State financial regulators plan to impose fines against Lynden-based Homestead Northwest and CEO Jim Wynstra for allegedly selling millions of dollars in unregistered real estate investments.
The securities division of the Washington State Department of Financial Institutions plans to issue a cease and desist order to Wynstra and impose $100,000 in fines against Wynstra and $10,000 in fines against his administrative assistant Rita Lahman. The securities division will also charge Wynstra for investigative costs totaling about $10,000.
The cease and desist order, once issued, would prevent Homestead Northwest from selling unregistered real estate investments.
Investigators with the securities division alleged that Wynstra sold 1,341 unregistered real estate investments in the Lynden area totaling approximately $121 million from 1989 to 2009, according to the statement of charges filed by the department of financial institutions.
In April 2009, Homestead Northwest ceased making interest payments and paying back most investors, leaving about 350 investors with an estimated $65 million in outstanding investments in the Homestead companies.
“Many of the investors were elderly retirees who depended on the income from their Homestead investments to meet their living expenses,” securities division director Bill Beatty said. “[Homestead Northwest’s] actions have caused great hardship for these investors.”
Securities investigators also claimed Wynstra and Lahman violated the Washington state Securities Act because they were not registered in Washington as securities salespeople, in addition to violating the anti-fraud provision of the Securities Act because they made untrue statements in the process of selling securities.
The Homestead companies, under the direction of Wynstra, offered and sold real estate investments to customers in Lynden starting in the late 90s up until 2008.
Homestead Northwest had also purchased the Birch Bay Waterslides and had planned to develop the property until the economic recession hit.
As of press time, no criminal charges have been filed.