Tuesday, April 05, 2011
Lyn Peters, Director of Communications
PH (360) 349-8501 firstname.lastname@example.org
Suzanne Sarason, Chief of Enforcement, Division of Securities
PH (360) 902-8734 email@example.com
Statement of Charges: http://dfi.wa.gov/sd/orders/S-09-046-11-SC01.pdf
FOR IMMEDIATE RELEASE:
Washington State Department of Financial Institutions Issues Statement of Charges Against Homestead Northwest
James Wynstra and the Homestead Companies are accused of selling unregistered securities
OLYMPIA – The Securities Division of the Washington State Department of Financial Institutions (DFI) entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, Impose Fines, and Recover Costs against Homestead Northwest, Inc., its Chief Executive Officer James Wynstra, salesperson Rita Lahman, and related companies.
DFI alleges that beginning in 1989 and lasting until at least 2009, Homestead Northwest, Inc. and related companies offered and sold an estimated $121 million in unregistered real estate investments in the State of Washington. The investments typically were promissory notes which offered 8% interest. The Homestead Companies marketed the investments as secure and backed by deeds of trust. In April 2009, the Homestead Companies abruptly stopped making interest payments to investors and failed to redeem their promissory notes.
“Many of the investors were elderly retirees who depended on the income from their Homestead investments to meet their living expenses,” DFI Division of Securities Director Bill Beatty said. “Respondents actions have caused great hardship for these investors.”
DFI charges the Respondents with violating the registration provisions of the Securities Act of Washington. In addition, DFI charges the Respondents with violating the anti-fraud provision of the Securities Act.
DFI alleges that Respondents failed to disclose material information to investors, such as:
- The intended use of the investment proceeds;
- Information about the properties that were purported to secure the investments; and
- Financial information about the Homestead Companies and their ability to pay the interest promised to investors.
DFI notified James Wynstra that it intends to order him to pay a fine of $100,000 and to pay $10,000 to DFI for investigation costs. DFI notified Rita Lahman that it intends to order her to pay a fine of $10,000. The Respondents have a right to request a hearing on the allegations made by DFI.
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.
About the Securities Division
www.dfi.wa.gov/sd ▪ 360.902.8760 ▪ 877.746-4334
The Division of Securities regulates securities investments, franchises, business opportunities, and off-exchange commodities sold in Washington and the firms and individuals that sell these products or provide investment advice. The Division handles complaints, conducts investigations, and takes appropriate enforcement actions to protect investors and combat fraud.