Like the housing industry, real estate “guru” Mark Bosworth is in crash mode

Hutchinson became skeptical of the maintenance bills sent to him by Home America.

One time, he visited four Phoenix properties that weren't renting and discovered that none had a "for rent" sign out front. Company reps offered him a lame excuse when he complained, he says.

Another time, Home America told him they planned to bill him $3,000 for some painting work at a house. He told them to forget it and found someone to do the job for $300.

Hutchinson showed New Times an e-mail exchange that shows how frustrating it could be to deal with Home America.

The investor had sent the company $5,000 for painting and other work to be done on a rental home in July 2006. On July 25, Hutchinson sent his Home America contact, Cade Galloway, an e-mail explaining that a tenant had moved into the house and did not care whether the house was painted. "Go ahead and send the $5,000 back to me," Hutchinson told Galloway.

By that fall, Home America still hadn't refunded Hutchinson's money. So on October 24, Hutchinson told Galloway that because another home needed $2,260 in repairs, the company should take that amount from his $5,000, have the work done, and mail him the difference.

The repairs were completed, but Hutchinson's balance wasn't sent, despite Galloway's promises. Finally, in late February 2007, one of Home America's top managers, Berne Fleming, ordered Galloway to keep his promise to Hutchinson and pay the balance, copying the e-mail to Hutchinson.

The refund finally came in July 2007, a year after he requested it.

He says the story is just one example of the "heartburn" the company caused him while the market downturn leached equity from his investments. One by one, Hutchinson's properties went into foreclosure.

In April, the last rental home he had bought and managed through Home America went into foreclosure, he says.

"That was my retirement; that was my dream," Hutchinson says of his investment. "Now it's all gone."

A former Bosworth employee says Hutchinson is just one of many customers with a similar experience.

To be sure, the market downturn was a big problem. But the bigger problem for Bosworth's clients was the mismanagement that took place on his watch, according to court documents, former employees, and investors like Hutchinson.

The aforementioned anonymous employee gave New Times a list of investors who, he says, lost more than a combined $3 million in commercial property investments made with Bosworth.

One of the names on the list is Barbara Broyles, who says she worked for Bosworth for about three years.

Broyles confirms that she lost $50,000 on an office building deal that went bad, and tells New Times she lost an additional $50,000 in another investment with Bosworth, Van Campen, and others to buy properties in Mexico. Broyles says she and a group of the Mexico investors, who estimate they lost about $1 million combined because of Bosworth's poor handling of the deal, are considering a lawsuit.

She claims Bosworth often spent his investors' money on "things they did not invest in," like side business deals or personal items.

Broyles also says she saw firsthand some of the same fraudulent activity mentioned in the Magelsen lawsuit. For instance, there was "the air-conditioning scam."

Bosworth cooked up an idea to do bogus "maintenance" on the rental homes managed by Home America, she says.

"He sent an invoice for $79.95 per unit to every customer," Broyles says. "Anybody who complained about it, we removed it off their bill."

Turnover was just another of Bosworth's secrets, she says. Broyles left the company in late 2006, disgusted by something Bosworth told his sales staff during a meeting.

"He said when he first started in this business, he had the idea that you had to treat all of your owners right," Broyles says. "What he quickly learned was that this market was so huge, you can screw over every one of your customers and still grow your business because so many people are moving into Phoenix."

Other complaints by customers of Bos­worth's companies can be found, using a Google search, on various consumer affairs Web sites.

One customer, real estate investor Ben Magelsen, fought back hard.

Magelsen bought more than 10 homes through Property Masters in 2001, just before the company changed its name. In addition to bogus maintenance bills, overcharges, and other technical problems that led to breaches of contract, Bosworth profited by "fraudulently altering" deeds and power of attorney that Magelsen had granted the company, court records state.

The changes on the documents allowed Bosworth to sell four of Magelsen's properties, and Bosworth and his wife "pocketed the proceeds for themselves," court records state.

Magelsen tells New Times he's now out more than $500,000 in attorney's fees. And he says he doesn't expect to ever see the damages awarded him by the jury because of Bosworth's bankruptcy filing.

Yet it's still worth it, he says, to have proved Bosworth's malfeasance in court: "My wife and I talked this over. We felt, morally, that someone had to stop him."