-- message from "Zorro," posted on the "Magellaninfo" Web site.
In 1995, Walt and Linda Schroeder mortgaged their home in British Columbia, then took $20,000 and invested in what they thought would be a terrific real estate deal with an Arizona company.
Now they doubt that they will ever get all their money back.
The Schroeders were not particularly savvy investors. Walt Schroeder is an elementary school teacher. Linda Schroeder, a former furniture saleswoman, now stays at home to care for her grandchild.
But the Schroeders trusted their Canadian financial planner, who suggested the Schroeders invest in a limited partnership that would own American real estate managed and developed by the Magellan Companies, a Canadian-owned, Phoenix-based real estate conglomerate. Magellan consisted of a maze of subsidiaries that developed, managed and sold properties in Arizona and California. Two of its owners, Les Litwin and David Dewar, are Canadians who reside in Phoenix. In April 1999, Vancouver Magazine reported on how Litwin and Dewar lived extravagantly in Arizona. In divorce proceedings, Litwin's ex-wife accused him of high living and lavish spending. The third owner, Kenneth Losch, lives in British Columbia.
Today, Magellan has offices at 2777 East Camelback. It purports to have 42 properties worth more than $500 million, but company officials will not reveal its net worth. Magellan is currently planning a $75 million gated apartment complex at Greyhawk in north Scottsdale.
Like Ferdinand Magellan, the 15th century Portuguese navigator who died while sailing around the world, Magellan investors have been in uncharted waters for a very long time.
Some disgruntled investors say the apartment buildings, condos, raw land and office buildings Magellan purchased in the mid-1990s should have been good investments, but that something has gone terribly wrong. At the very time investors should be reaping excellent returns, they say they have gotten mere pennies back on their original investment dollars. The angry investors accuse Magellan owners of mismanaging the properties, and, in some cases, wrongfully taking money out of one project to pay expenses for another, which, investors say, is illegal.
Magellan says such allegations are "without merit."
Investors want justice but claim they can't get it.
They are bitter with what they see as regulatory lassitude in Arizona and Canada alike. Some vow to resort to theatrics, like organizing a demonstration of hundreds of Canadian investors at the office of Arizona Attorney General Janet Napolitano, whom they accuse of ignoring their allegations of fraud and misconduct.
Others simply have decided to take matters into their own hands by supporting stateside receiverships, filing a fraud lawsuit, demanding forensic audits and actual takeovers in which management of some properties has been wrested from Magellan companies.
Anonymous Magellan detractors have even put up an Internet site (www.members.tripod.com/magellaninfo/) where a shadowy figure known only as "Zorro" posts damning public records detailing Magellan's problems.
"My research into this 'Magellan Thing' has been ongoing now for over a year," Zorro writes on the Web site. "I have undertaken the task of helping the peoples of two countries -- the Canadians and the Americans . . . I have tried to bridge the information gap."
Zorro also targets Magellan's three Canadian owners, whom he calls the "Three Amigos."
"Guess what, Magellan's Three Amigos," Zorro writes to Litwin, Dewar and Losch, the Magellan owners, "you failed to realize the Power of the Internet, you also failed to realize that you moved into Zorro Country. . . ."
In an October 22 letter to New Times, Magellan spokeswoman Denise Resnick writes that the Web site "was created by a small group of highly emotional and vindictive investors who knowingly cite inaccurate information and who refuse to identify themselves publicly . . . This small investor group is not fully informed and it's clear they don't want to be."
Magellan is combating those "highly emotional and vindictive" investors by attempting to liquidate all properties that involve such small investors. Magellan has initiated libel lawsuits against three critics in Canada. Magellan says it plans to file a defamation lawsuit against the Web site's provider. The company is also attempting to regain control of a trust that holds 11 properties, including five in the Valley -- Northwood Village Apartments, Maryland Meadows Apartments, Las Palmas Apartments and Canterbury Hills Apartments in Phoenix, and Dobson Springs Apartments in Mesa.
Despite repeated requests, Magellan's attorneys and principals would not grant interviews for this story.
New Times submitted detailed questions to Magellan's attorney, Ivan Mathew, on October 8. Mathew did not answer the questions, but referred New Times to Resnick, who set up an interview with Magellan owner Ken Losch. But an interview scheduled for October 26 was cancelled on short notice. (Resnick says attorneys advised Magellan not to meet with New Times.)