More than 130 plaintiffs who sued Investment Properties of Minnesota, alleging that the company duped them in a real estate scheme, have been granted $22.7 million in damages under an order filed last week in Hennepin County District Court.
A court-appointed special master determined the damages, which were several times more than the $3.5 million in losses originally estimated by the Minnesota Attorney General's Office. The office sued the Brooklyn Park-based investment company in 2006, but it later asked to be dismissed from the case after the plaintiffs obtained private counsel.
The plaintiffs say Investment Properties of Minnesota (IPM) and several related entities solicited funds for Illinois and Florida real estate ventures during investment seminars in 2004 and 2005. Investors claim they were promised returns of 30 to 35 percent. Their suit alleged that IPM failed to make the investments and defaulted on the loans.
Last week's order by Judge Denise Reilly said IPM principals Joseph Cole and Jim Abbott took some of the money for their personal use. The order says that according to IPM's check ledgers, Abbott withdrew almost $500,000 and Cole withdrew nearly $42,000 from July 2004 to March 2005.
A court-appointed receiver earlier reported that some of the money was diverted into what turned out to be a mammoth investment scheme run by Travis Correll in Atlanta. Correll has admitted to operating a pyramid scheme and has been sentenced to 12 years in federal prison.
"It's good to have gotten this order, but collecting the money is another matter," said Robert Bauer, an Apple Valley attorney for 134 victims of the scheme. "We will take every reasonable step to find out where it is located," he said.
Bauer said his clients will seek a motion that would prevent Cole, Abbott and two other principals, Geoffrey and Nancy Thompson, from having the judgments against them discharged in bankruptcy court.
Attorneys for Cole and the Thompsons could not be reached for comment Monday. Abbott's attorney, Konstandinos Nicklow, said his client "is an innocent victim who has been caught up" in the scheme.
Susan Feyder • 612-673-1723