House flip scheme tricks investors into hard money loans

A Chicago home-flipping venture is under fire for allegedly defrauding small investors and preying on them via social media.

Several people are suing iFlip Chicago, accusing it of luring inexperienced investors into hard money loans, WMAQ reports. The alleged scheme has had a severe financial impact on dozens of Chicago families, including a licensed real estate agent and the family of iFlip's co-founder.

The company's social media accounts promoted a bootcamp for prospective investors. Two women who attended the bootcamp said that iFlip co-founder Ramo Bey invited them to join iFlip's venture program.

The program was supposed to provide them with advance funds and identify distressed properties, they told the outlet. iFlip allegedly used funds from financial institutions to purchase and renovate properties, then oversaw the projects and received 30% of the profits from home sales.

“You don't have to worry about hiring a contractor because they have a contract. You don't have to worry about a real estate attorney. You don't have to worry about these things. They have all these relationships. ,” said Ameera Hamid, an emergency room doctor who said she was scammed by her cousin Bey.

In reality, she said, she signed a high-interest, short-term loan from Envision Funding. The victims said Bey told Hamid that he needed to put his name on the loan for the lender to approve it.

The Woodlawn home was identified by iFlip as being purchased separately by Haamid and real estate agent Tatianna Barnett, who each hired real estate attorney Alex Ranjha to represent them at closing. However, Ranjha, who was listed as a team member on iFlip's website, did not warn Bey that the documents he signed meant he would become indebted to Bey.

The “cross-default and cross-collateralization” clause meant that it would be tied to Bay's other debts owed by Envision Funding.

“This essentially states that if someone signing this loan has more accounts with this lender, they can use your payment to satisfy the past due balance. And Ramo had several past due balances,” Hamid said.

Mr Hamid and Mr Barnett provided financial documents showing Mr Bey's debts had been charged to their accounts.

They said they have never received funds for rehabilitation projects and the houses they purchased remain vacant and dilapidated. Barnett said he lost $169,000.

Hamid said he could lose hundreds of thousands of dollars and faces bankruptcy and foreclosure. Meanwhile, debt continues to grow.

“The December repayment letter more or less said we owed the loan company $315,000, and that was how we made ends meet. But the next repayment letter so we could refinance externally. When we asked for a refund, we were told that the lender had added an additional $60,000 in debt from a property that had no connection to us, so we owed $375,000,” Hamid said.

Mr. Barnett and Mr. Hamid sued iFLIP, Ranjha and Envision Funding for alleged consumer fraud, conspiracy to defraud, breach of contract and breach of fiduciary duty.

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