SEATTLE-- On a sunny June day, movers are dismantling a once booming real estate empire.
We have been instructed that we can t give out any information, or talk or answer questions, said Sue Young, of The Stratford Group Ltd as work crews carted away boxes of receipts and records for dozens of properties managed by the company.
No one saw the storm coming.For nearly three decades, The Stratford Group offered an apparently winning formula for ambitious investors looking to start small and go big.
You could see yourself start in a four-plex and wind up in a 20-unit building or commercial building, said Mark McCarthy of Lynnwood.
Like his parents before him, McCarthy invested thousands of dollars, trusting Stratford s track record. Consistent growth, working the market, selling, knowing when to move, is how McCarthy described Stratford s strategy.
The brain behind the operation was Stratford s president, 61-year-old Wayne Boswell of Seattle.
Boswell s view of real estate seemed as rosy as the picture from his fifth floor window in a Lake Union high-rise.
He was a very charismatic person, really good with numbers, very sharp, McCarthy said, I had a lot of confidence in him.
Boswell delivered, brokering the sale of apartments, commercial buildings, and strip malls, from Washington to California, for dozens of buyers.Following the sales, Boswell managed many of the properties for a fee.
He would collect the rents, pay the mortgage and bills that needed to be paid and send you a monthly statement with a check for the excess, McCarthy said.
Those regular statements gave McCarthy and others confidence that their investments were sound.
He was very, very good, for many, many years, McCarthy said.
In fact, investors marveled at Boswell's ability to find high value properties--in a sagging real estate market.
But on April 1, a secretary arriving for work discovered a disturbing note on her desk.In it, Boswell explained that bad investments had left him bankrupt.According to police the note contained instructions on where to find his body.
Police found him in his car, with two bullet wounds to the chest, in the parking garage of the $1.5 million condo he shared with his wife overlooking the Seattle waterfront.
According to the police report, Boswell wrote that his bad investments and trying to protect the clients he had sold bad investments to had bankrupted him. He went on to say that he had taken the dishonorable path out of this world.
The note contained detailed instructions on how to reach his wife, who was traveling, even who to contact to feed his cat.
The King County Medical Examiner ruled the death a suicide.
Those who knew Boswell say his death reflected the way he lived his life, meticulous and in control, which is why they found it baffling that he left no information about how to untangle the financial quagmire he'd created.
The reserve funds Boswell was supposed to be holding on approximately 98 properties was gone.
Attorney Ken Hart, who represents a group of investors with properties in Puyallup, Bellingham and Seattle, which were managed by Boswell & The Stratford Group.Following a court hearing Monday, we asked Hart if his clients were blindsided by the company s collapse.
That s safe to say, Hart said.
After Boswell s suicide, his wife tried to sort out the mess.In a letter to clients dated April 22, 2011 Cheryl Boswell wrote: My review of Stratford s financial condition has not been pleasant...as I have now discovered and confirmed rents and other funds were used for inappropriate purposes. Cheryl Boswell said The trust account has been depleted...the shortfall is substantial.
A court ordered receiver took over and a forensic accountant brought in to trace the money discovered that funds from nearly a hundred properties that should have been kept separate hand been mixed into one general account that was nearly empty.The receiver estimated the shortfall at over $1 million.
Attorneys for some of Stratford s former clients appeared in King County Superior Court this week, but Commissioner Carlos Velategui refused to open the door to legal claims against Stratford until it's determined there's anything to collect.
That's wasteful of judicial time and it's wasteful of your clients money, Velategui said.
What no one s been able to figure out is where the $1 million went.Did it go to support Boswell s luxury lifestyle?Or was it paid out to clients as profits that never really existed?
I feel deceived and I feel frustrated.I feel upset that I haven t gotten more answers about what had gone on, said McCarthy.McCarthy estimates he and his co-investors lost approximately $32,000 on the property they own in Folsom, California, which was being managed by Stratford.
The only man who could explain the mystery left...without offering any answers.
I think he ran out of money and started looking for his exit strategy, McCarthy said.
Today a judge approved the sale of some of Stratford's property management contracts to another company, which could bring in several hundred thousand dollars.But it won't begin to cover all of the losses by the dozens of investors all over the west coast.
The court is giving the receiver an additional 60 days to untangle the accounts.While many clients lost money, others may have been unjustly enriched receiving payments from The Stratford Group at the expense of other clients and may be ordered to re-pay funds.
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