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.