Laurelmor and The Ginn Company Lawsuit

Laurelmor, a Ginn Resort Property, is one of the largest mountain slope communities ever planned for Western North Carolina. Laurelmor, is located in the Blue Ridge Mountains and land for the project encompasses 6000 plus acres in Watauga and Wilkes Counties. The Ginn Company advertises 1500 home sites for sale in the resort.

History of the Ginn Company Lawsuit

A class action lawsuit was filed against The Ginn Company on May 29, 2007. This nine-count lawsuit was filed in U.S. District Court in Michigan. The $60 million Federal lawsuit has been moved to the Middle District of Florida in Jacksonville. The following article from LawyersandSettlements.com provides a summary of the legal complaints:

A class action lawsuit has been filed against the real estate venture for allegedly misleading and defrauding consumers in property purchases. The lawsuit was filed in the United States District Court for the Eastern District of Michigan on behalf of all those who purchased land an homes from The Ginn Company and alleges the company has breached agreements and violated several laws, including the Interstate Land Sales Full Disclosure Act and the Securities and Exchange Act of 1934. The suit claims Ginn solicited plaintiffs to purchase vacant residential lots in Florida by sending brochures and marketing materials advertising the lots. Purchasers were allegedly promised large returns for their investment and claim initial purchasers were actually paid the promised returns which attracted additional purchasers. The lawsuit alleges Ginn created a complicated web of companies to be used in marketing, soliciting, and promoting properties to potential purchasers in order to avoid scrutiny of US regulators. The case also claims Ginn perpetuated a ponzi scheme where returns to investors were not financed through the success of the underlying business venture, but were taken from principle sums of newly attracted purchasers. In all, the suit is alleging nine counts, namely violation of Interstate Land Sales Act failure to provide property report; violation of the interstate Land Sales Act Fraud and Deceit upon purchasers; violation of securities and exchange rules registration, reporting and disclosure requirement; false representation under Securities Exchange Act of 1934; "Ponzi Scheme" and violation of section 10(b) of the Securities and Exchange Act; violation of State Securities laws; fraudulent misrepresentation; innocent representation; and violation of Racketeer Influenced and Corrupt Organizations Act.

For additional information please see the following articles:

“The Ginn Co.’s federal suit moves to Fla.” Orlando Business Journal March 14, 2008
“Ginn fights lawsuits and other woes” Orlando Sentinel.com October 5, 2007

Will this lawsuit affect the financial well being of The Ginn Company and their plans for Laurelmor? Should this lawsuit be disclosed to current and future Laurelmor investors?

For additional information please visit ginnlawsuit.com

In response to the article "Ginn fights lawsuits, other woes" a Realtor wrote the following to the Orlando Sentinel on January 11, 2008:

These deals should never have happened, how can Ginn sell lots for $1.2m and then 2 years later these same lots will not sell for $300,000 these deals would not have gone through if the Appraisers done their jobs and the Banks had looked at the prices of these lots, how can they triple in months. The Investors have been taken to the cleaners by the Ginn Company, Ginn Salesman and Appraisers and certain Mortgage Brokers working for Crown Bank, Suntrust and Fifth Third Bank, who between them have lost millions and millions. It is one of the biggest land fraud scams I have ever witnessed and there is another law suit in the pipeline with up to 200 plaintiffs. There isn't a Bank out there now who will fund a Ginn Property.