FTC: Boreyko might have mislead Bank of America
Two days ago BehindMLM reported BK Boreyko’s request for an expedited decision on his motion to short sell a property.
The court granted the request, with the motion moving fast towards a January 15th decision.
Part of the discourse of the motion has seen the FTC file an objection to the sale, with the regulator questioning Boryeko’s honesty with Bank of America.
The specific wording of the FTC’s objection sees the regulator concerned
about whether the representations Defendant Boreyko made to Bank of America to obtain approval of the sale were truthful and complete.
The FTC’s concern stems from the fact that, following the granting of a preliminary injunction in September, 2015, Boreyko (right) has
- liquidated his interest in Arizona Production & Packaging, a purportedly profitable and growing venture, for an unknown sum
- moved the Court to permit him sell his interest in the related real property holding company, AZPACK Properties, LLC
- made a $1,031,500 “loan” to Vemma, which continues to operate at a loss
With respect to the proposed short sale of the property in question now, the FTC reveal that ‘Boreyko stopped making payments on the Property in September 2015‘.
The earnest money check for the proposed transaction is dated November 17, and the residential purchase contract was executed on December 2 and 3.
However, Defendant Boreyko’s counsel first requested a stipulation to the sale at 11:48 a.m. on Friday, January 8, and requested a response by Monday, January 11 at noon.
Why Boreyko contacted the FTC over a month after the purchase contract was executed is unclear. Ditto why he demanded a response from the FTC within one business day.
Despite being given only one business day to review a transaction that had been contemplated for over seven weeks, the FTC made a good faith effort to review the materials provided by Defendant Boreyko’s counsel.
However, as of January 11, the FTC still had unresolved concerns about the veracity and completeness of Defendant Boreyko’s representations to Bank of America in support of his request for short sale approval
The FTC is concerned that Defendant Borekyo misrepresented his financial condition when claiming hardship to Bank of America.
The hardship letter Defendant Boreyko sent to the bank on December 9 informed the bank of the August 2015 asset freeze in this matter and vaguely stated that Boreyko was left without an income.
However, as noted above, the asset freeze was lifted by the preliminary injunction Order in September.
Moreover, following entry of the Order, Boreyko liquidated his valuable interest in Arizona Production & Packaging and made the $1,031,500 “loan” to Vemma.
Meanwhile, despite having available assets, Defendant Boreyko continued to fail to make payments on the Property and claimed to Bank of America that he was unable to make such payments. That claim appears to have been false.
Basically Boreyko claimed hardship to the Bank of America to gain approval of the short sale, which the FTC are calling out as baloney.
As opposed to being unable to make payments on the property, Boreyko instead chose not to – as evidenced by only his real estate assets being frozen and access to “valuable assets”.
Contend the FTC,
The lifting of the asset freeze and the availability of other, valuable assets would be relevant to the bank when deciding whether to give Defendant Boreyko authority to sell the Property by short sale and hold him harmless from a deficiency judgment.
However, Defendant Boreyko did not disclose these facts in his hardship letter and it is unclear whether the bank would have known them from any other source.
The FTC recognizes that the proposed transaction could theoretically decrease Defendant Boreyko’s indebtedness by nearly $550,000.
However, the FTC cannot stipulate to the transaction if it was obtained through deceptive means.
At this point you’re probably wondering why the FTC, Boreyko and Bank of America haven’t sat down to clear all of this up.
In an effort to resolve its concerns, the FTC requested additional statements or a conference with a bank representative to determine whether Bank of America was aware that the asset freeze was lifted and that Defendant Boreyko had access to significant funds.
However, Defendant Boreyko has failed to provide such materials or arrange for such a conference.
Instead, Boreyko has filed his motion and requested the court make an expedited ruling on the matter.
Perhaps with the granting of an expedited decision, Boreyko figured nobody would look too closely into the proposed sale.
With the FTC’s objection taken into consideration and Boreyko having filed ‘proof of the amount currently outstanding on all mortgages for the property, as well as documents outlining the terms of the short sale, including sales price, and a statement under oath that there is no or negative equity in said property‘ earlier today (under seal as requested by the court), a decision on the matter is expected within twenty-four hours.
Did Boreyko mislead Bank of America to push the sale through? Was the delay in contacting the FTC at the last-minute co-incidence or entirely intentional?
Hopefully we’ll get an answer soon…
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the FTC’s response to BK Boreyko’s “Motion for Order of Sale”.
Update 16th January 2016 – The court granted Boreyko’s proposed short sale today, subject to final approval by Bank of America.