A Newport Beach real estate broker and his father, who is a developer and real estate broker in Phoenix, are being sued for allegedly burning two investors for $100,000 each in a real estate scheme.
Dennis Stearns and Craig Smith filed the complaint in federal court in Santa Ana against Edward Theodore Embry, his father Michael Patrick Embry, their attorney Michael D. Davis and Red Rock Servicing II LLC of Newport Beach.
The 11-page lawsuit, which Stearns and Smith filed through their attorney Elliot Stone with The Stone Law Firm, seeks actual, incidental, contractual and punitive damages, attorney fees and costs for securities fraud, constructive fraud, breach of contract, conversion, unjust enrichment and alter ego, reports Matt Reynolds of Courthouse News Service.
The plaintiffs claim the Embrys advertised a $1 million investment vehicle that would buy distressed California real estate, rehab it and sell it for a profit. The ad touted a minimum return of 15 percent a year and a total refund after a year, the suit states.
However, after Stearns and Smith each ponied up $100,000 for Red Rock Servicing in September 2010, they discovered they actually bought into a fraud scheme and would go on to learn the Embrys did not intend to refund their money, Reynolds writes of the complaint.
An online listing indicates Red Rock Servicing is part of Corona del Mar-based Bear Investments, whose CEO is Ted Embry: bearinv.com. The Weekly has reached out to Embry for comment and will update this post should that come through.