Banner: Maryland Attorney General J. Joseph Curran, Jr.
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For Immediate Release
October 25, 2002
Contact: Sean Caine, 410-576-6357


Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division has issued a final Order in the case of four men and five companies charged with misleading and deceiving consumers in numerous real estate transactions in Baltimore. Real estate sellers and lenders Lee M. Shpritz and Lee P. Woody III, appraisers John Morgan and Michael Almony, and the companies American Skycorp, Inc., L&R Properties, Inc., West Star Properties, Inc., West Star Properties, LLC, and Almony Appraisal Services, were ordered to cease violating the Consumer Protection Act, pay restitution to consumers, and pay civil penalties and the costs of the Division. The total amount of the restitution will exceed $2 million.

Curran's Consumer Protection Division found that the men and their companies violated Maryland law when they used deceptive and misleading practices to sell homes to consumers, usually first-time home buyers with poor credit, a practice known as "flipping." They sold homes at inflated prices based on fraudulent appraisals to consumers who could not afford them. Many of those consumers later defaulted on their mortgage loans.

"The practices of these men hurt these homebuyers terribly, and also created significant problems for the neighborhoods in which the homes are located," said Curran. "As sellers, lenders and appraisers, they had a duty to adhere to standards designed to protect the public. Instead, they took advantage of a vulnerable population for their personal gain."

The Division found that Shpritz, Woody and their companies had engaged in a number of unfair and deceptive trade practices, including: advising consumers to sign blank or partially blank documents, and then filling them in with false income and asset information later; misrepresenting the purchase price of a home to consumers and then increasing it at settlement; advising consumers to falsify gift letters; misleading consumers about home inspections and appraisals; failing to disclose that Shpritz was both a seller of a property and the loan officer for the lender; approving FHA loans even though consumers had unacceptable credit histories and debt-to-income ratios and using appraisals they knew to be inaccurate.

Morgan and Almony were found to have provided misleading appraisals by using comparable sales that were not in the described neighborhood, omitting appropriate comparable sales, making misleading statements about the neighborhood predominant values, and failing to report recent prior sales of the property in question.

The Order imposes a number of requirements with which Shpritz, Woody, Morgan and Almony must comply if they are to engage in any future residential real estate transactions or appraisals in Maryland. Among them:

Lee Shpritz and his companies, L&R Properties, Inc., West Star Properties, Inc., and West Star Properties must disclose all material facts to buyers; explain to consumers the difference between an appraisal and a home inspection and urge them to hire their own home inspector; not act as both a seller of a property and as a mortgage broker or lender for the same transaction; and make any sale to a first-time homebuyer or one that has a loan insured or financed by the FHA or Veterans Administration contingent on the buyer obtaining homeownership counseling.

Woody and American Skycorp must reject any loan that does not meet the underwriting criteria established by the FHA or VA, as applicable. They must maintain a list of at least 10 HUD-approved appraisers and sequentially select appraisers from this list to conduct appraisals, and deliver a copy of any appraisal report to the prospective buyer promptly after receiving it.

Morgan and Almony are required to report truthfully on prior sales of the property in the last year, report on any sale that occurred within one year and located within one-quarter mile and within the neighborhood boundaries of the property stated in their appraisal report.

The four men and their companies are ordered to pay, within 30 days, restitution of up to $2,272,801.50. They were also ordered to pay civil penalties totaling $264,000 and costs. The Consumer Protection Division will distribute the restitution money to injured consumers through a claims process based on company records.




Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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