Oregon JV LLC v. Advanced Investment et al. was filed in the United States District Court for the District of Oregon on March 2, 2022. Plaintiff asserts claims sounding in fraud and requests compensatory and equitable relief against a construction lender and other individuals and entities that funded various loans to a homebuilder with a history of fraud and embezzlement.
Plaintiff is a company that managed a construction loan pool for non-party Joseph Russi. Defendant Advanced Investment Corp (“AIC”) is an Oregon-based corporation that previously managed the loan pool at issue. The remaining Defendants consist of trustees of various trusts, Oregon-based financial institutions, and several Oregon residents, all of which were investors in the subject loan pool (the “Defendant Lenders”).
Defendants are alleged to have engaged in a scheme to defraud Plaintiff by misrepresenting the construction status of properties covered by the loan pool when Defendants convinced Plaintiff to take over the management of the loans. Prior to Plaintiff’s involvement, Plaintiff alleges that AIC over-advanced funds to Russi without ensuring that projects were in the correct phase of completion or inspecting the properties for compliance. Plaintiff contends that AIC was involved with Russi in a “pseudo-Ponzi scheme” whereby Russi and AIC, through one of its principal agents, would pocket construction funds leftover after Russi completed a shoddy job. Further, AIC is alleged to have double-dipped. Russi was required only to make interest payments on the underlying loans during construction. AIC would take a cut of these interest payments before sending them along to the remaining Defendants who invested in the loan pool.
In the summer of 2020, Russi declared bankruptcy, and in order to conceal the scheme, AIC sought out Plaintiff to assume the management of this loan pool. Plaintiff asserts that the Defendant Lenders are liable for their involvement in the scheme because AIC is their agent. The Defendant Lenders also allegedly knew that AIC and Russi were misusing the loan pool funds by deliberately completing below standard construction projects and splitting the left-over savings from the construction loans.
The complaint asserts various claims for fraud in the inducement, promissory fraud, unjust enrichment, declaratory relief, and attorneys’ fees. Plaintiff seeks damages of no less than $10,000,000.