DeWaay on the brink of bankruptcy because of court cases, documents say

A Delaware court case has DeWaay Financial Network LLC teetering on the brink of bankruptcy, according to court documents.

The Clive brokerage has asked the judge in the case to temporarily block arbitration hearings before the Financial Industry Regulatory Authority (FINRA) that it says could lead to $4 million in judgments and attorney fees.

DeWaay Financial Network has total assets of $3.4 million and $772,679 in working capital, according to court records. FINRA requires brokerages to maintain $300,000 in working capital.

The firm has paid $750,000 in claims on investments it made with DBSI Inc., an Idaho-based real estate syndicator that folded in 2008. The company raised $1 billion from indendent brokers such as DeWaay Financial Network, which sold $46.3 million in investments to 590 clients, according to a court document.

This is the second time since 2010 that DeWaay has been sued by investors seeking to recover commissions and other damages in connection with investments the brokerage placed with investment houses that ultimately failed.

Late businessman’s wife entitled to profits from sale of property, court rules

The Iowa Supreme Court cited cases to the mid-19th century in upholding an appeals court ruling that affirmed Maureen Boesen’s right to the profits from the sale of bank-owned warehouse. It had been the center of a controversy in the estate of her late husband, businessman Ed Boesen.

Ed Boesen died from an overdose of over-the-counter drugs in July 2008. His death triggered a flurry of lawsuits and claims in probate as banks and other creditors sought to recover millions of dollars in debts, some of which had been secured by a nonexistent stock account.

In a ruling Nov. 18, the Supreme Court upheld a ruling by the Iowa Court of Appeals that Maureen Boesen could receive proceeds from property on which her husband had obtained a $232,000 purchase-money loan from Freedom Financial Bank. The bank took claim to the property in a sheriff’s sale and later sold it to the city of Ankeny for $290,000.

The appeals court ruling came as a result of a Polk County District Court judgment that granted the property to Freedom Financial and ordered that after the lender’s claims were satisfied, remaining proceeds would go to Boesen’s estate.

Maureen Boesen had contested the foreclosure judgment, arguing that her signature had been forged on a mortgage securing the loan and that she had a marital right to the property. The Supreme Court held that in a purchase-money loan, the borrower has fictional ownership of the property, which passes to the lender for the duration of the loan.

The forged signature added extra drama to the lawsuit, but did not change the fact that Ed Boesen did not own the property, the court said.

Lawyers for Ed Boesen’s estate had argued that the estate was entitled to proceeds from the sale of the property.

A partial settlement in West Glen lawsuit

Businessman William Van Orsdel has agreed to pay $9.6 million to partners in West Glen Town Center and has given them a priority lien on multimillion-dollar residences and property he is attempting to sell in Des Moines’ South of Grand neighborhood.

Polk County District Judge Robert Blink signed an order Nov. 16 in which Van Orsdel agreed to a judgment sought by Gary Kirke, Robert Horner, A. Terry Moss and Robert Pulver in a lawsuit against their partner in the upscale entertainment, office, residential and retail center in West Des Moines. Also on Nov. 16, a mortgage and a subordination agreement were filed with the Polk County recorder that use properties Van Orsdel, two trusts and a limited partnership own in the 3400 block of Lincoln Place Drive as security on the court judgment.

The properties are listed for sale for $5.2 million. Any proceeds would go to Kirke, Horner, Moss and Pulver after a first mortgage with Bank of America is settled, according to property records. The four businessmen and their West Glen Town Center LLC sued Van Orsdel in February, claiming that he had reneged on loan obligations and engaged in various forms of fraud while managing West Glen from 2004 to 2009.

The court order resolves two of the nine counts alleged in the lawsuit.

Van Orsdel, also a principal partner in the West Glen operating company, is the target of a separate court action by Midwest Independent Bank of Jefferson City, Mo., which seeks $6.7 million on a personal guarantee he made on a construction loan that the lender obtained earlier this year from First Bank.

Van Orsdel has argued in court documents that some West Glen properties should be liquidated before he settles with the bank.

That action came in a lawsuit also filed in February in which Midwest Independent Bank claimed all of the partners were in default on a $30 million construction loan.

Kirke, Moss, Pulver and Horner have either paid or are working out agreements with the bank to pay their portion of the loan, on which the bank said it was due $26 million when it filed the lawsuit.

The funds were for the development of an office building, a combination residential and retail building, a tavern and a parking ramp. With the exception of the residential units, the Blue Moon Dueling Piano Bar & Restaurant and two commercial tenants, those buildings are largely unoccupied.

The structures have been in receivership since Midwest Independent Bank received a foreclosure judgment in June.