Investors hoping Metropolitan Grapevine would soon resume paying their mortgages had those hopes crushed yesterday.
A Prince Georges County judge said the company, which has an office in Spotsylvania County, was operating a pyramid scheme and is $300 million in debt.
In his opinion, Circuit Judge Thomas P. Smith also said that Metropolitan Grapevine President Andrew Williams, his company and a subsidiary, POS Dream Homes LLC, both of which are based in Laurel, Md., were operating an unregistered promissory-note investment program under the guise of a mortgage payment plan.
Efforts to contact Williams and his lawyer for comment yesterday were unsuccessful. Isaac Smith of Spotsylvania County, former head of POS Dream Homes, declined to comment, and the phone at the Spotsylvania office was busy all afternoon.
Metropolitan Grapevine had claimed that its POS Dream Homes company would help investors achieve their dream of homeownership by paying off their mortgages in five years using money generated by some of its other businesses.
The price to join the program was a membership fee of up to $5,500; about 15 percent of the sale price of the property, which was overinflated in some cases; and an even split of the equity once the mortgage was paid.
Williams, who was barred from selling securities in Maryland in 2001, did not register his new businesses, as is required in Maryland and Virginia. Both states ordered him and his companies to temporarily stop doing business in August until hearings could be held.
Dozens of people from Virginia, Maryland and several other states soon began calling The Free Lance-Star to complain that their mortgages were not being paid. Many said they feared they would be forced into foreclosure because they bought houses they wouldn't have been able to afford without Metropolitan Grapevine's help.
On Oct. 8, the Maryland Attorney General's Office got an emergency court order to freeze the assets of Williams and his companies. The order also appointed Invotex Group, which does financial analysis for investigations, as the receiver to examine the companies' financial records.
An Invotex representative told the judge yesterday that he has been able to find only $150,000 in assets so far, and that it appears Williams' companies are more than $300 million in debt, said Raquel Guillory, spokeswoman for the Attorney General's Office.
Invotex Group has had difficulty getting information from Williams and his employees, she said, and a federal judge sent Williams to jail for several days earlier this month in an effort to make him comply with a court order to turn over records.
The judge's opinion means that the assets will stay frozen and the company remains banned from seeking new investors.
Invotex Group will continue to examine Williams', Metropolitan Grapevine's and POS Dream Homes' finances, and post updates on a Web site it is creating.
It will be up to the court to determine how assets would be returned to investors, Guillory said.
For updates on Metropolitan Grapevine and POS Dream Home finances: pos-receiver.com Cathy Jett: 540/374-5407| The Virginia State Corporation Commission has delayed a court hearing on Metropolitan Grapevine and POS Dream Homes until legal issues are resolved in Maryland.
No date has been set yet for the Maryland Attorney General's hearing on possible security violations by the companies. The companies remain banned from seeking new investors in both states.
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