Building of dreams: A downtown real estate deal goes south, costing investors and retirees millions

KANSAS CITY, Mo. - Millions of dollars are missing following the failed purchase of two landmark buildings in downtown Kansas City.

Critics say a Ponzi Scheme drained the pockets of dozens of victims including local power brokers, retirees living on fixed incomes and those with life-threatening illnesses, an investigation by 41 Action News found.

At the center of the defunct deals is Brenda Wood, a business woman from Leavenworth County who owns a small janitorial service that cleans school buildings and other facilities.

According to court records and interviews with victims, the four-foot, six-inch woman’s charming personality, silver tongue and false documents led many people to initially believe and trust her financial acuity without question until their loans and investments totaling $12 million dollars disappeared.

Wood, who has filed for bankruptcy, denies being a double-dealer and says she too was a victim of deceitful businessmen. In court depositions she has denied being involved in a check-kiting and Ponzi scheme and providing fraudulent documents to investors.

She also has battled lymphoma. The cancer came at an inopportune time, she said, just when she was about to close on the second of two downtown buildings, and chemotherapy left her confused.

While she has not been charged with a crime, the FBI and other agencies including the Kansas Securities Commission, the Kansas Real Estate Commission and state and federal labor departments are investigating Wood.  She has acknowledged speaking to the FBI and says she “is working with them.”

The FBI will not comment but several victims told 41 Action News FBI agents had come to their homes to ask questions at length about how they lost money to Wood. But the federal government doesn’t agree she is a victim and the U.S. Trustee denied her request to discharge her debts last month, according to bankruptcy records.

Wood could not adequately explain the losses of money and financial discrepancies in bank statements during a deposition, according to a court record filed by attorney Joseph DiPietro, who represents the U.S. Trustee, a U.S. Department of Justice agency that oversees the administration of bankruptcy cases.

Wood also destroyed or concealed business records, provided material misrepresentations and false statements and made false oaths, according to DiPietro’s court filing.

Government and court records detail her complex real estate deals between 2010 and 2012 in which people from many walks of life lost a bundle through loans or investments in the building purchase.

Investigators for 41 Action News pored over thousands of pages of court records from Wood’s bankruptcy case, lawsuits filed by creditors and sworn depositions taken in those cases and interviewed state and local officials and victims.

Court records show Wood operated through almost a dozen shell companies and various banks. Three businessmen involved in Wood’s building purchase are now in federal prison or on probation for financial fraud, bribery and kickback schemes. Those cases are not connected to Wood’s building deal.

Some victims were willing to talk on the record, others were not because they were embarrassed, or they feared Wood. She has body guards and sometimes carries a gun in her waistband and keeps another in a holster on her leg, several victims said.

“She scares me,” one person said. “I know she carries a gun."

Mitch Mitchner, a businessman who loaned Wood $900,000 dollars, said he was embarrassed but believed he needed to speak up.

“I don't care what she tells you, you need to have it confirmed by two or three other people,” said Mitchner, who is listed as a creditor in the bankruptcy case. “She's a little loose with the truth.”

Not everyone who lost money to Wood believes she was at fault. Business deals come with risks, they said.

“Brenda is a nice lady, and people thought they could trust her,” said Steve Sobek, a local real estate broker who along with his mother lost money to Brenda. “People get very personal when they lose money but when you go into a situation, you have got to know the risks. This situation didn’t work out.”

The Downtown Deals

Back in 1997, Wood and her husband hit a bad patch financially and filed for bankruptcy, and it was granted. Just a few years later however, things were looking up for Wood. She had her janitorial business and had a great idea to expand by getting contracts with school districts. Her husband and children all worked as janitors in the business, Wood told court officials.

One of the investors who lost money in the building deal told 41 Action News that Wood had the makings of a great business person.

“You need a vision, wind at your back and entrepreneurial vision,” the investor said. “She worked like a dog. She could have built a $100 million company if she had kept doing what she had been doing.”

Wood had a plan to buy the 10-story New York Life Insurance building at 20 W. Ninth St. She already had a cleaning contract for the building and if she could get enough investors to buy the building, she would keep the contract and also make money.

But she did not have the money to broker such a deal. Steve Sobek, the local real estate broker, told 41 Action News he learned about Wood's need for what is called a “bridge loan.”

In early 2010, Sobek introduced Wood to Tim Rowland, Mitch Mitchner and other local investors with deep pockets who would eventually lose hundreds of thousands of dollars if not millions to her. 

All the investors thought buying the building would be a good investment and were impressed with Wood’s dealings.

Wood provided investors with tax returns and false financial statements to show that her janitorial business was strong financially even though it wasn’t, according to bankruptcy and lawsuit records. Court records show she also provided them fraudulent bank statements and “artificial and forged bank account balances” that showed she had $3.3 million in escrow to purchase a building.

The $3.3 million in escrow was at the heart of the deal and investors said that is why they believed a building would eventually be purchased.

As investors sent her money, Wood opened more than two dozen checking accounts and was making daily deposits and withdrawals. For many months, Wood managed to shift hundreds of thousands of dollars between accounts, subpoenaed bank records revealed.

To complete the sale of the New York Life building, Wood needed a lender and found Joseph Sorrentino, of Stratford, Conn., who had been convicted of defrauding his clients of more than $2 million dollars and was awaiting sentencing in federal court. 

The big money brokers in Kansas City knew Sorrentino only as J. Stein or Jacob Stein, a financial broker, and knew nothing about his criminal background, they said.

After Sorrentino “verified” Wood's bank balances, he wrote a letter stating he was satisfied with the account balances and agreed to hold the imaginary $3.3 million in escrow at Union Bank, court records show.
In spring 2010 investors spotted news articles reporting Sorrentino was a fraud and had been sentenced in Connecticut to prison for four years.

The building purchase failed to close because Woods couldn’t raise the capital, and she began looking for a new lender even as she assured the investors that the $3.3 million was safe. She told them she had moved the money to Chicago Title from Union Bank.

One of the brokers was Joey Cormier in Venice, Fla. It would take several months before investors learned that the FBI was investigating Cormier for a Ponzi scheme that had bilked dozens of people out of more than $2.5 million. While facing 20 years in prison Cormier agreed last year to help federal prosecutors build a case against other people involved in that scheme.

Eventually Wood’s deal collapsed when the Catholic Diocese bought the New York Life Insurance Building in September 2010.

Over the next several months, Wood searched for a new building to buy in downtown Kansas City. After touring several, investors agreed to buy a 20-story office tower at 10 Main Center, the former AMC building.

In February 2011 Wood showed investors a letter from Cormier's Clear Title company confirming that Wood had $5 million in escrow pending the AMC building purchase.

But as the deal was about to close, AMC announced in September 2011 the company was moving to Leawood, and at that same time Wood found out she had cancer. Everyone pulled out of the deal.
A year later in 2012 Wood filed for bankruptcy and creditors from many walks of life began seeking attorneys and filing lawsuits.

"Special" Deal for Retirees Unravels  

In 2010 with her eyes set on purchasing the New York Life Insurance building, Wood's need for money increased and she had begun looking beyond people with deep pockets.

She had a special deal for retirees: Lend her $100,000 and Wood would pay it back in just a few days along with a 10 percent return.

It’s unknown how many seniors lost money in the deal.

But Wood had some help from Jimmy Weishaar, a financial advisor for retirees, who had an office in Wood’s building in Bonner Springs, locating seniors to loan her money, according to Kansas Securities Commission records.

He brought her six of his clients.

Weishaar’s part in the deal is told by him in a sworn deposition to the Kansas Securities Commission’s general counsel in 2012. Because of Weishaar’s involvement he advised the seniors to loan Brenda money. He was barred last year from working with any financial advisers for 10 years and ordered to pay a $25,000 fine.

Weishaar would not comment for this story.

In the beginning Wood’s deal sounded like “pie in the sky,” Wieshaar said in the deposition. But then she showed him documents that made him believe the investment was safe even if the purchase of the building didn’t go through.

Wood promised the money would come back to his clients within a couple weeks with a gain of 10 percent.

“I thought (the deal) was solid,” he testified. “I didn’t foresee the way things evolved.”

Weishaar said he thought he could help his clients who needed money turn a quick dime. But his clients lost hundreds of thousands of dollars.

One retiree, Bonita Rooks, almost lost her home after she loaned Wood $95,000, expecting the money to come back to her in just a couple weeks, according to court records.

“I was actually living on that money, taking withdrawals each month,” Rooks, 61, told 41 Action News. She had to take a job making much less than she had when she retired.

The government’s attorney asked Weishaar why he did it. “Because I thought it was the right thing to do, because I was stupid,” he said.

The attorney asked Weishaar what his partners reactions were when he told them what he did.

“Are you insane?’” he said.

“What was your response,” the government attorney asked.

“I tried to justify it because I thought I was doing the right thing for the clients,” Weishaar said.

Weishaar was asked what Wood said when she learned he had been fired from his job.

“’Oh well,’” he said she told him.

What’s next?

Wood and her family live in a $600,000 home nestled on 31 acres of woods and grass. The landscape and the 4,000 square-foot home with five bedrooms, 4 1/2 baths and 800 square-feet of decks was an ideal setting to hold her daughter's wedding last fall.

The home is protected from debtors, it's titled to the Dennis Wood trust. Dennis Wood is her husband.

Today, Wood’s lymphoma is in remission. She has lost her bid on the bankruptcy, and the FBI is continuing to investigate, sources told 41 Action News.

Stephen Ware, a KU law professor who specializes in bankruptcy law said it’s “very unusual” for the bankruptcy court to not release someone from their debts after filing chapter 7.

The FBI is following the money trail, pulling checks together to see where the money came from and where it went. Experts say such an investigation could take another year.

Jim Mabrey, whose father-in-law lost $50,000, said he has one question:

“Where’s the money?”.

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