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September 7, 2007

State Bars Wolfords from Any Real Estate of Securities Business

Court also orders over $3 million in civil penalties, restitution, and fees for investigation and attorney costs. The Wolfords were found guilty of criminal charges last year.

Des Moines. Polk County District Court Judge Robert Blink has issued an order barring Rod Wolford, Sr., and Rod Wolford, Jr., from engaging in any way in the business of buying and selling real estate or selling securities. The order wraps up the State’s civil lawsuit alleging consumer fraud and securities violations by the Wolfords and the Wolford Group, Inc.

Judge Blink also entered judgment that the defendants pay $2,431,808 for reimbursement and restitution, $240,000 each in civil penalties, and $378,456 for attorney and investigation fees. However, it appears that the Wolfords do not have assets to make payments. When the suit was filed, the Wolford Group’s assets were frozen by the court, and then went to a receiver and ultimately to the federal bankruptcy court for distribution.

Last year, Rod Wolford, Sr., was found guilty of 17 criminal theft and securities charges and was sentenced to 75 years in prison. (Wolford is appealing his convictions; he is at the state correctional facility in Newton.) Rod Wolford, Jr., pled guilty to two counts of theft in the first degree and one count of securities fraud, and was given a suspended sentence.

The Attorney General’s Office filed the civil consumer fraud lawsuit in August 2003, but the suit was put on hold pending the outcome of the criminal case. The lawsuit alleged that the Wolfords engaged in deception, fraud and misrepresentation in their advertisements, representations, and sales practices directed to consumers who were selling their homes or buying homes. Securities fraud and other allegations were added later to the suit.

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Background and more detail:

Judge Blink entered the Consent Decree resolving the civil lawsuit on Thursday. The case was a joint effort by the Consumer Protection Division of the Attorney General’s Office and the Securities Bureau of the Iowa Insurance Division. Principal defendants in the state lawsuit were The Wolford Group, Inc., The Wolford Corporation, FNBD, L.L.C., Rodney Wolford, Sr., and Rodney Wolford, Jr.

The Attorney General’s Office and the Securities Bureau of the Iowa Insurance Division – with strong cooperation from others – also have worked since 2003 to assist victims directly. Many sellers received their homes back, and many buyers were able to finish their purchases. Other victims were able to repair their credit records and clear Wolford title ‘clouds’ from their titles. The Faegre & Benson law firm, Citizens for Community Improvement (CCI), local lenders, and the Federal National Mortgage Association (FNMA) all worked with the State to aid victims of the Wolford home-buying and home-selling scams. Despite these efforts, many consumers were permanently injured by the conduct of the defendants. Efforts continue to assist victims.

Insurance Commissioner Susan Voss commented, “We’re very pleased to see this action. A number of our Insurance Division staff members have been extensively involved in this process from the beginning. It’s good to see it finalized.”

On Sept. 5, 2003, the Court appointed a Receiver, Holmes Foster, to control the assets and manage the business affairs of the Wolford Group. On Sept. 23, 2003, a bankruptcy filing was entered and a Trustee was appointed. The Receiver, now Dennis Dietz, and the Trustee, Wesley B. Huisinga, still are making extensive efforts to sort out the properties and any other assets of the defendants, and when possible they assist in transferring properties to the proper owners. Dietz is a volunteer lawyer who is doing the work at no charge, in cooperation with the Attorney General’s Consumer Protection Division. The State’s participation in the Wolford case will be concluded once the bankruptcy and receivership are finalized.

The Court also entered Consent Judgments Thursday regarding other defendants, Rachel Nelson and Daniel Brown. Nelson (daughter of Rod Wolford, Sr.) worked in the Wolford office on a part-time basis. Brown worked as a salesman in the office. Nelson and Brown each were ordered to pay $500 in penalties. Nelson is prohibited from doing business in real estate and from selling securities. Brown is prohibited from selling securities.

The Court order prohibiting the Wolfords from sales and other activities in real estate and securities provides that, if they violate the order, the Court can find them in contempt of court and fine them up to $5,000 for each day they are in violation of the order.


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