Carolina Beach, N.C.

TEXARKANA, Texas – In 2005, two Arkansas men thought they were investing $1.65 million in a hot deal in North Carolina to develop condominiums on the last available beachfront on the entire East Coast.

The men are now claiming that, unknown to them, they had handed over their money to a man with previous convictions for fraud and money laundering.

With the beachfront property still undeveloped after three years, the investors have filed a lawsuit to try to recoup the funds they put into the development scheme, court papers say.

Alleging securities fraud, Richard Henry and Greg Henry filed suit against Bruce West Sr., Bruce West Jr., Jr. Realty Corp., D. Aaron Buck, Laura Manning, The Manning Companies, Carolina Jubilee Ltd., Carolina Lakeview Ltd., Jubilee Park at Lakeview Beach LLC, and Lakeview at Carolina Beach LLC on Oct. 3 in the Texarkana Division of the Eastern District of Texas.

The plaintiffs allege that in March 2005, their friend Aaron Buck approached them about investing in two condominium projects on the coast of North Carolina, the "Lakeview Project" and the "Jubilee Project."

The Henrys claim Buck told them the properties being developed were in great demand as they were located on the last available beachfront on the entire East Coast and condos were already being pre-sold. The plaintiffs say they were told the projects would be headed up by companies located in Texas.

The investors state they were led to believe that Bruce West Sr. was not charging a developer's fee because the projects were to be "family projects" and were told West had "never lost money on a deal."

Buck told the Henrys that all the investment for the projects had already been secured but because they were friends they would be "allowed to invest" and "get in on the ground floor," the plaintiffs allege.

Shortly thereafter, the men traveled to North Carolina to view the projects and discovered that construction had not been started on either project.

The Henrys claim they did not learn until much later that Bruce West Sr., who was "heading up" the project, had been convicted of 10 counts of bankruptcy fraud, 11 counts of money laundering, and one count of conspiracy to commit bankruptcy fraud.

According to the plaintiffs' original petition, in addition to purchasing limited partnerships in the condominium projects, the Henrys agreed to invest in "Reservation Agreements."

Under these agreements, each $50,000 investment contract would be held in an escrow account and not used until the defendants began construction on the project. Then when the unit sold, the investors believed they would receive their $50,000 plus an additional $50,000.

" … the defendants assured the plaintiffs that they were willing and able to offer these no risk investments because helping their friends have great and safe returns is where they find purpose in their work," the lawsuit states.

Construction on the Lakeview project eventually started in 2006, but according to the plaintiffs, construction on the Jubilee project has yet to begin.

In late 2007, the plaintiffs entered into a termination contract to regain the return of their investments. Under the contract, the defendants agreed to repay the plaintiffs $50,000 a month.

However, the plaintiffs state that after four payments, they have not received any more of their money back. Of the $1.65 million invested, only $300,000 has been returned to the plaintiffs, the suit states.

The plaintiffs allege the defendants committed securities fraud, common law fraud, fraud in the inducement, breach of fiduciary duty, violation of the condominium act, conversion, breach of contract, deceptive trade practices act, and civil conspiracy.

The plaintiffs are seeking for the court to enforce access to the defendants' accounting records and actual and punitive damages in excess of $9 million.

The plaintiffs are represented by attorney Robert L. Henry III of the Little Rock law firm Barber, McCaskill, Jones, Hale, PA, attorneys James Simpson and David Wilson of the Little Rock law firm Friday, Eldridge and Clark, and attorney R. Gary Nutter of the Texarkana law firm Dunn, Nutter, and Morgan, LLP.

A jury trial was demanded. U.S. District Judge David Folsom will preside.

Case No. 5:08cv00172

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