

Garden offered to handle the process for her. She signed some papers, but Pinnick said Garden rarely updated her on the sale.

In 2011, she was forced to move back to Tennessee after losing her job in Indianapolis.

Then, on the visit to Indy to see her mother, Pinnick met Linda Rees, who was living in her house. Rees was paying Garden $650 a month in rent, and believed she would own the house in two years as part of a rent-to-own agreement.

The constant flooding had caused the wooden floor to rot and Rees said she shouldered the cost of repairs.

After discovering Rees had been living in her home, Pinnick called her lender to inquire about the status of the short sale. A representative said the bank thought Pinnick had called a few months earlier to stop the sale, documents said. Pinnick said she never made such a call.

"I was livid!" Pinnick said. "I called his office as I had done months and months before with no return calls."

A pattern of criminal activity

Charges against Garden were filed after a two-year investigation by the Marion County prosecutor's office and the Indianapolis Metropolitan Police Department. The Indiana attorney general's office had received 45 consumer complaints against Garden.

Court documents name at least 20 victims. Some of his alleged victims are homeowners like Pinnick; others are renters like Rees.

McCallum, the prosecutor, said she does not know where the rent payments went, but there's little evidence that Garden lived a wealthy lifestyle. He operated his real estate business out of his Southside home. Records show he filed for bankruptcy several times, the most recent filing coming earlier this year.

According to a probable cause affidavit, Garden convinced the homeowners to sign quit claim deeds, which, Garden said was part of the short sale process. The result was he gained control of the properties.

Garden also told the homeowners to move out of the houses, saying lenders would want that, documents said. Documents said he listed some of the homes as "rent to own" on Craigslist.

Meanwhile, mortgages remained under the homeowners' names as they got farther and farther behind on payments.

"They knew they were getting monthly bills, but they thought the bank was involved in the short sale," McCallum said. "They thought Garden had received approval from the bank."

Some owners ended up renting other houses that Garden had taken control of, documents said. Homeowners later learned that no short sales were approved. In some cases, McCallum said, they were never initiated.

Last March — two months before his arrest — Garden posted a lengthy statement on his Facebook page. His said he's not a scam artist and he wants to be "judged by truth and facts, not vicious lies."

"I have been in business of buying and selling homes since 1979," he wrote. "I have helped hundreds of folks realize their dream of becoming happy homeowners."

He called the complaints made to the attorney general's office "frivolous" and asked those who feel he has wronged them to contact him so they can resolve their issues peacefully.

He also wrote he had been recently baptized and he wants to forgive and be forgiven.

"I am not perfect, and I have made mistakes," he wrote, "that is being human."

'A predatory scheme'

Experts say they've seen real estate scams come and go, and the way people are scammed tends to vary.

The common theme is the involvement of homes in or nearing foreclosure. Hofer, a member of the National Association of Consumer Advocates, said the "home apocalypse"a few years ago — when a lot of people were behind on their mortgages and desperate — was the last time he saw an increase in real estate scams.

"It's really a predatory scheme. The person kind of identifies the area of weakness of the consumer and hangs on that until they can be sure of the kill," Hofer said. "What they're looking for is people who are willing to give up their houses for nothing but a promise."

According to a recent survey by the Washington, D.C.-based Lawyers' Committee for Civil Rights Under Law, about 55 percent of homeowners in Indiana said they have dealt with scammers who either asked them to stop making loan payments or to sign over property titles to them.

Andrew Pizor, an attorney for the Washington, D.C.-based National Consumer Law Center, said while real estate scams are not uncommon, he has not heard of a scam that involves renting homes without the homeowners' knowledge or consent.

"That's kind of a twist," Pizor said. "Usually, what they do is resell it or get another mortgage on the house, pocket the equity and disappear."

Hofer said high foreclosure rates create an environment conducive for real estate scams. That's a concern in Indiana.

According to a RealtyTrac, one in every 823 Indiana homes were foreclosed in May. Indianapolis' foreclosure rate is one in every 617 homes — nearly twice the national average of one in 1,199.

Experts advise homeowners to not act rashly.

Don't feel you need to move out right away, Hofer said. Homeowners have the right to stay in their homes until they are sold. And, don't immediately trust anyone who offers to help you avoid foreclosure.

"Pretty much any individual or company that says they can help you with mortgage problems should be taken with a grain of salt," Pizor said, "Don't trust ads unless they're run by a government agency. Billboard signs, radio ads, they're usually scams."

Hofer agreed, saying homeowners shouldn't trust intermediaries. Those usually hint fraud, he said, and are often unnecessary in short sale transactions.

Hofer said other resources are available. People who fall behind on their mortgages can contact the Indiana Foreclosure Prevention Network, a non-profit agency with trained housing counselors. Those who prefer to not deal with an agency can contact the loss mitigation department of their mortgage lenders.

Homeowners also can contact the local office of the U.S. Department of Housing and Urban Development, which has trained counselors. Some private attorneys and legal aid agencies offer counseling for free or at a low cost, Pizor said.

'No resolution'

McCallum said most of Garden's alleged victims were left in a worse financial position than they were in before they met Garden.

"Some were just completely ripped off," she said. "There was no resolution for them."

McCallum said the prosecutor's office will try to get restitution for the victims. She said she does not know what happened to the houses that Garden took over. She said some likely had been foreclosed and others may still be going through foreclosure.

Pinnick's former one-story Southwestside home was sold at a sheriff's sale, according to the Marion County assessor's office, and was later bought and remodeled by BLT Homes, a company that rents out houses. The four-bedroom home is now available for rent for $950 a month.

Pinnick said she feels badly for the other families who have been in the same situation.

"There were families with young children that he did this to. That gets me emotional every time I think about it," she said. "Me? I can get over financial obstacles and move on."

She said she has since started school to become a paralegal. Maybe one day, she said, she'll become a lawyer.

Contact Star reporter Kristine Guerra at (317) 444-6209. Follow her on Twitter: @kristine_guerra