Paul Gwaz

Con Artist Paul Gwaz Paul Gwazdauskas, Paal Wall, Paul Bamm, Paul Dance, et al has Stolen Money in Real Estate Deals Winston Salem, North Carolina

12th of Mar, 2011 by User343800

State of North Carolina
County of Forsyth
In the General Court of Justice Superior
Court Division
O6 CVS 8739
ERNESTINE G. CHRISCOE, EC INVESTORS,
LLC, JOHN MORRISON, CAROLE MORRISON,
RONALD HORTON, MICHAEL GARRETT,
VINCENT JODER, JASON JODER AND
SCOTT KIXMILLER,
Plaintiffs
vs.
PAUL GWAZ aka PAUL GWAZDAUSKAS,
NEW BUILD LAND TRUST, CCRIC L.L.C.
d/b/a CENTRAL CAROLINA REAL ESTATE
INVESTMENT CLUB,
Defendants
COMPLAINT
Plaintiffs ERNESTINE G. CHRISCOE, EC INVESTORS, LLC, JOHN MORRISON,
CAROLE MORRISON, RONALD HORTON, MICHAEL GARRETT, VINCENT JODER, JASON
JODER AND SCOTT KIXMILLER, hereinafter collectively “Plaintiffs”) by and
through counsel allege the following against Defendant Paul Gwaz, aka
Paul Gwazdauskas (“Defendant Gwaz”), or Defendant CCRIC LLC (“Defendant
CCRIC”), and Defendant New Build Land Trust (Collectively
“Defendants”)” SUMMARY OF CLAIMS
1) In this complaint, Plaintiffs allege that they each individually invested at least three thousand and 00/100 dollars ($3,000.00) in real estate trust “), for the creation of Defendant New Build Land Trust. Defendant Gwaz was the purported trustee for the New Build Land Trust. Plaintiff’s contend that Defendants, through Defendant Gwaz, made fraudulent representations about the real estate investment, that real estate investments sold by Defendant Gwaz are unlicensed securities in violation of the North Carolina Securities Act, that Defendant Gwaz offered and sold the real estate investment by means of materially false and misleading representations and omissions and that Defendants are liable to Plaintiffs under the North Carolina Securities Act, under the North Carolina Unfair and Deceptive Trade
Practices Act, under the North Carolina Uniform Trust Act, and under common law theories of breach of contract, breach of fiduciary duty, fraud and negligent misrepresentation. Plaintiffs seek to recover damages from Defendants in excess of $10,000.00. 2) In a separate lawsuit filed in Guilford County North Carolina by give (5) other investors in the New Build Land Trust, case no. 05CVS9744, an arbitrator found all defendants liable under the North Carolina Securities act and awarded all monies invested interest and attorneys fees. The arbitration award was confirmed by the Presiding Superior Court Judge in Guilford County on September 4, 2006. A copy of the judgment is attached hereto as Exhibit A. GENERAL ALLEGATIONS
3) Plaintiff Ernest G. Chriscoe is a resident of Randolph County, North Carolina. 4) Plaintiff Michael Garrett is a resident of Guilford County, North Carolina. 5) Plaintiff Vincent Joder is a resident of Davie County, North Carolina. 6) Plaintiff Jason Joder is a resident of Guilford County, North Carolina. 7) Plaintiffs John & Carole Morrison are residents of Rowan County, North Carolina. 8) Plaintiff’s Ronald Horton is a resident of Rowan County, North Carolina. 9) Plaintiff EC Investors LLC is a limited liability corporation organized under the laws of North Carolina. 10) Plaintiff Scott Kixmiller is a resident of Guilford County, North Carolina. 11) Defendant Gwaz is a citizen and resident of Forsyth County, North Carolina
.
12) Defendant CCRIC LLC is a corporation organized under the laws of North Carolina with a principal place of business in Forsythe County. Paul Gwaz is the registered agent for CCRIC, LLC. 13) Defendant New Build Land trust is a purported trust with Defendant Gwaz as Trustee. 14) In a letter dated June 22, 2004, from Defendant Gwaz, on Defendant CCRIC’s letterhead, Defendant Gwaz solicited
Plaintiffs to invest in a “Real Estate Trust” whereby investors would contribute 1% for the purchase price of a house and the Trust would purchase the house and then turn and sell the house for a profit. The letter states: By investing 1% of the purchase price of one house, investors can possibly gross 10 times or 1000% their investment in 4-12 months by being a beneficiary of the Trust.
For example: the appraised value of the house is ……………………………$150,000
You invest……………………………………………………………………………………………..$1,500
The discount is……………………………………………………………………………………($15,000)
The Trust puts the contract at…………………………………………………………...$135,000 by July 1, 2004
The Trust sells the home……………………………………………………………………$150,000
Total Gross Gain………………………………………………………………………………….$15,000 15) The June 22, 2004 letters states that Defendant Gwaz was approached by a “major nationwide builder” that needed to quickly sell houses, which were not built at that time, before a shareholder meeting. The letter states that Defendant Gwaz “proposed to them…a huge discount if the houses are sold now” the letter goes on to state that the “nationwide builder” agreed that the trust would sell the houses for full price or more in 4-12 months when the homes are built. A copy of the June 22, letter is attached hereto as Exhibit B. 16) The “nationwide builder” referred to in Defendant Gwaz’s letter is Ryland Homes Inc. (“Ryland Homes”). 17) Ryland Homes did not approach Defendant Gwaz and provide Defendant Gwaz with any “discount” not available to the general public. 18) There was no discount offered specifically to Defendant Gwaz, Defendant CCRIC, or Defendant New Build Land Trust on Defendant Gwaz’s proposal. 19) Defendant Gwaz made similar statements regarding the “discount” from Ryland Homes on or about the night of June 23, 2004, to a gathering held by Defendant CCRIC attended by Plaintiffs. 20) In the June 22, 2004, letter, June 22, 2004, CCRIC meeting, Defendant Gwaz pressured Plaintiffs to make an investment quickly. Defendant Gwaz stated that a Trust had been set up but that investment money was needed to fund the purchases of the homes. 21) As a result of the material misrepresentations of Defendant Gwaz, Plaintiffs each invested in the Trust. 22) In a July 21, or July 22, 2004, letter from Defendant Gwaz in his capacity as trustee of the new Build Land Trust, Defendant Gwaz set for the ownership interest of the Plaintiffs and documents purporting to create the new Build Land Trust. A sample copy of the July 21, 2004, letter is attached hereto as Exhibit C. 23) The New Build Land Trust was never properly created because the transfer of land from the Service Call Trust to the
New Build Land Trust set for the in the Declaration of Revocable Trust documentation never occurred. A copy of the Declaration of Revocable Trust is attached hereto as Exhibit D. 24) Defendant Gwaz entered into numerous contracts for the sale of real estate with Ryland Homes in the name of Defendant CCRIC not Defendant New Build Land Trust. 25) Defendant Gwaz did not enter a single contract for the purchase of real estate on behalf of Defendant New Build Land Trust. 26) Defendant Gwaz did not set up a separate bank account for the New Build Land Trust. 27) Defendant Gwaz, Defendant CCRIC and Defendant new Build Land Trust have commingled funds between defendants and have not separated Plaintiffs investment. 28) Defendant Gwaz or Defendant CCRIC purchased six properties from Ryland Homes. Defendant Gwaz stated that he would be able to buy fifty properties from Ryland Homes. 29) Defendant Gwaz or Defendant CCRIC purchased the following real estate properties. a) $173,000. Defendants did not make payment to Plaintiffs for such profit, did not provide an accounting to Plaintiffs,
but instead kept such profit for Defendants’ own gain. Lot 94 or Wolfetrail Run, Phase 1, Section 1, as shown on map recorded in book 157, at Page 54-55, Guilford County, North Carolina. Lot 94 is known as 4430 Gray Wolf Way, Greensboro, North Carolina 27406 and more particularly described in the deed recorded Book 6218, Page 2680
Guilford County Register of Deeds; b) Lot 117 or Wolfetrail Run, Phase 1, Section 1, as shown on map recorded in book 157, at Page 54-55, Guilford County,
North Carolina. Lot 117 is known as 4502 Gray Wolf Way, Greensboro, North Carolina 27406 and more particularly described in the deed recorded Book 6218, Page 2680 Guilford County Register of Deeds; c) Lot 148 or Wolfetrail Run, Phase 1, Section 1, as shown on map recorded in book 157, at Page 54-55, Guilford County,
North Carolina. Lot 148 is known as 4503 Gray Wolf Way, Greensboro, North Carolina 27406 and more particularly described in the deed recorded Book 6218, Page 2680 Guilford County Register of Deeds; d) Lot 15 or Wolfetrail Run, Phase 1, Section 1, as shown on map recorded in book 157, at Page 54-55, Guilford County, North Carolina. Lot 15 is known as 924 Gray Wolf Way, Greensboro, North Carolina 27406 and more particularly described in the deed recorded Book6218, Page 2680 Guilford County Register of Deeds; e) Lot 127 or Wolfetrail Run, Phase 1, Section 1, as shown on map recorded in book 157, at Page 54-55, Guilford County,
North Carolina. Lot 127 is known as 4425 Gray Wolf Way, Greensboro, North Carolina 27406 and more particularly described in the deed recorded Book 6218, Page 2680 Guilford County Register of Deeds; f) Lot 125 or Wolfetrail Run, Phase 1, Section 1, as shown on map recorded in book 157, at Page 54-55, Guilford County,
North Carolina. Lot 125 is known as 4419 Gray Wolf Way, Greensboro, North Carolina 27406 and more particularly described in the deed recorded Book 6218, Page 2680 Guilford County Register of Deeds;Collectively the above six properties are herein referred to as the “Properties”. 30) Defendant Gwaz or Defendant CCRIC bought Lot 94 or Wolfetrail Run for $153,000 and subsequently sold Lot 94 of
Wolfetrail Run to a third party for $173,000. Defendants did not make payment to Plaintiffs for such profit, did not provide an accounting to Plaintiffs, but instead kept such profit for Defendants’ own gain. 31) Defendant Gwaz or Defendant CCRIC bought Lot 117 of Wolfetrail Run for $131,000 and subsequently sold Lot 117 of Wolfetrail Run to a third party for $136,000. Defendants did not make payment to Plaintiffs for such profit, did not provide an accounting to Plaintiffs, but instead keep for Defendants own gain. 32) Defendant Gwaz acted as the real estate agent for the seller in the sale of Lots 95 and 117 and earned a commission
for the sale to the detriment of the Plaintiffs in violation of his duties as Trustee. 33) Ryland Homes cancelled numerous contracts with Defendant Gwaz, Defendant CCRIC and or Defendant New Build Land Trust for Defendants failure to acquire financing. 34) Plaintiffs combined invested Thirty Thousand Seven Hundred Seventy and 00/100 Dollars ($30,770.00) in Defendants realestate investment. 35) Defendants enticed at least 40 (Forty) other investors and received at least $125,000.00 from the sale of the real
estate trust investment. CLAIMS FOR RELEF
FIRST CLAIM FOR RELIEF
(Sale of Unregistered Securites in Violation of N.C.G.S.78A-24 and 56(a) as against all Defendants) 36) The allegations in paragraphs 1-33 of this complaint are incorporated by reference as if set out fully herein. 37) The real estate investments sold by Defendant Gwaz, Defendant CCRIC and Defendant New Build Land Trust and purchased by plaintiffs were securities within the meaning of the North Carolina Securities Act, N.C.G.S. 78A-2(11). 38) The securities at issue were not registered pursuant to N.C.G.S. 78A-24 and were not exempt from registration
pursuant to N.C.G.S. 78A-16-17. 39) Defendants offered and sold non-registered, non-excempt securities to Plaintiffs in violation of N.C.G.S. 78A-56(a). 40) By reason of defendants unlawful sale of non-registered, non-excempt securities, Plaintiffs are entitled to recover from Defendants in amounts in excess of $10,000.00 to be proven with more particularity at trial. SECOND CLAIM FOR RELIEF
(Sale of Securites by Unlicensed Person in Violation of N.C.G.S.78A-36(a) and 56(a) as against Defendant Gwaz) 41) The allegations in paragraphs 1-38 of this complaint are incprorated by reference as if set out fully herein. 42) The real estate investments sold by Defendant Gwaz and purchased by Plaintiffs were securities with the meaning of the North Carolina Securities Act. 43) Defendant Gwaz was not licensed in North Carolina as a securities salesman or a securities dealer pursuant to N.C.G.S. 78A-36(a). Therefore, Defendant Gwaz’s offer and sale to Plaintiffs was done in violation of N.C.G.S. 78A-56(a) and Plaintiffs are entitled to recover from defendant Gwaz in amounts to be proven with more particularity at trial. THIRD CLAIM OF RELIEF
(Fraudulent sales in violation of N.C.S. 78A-8 and 56(a) as against all Defendants) 44) The allegations in paragraphs 1-41 of this complaint are incorporated by reference as if set out fully herein. 45) The real estate investments sold by Defendant Gwaz, Defendant CCRIC and Defendant new Build Land Trust and purchased by plaintiffs were securities within the meaning of the North Carolian Securities Act. 46) Defendants violated N.C.G.S. 78A-8 and 56(a) in that they directly employed devices, schemes and artifices to defraud Plaintiffs in connection with an offer or sale of securities, directly or indirectly induced Plaintiffs to invest in securities by means of untrue statements of material facts and engaged in transactions, practices and a course of conduct which operated as a fraud an deceit upon Plaintiffs. 47) By reason of the foregoing violations of N.C.G.S. 78A-8 and 78A-56, Plaintiffs are entitled to recover from Defendants their damages, consisting of their investments, plus interest at the legal rate and the costs of this action including attorney’s fees, less the amount of any income Plaintiff’s received on their investment. FOURTH CLAIM FOR RELEIF
(Breach of Fiduciary Duty as against all Defendants) 48) The allegations in paragraphs 1-45 of this complaint are incorporated by reference as if set out fully herein. 49) In the course of dealings between Plaintiffs and Defendant Gwaz, as trustee, and prior to Plaintiff’s investing in the
New Build Land Trust, a relationship of trust and confidence developed between Defendant Gwaz and Plaintiffs. Defendant Gwaz in his capacity as trustee has a fiduciary duty to trust beneficiaries. 50) Defendant Gwaz breached his fiduciary duties as trustee to Plaintiffs for personal profit and therefore Plaintiffs are
entitled to recover from Defendant Gwaz actual and punitive damages in excess of $10,000, in an amount to be determined at trial. FIFTH CLAIM FOR RELIEF
(Fraud as against all Defendants) 51) The allegations in paragraphs 1-48 of this complaint are incorporated by reference as if set out fully herein. 52) Defendants prepared, published, disseminated or presented to Plaintiffs, or caused to be prepared, published, disseminated and presented to Plaintiffs documents and oral statements which were reasonably relied upon by Plaintiffs, which documents and oral statements were material false or misleading concerning the real estate investment contracts offered and sold to Plaintiffs. 53) Defendants knew that the statements were materially false and misleading at the time Defendants prepared, published, disseminated and presented the statements to Plaintiffs, and had the complete truth been disclosed instead of such misrepresentations, Plaintiffs would not have invested in the real estate investment. 54) In carrying out the real estate investment scheme, Defendants acted with intent to defraud in that the Defendants knew where was no basis for the positive representations made to Plaintiffs concerning the safety, liquidity, discount and return on the real estate investment. Defendants made those misrepresentations know the Plaintiffs would rely on the representations in deciding whether to invest in the real estate investment. Defendants knew that Plaintiffs did in fact so rely upon the representations. 55) Plaintiffs reasonably relied on Defendants’ false and misleading statements and did not know, and in the exercise of
reasonable care could not have learned, the truth concerning the investment. Defendants held themselves out as being knowledgeable and experience in regard to real estate investments. 56) By reason of the foregoing misconduct as alleged herein, Defendants are liable to Plaintiffs under the common law theory of fraud, and Plaintiffs are therefore entitled to recover from Defendants actual damages and punitive damages in excess of $10,000.00. SIXTH CLAIM FOR RELIEF
(Negligent Misrepresentation as against all Defendants) 57) The allegations in paragraphs 1-54 of this complaint are incorporated by reference as if set out fully herein. 58) Defendants’ false and misleading statements to Plaintiffs, both written and oral, as alleged herein constitutes negligent misrepresentation. 59) By reason of the foregoing misconduct as alleged herein, Defendants are liable to Plaintiffs in excess of $10,000, in an amount to be proven with more particularity at trial. SEVENTH CLAIM FOR RELIEF
(Constructive Trust as against all Defendants) 60) The allegations in paragraphs 1-57 of this complaint are incorporated by reference as if set out fully herein. 61) Plaintiffs provided funds to Defendants for the express purpose of purchasing real property for Plaintiffs’ benefit and
defendants used Plaintiffs’ funds for the purchase of said real propertyin Defendants’ names. 62) Defendants have unjustly retained the benefit of Plaintiffs’ funds. 63) Defendants have been unjustly enriched by their actions in the purchase of the real property and the retention of the
Plaintiffs’ investment. 64) Plaintiffs have been damaged by Defendants’ breach of duty and Defendants’ continued retention of trust funds. 65) To avoid irreparable harm, the Properties and all profits from the Properties are to impressed in a constructive or
resulting trust with Plaintiffs as beneficiaries. EIGHTH CLAIM FOR RELIEF
(Violation and liability under N.C.G.S. 75-1.1, 16 and 16.1 as against all Defendants) 66) The allegations in paragraphs 1-63 of this complaint are incorporated by reference as if set out fully herein. 67) Defendants engate in unfair or deceptive acts or practices in or affecting commerce within North Carolina. 68) Defendants injured Plaintiffs by reason of conduct violative of N.C.G.S. 75-1.1 and therefore, Plaintiffs are entitled to recover from defendants three times their actual damages and an award of reasonable attorneys’ fees. PRAYER FOR RELIEF
WHEREFORE, having complained of Defendants, Plaintiffs prays the Court for the following relief (but not for duplication of recoveries):
1) On their first, second, and third claims for relief, Plaintiffs seek a judgement that they are entitled to recover from
Defendants their investment of $30,770, plus interest at the legal rate and the costs of this action including attorneys’ fees, less the amount of any income Plaintiffs received on their investment.
2) On their fourth claim for relief, Plaintiffs seek a judgment against Defendants for actual and punitive damages in excess of $10,000.
3) On their fifth claim for relief, Plaintiffs seek a judgment against Defendants for actual damages and punitive damages in excess of $10,000.
4) On their sixth claim for relief, Plaintiffs seek a judgment against Defendants for actual damages and punitive damages in excess of $10,000.
5) On their seventh claim for relief, Plaintiffs seek a judgment against Defendants which imposes a constructive or resulting trust for all profits Defendants have made due to the sale of any real property purchased with Plaintiffs.
6) On their eighth claim for relief, Plaintiffs seek a judgment against Defendants for treble damages, costs and reasonable attorneys’ fees.
7) In addition to all other claims of relief set forth herein, Plaintiffs seek such other and further relief as the Court deems just and proper.
8) Plaintiffs demand a trial by jury on all issues.
Dated this 5th day of December, 2006
_________________________________
Kenneth C. Otis
N.C. Bar No. 28005
Hendrick & Bryant, LLP
723 Coliseum Drive
Winston-Salem, North
Carolina 27103
336-723-7200
336-723-7201 (facsimile)
STATE OF NORTH CAROLINA
COUNTY OF FORSYTH
NOTICE OF SERVICE
OF PROCESS BY
PUBLICATION
IN THE GENERAL
COURT OF JUSTICE
SUPERIOR COURT
DIVISION
06 CVS 8739
ERNESTINE G. CHISCOE, EC
INVESTORS, LLC, JOHN
MORRISON, CAROLE
MORRISON, RONALD HORTON,
MICHAEL GARRETT, VINCENT
JODER, JASON JODER AND SCOTT KIXMILLER
Plaintiffs
vs.
PAUL GWAZ, aka PAUL
GWAZDAUSKAS, NEW BUILD
LAND TRUST, CCRIC, L
LLC dba Central Carolina Real
Estate Investment Club
Defendants
To: Paul Gwaz, the above named defendant:

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