More than 120 who bought, sold homes in limbo after Indy-based flipper files for bankruptcy

Indianapolis home flipper, Chart Properties, LLC, has filed for bankruptcy, leaving more than 120 people who signed contracts to buy and sell homes across Central Indiana in a legal and financial quagmire that could take months to sort out.

But the monetary losses, which could top $5 million, may ultimately seem small compared to the personal struggles likely to spin out of the bankruptcy.

The initial bankruptcy petition filed Oct. 17 in U.S. District Court for the Southern District of Indiana contains few specifics about Chart’s finances, but one thing is clear: The company has no assets to repay clients and a slew of other creditors.

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The bankruptcy filing throws the ownership of scores of homes across Central Indiana into question. That’s because Chart didn’t actually own the homes it sold to new buyers; it only had contracts to purchase those properties.

Now, Chart is basically defaulting on its agreement to buy those houses. The problem is, they've already been resold. New families are living in them.

Legal experts told IndyStar those families who bought homes from Chart could ultimately find themselves out on the street, the cash they put down and their monthly payments to Chart lost.

The bankruptcy also means it's likely the people who sold to Chart will once again be saddled with homes they cannot afford or don't want — homes they thought they had sold as they awaited a payoff from Chart.

Chart clients who spoke to IndyStar said the people behind the company aren't talking. The company's phone number is no longer in service.

Legal experts said Chart — which was the subject of an IndyStar investigation published in June — is walking away from a colossal mess. It is a scenario fair housing experts earlier told IndyStar could happen because they saw Chart's approach as unstable and potentially predatory.

"The real problem here is there's apparently no money left," said Briane House, an Indianapolis attorney representing a seller in a lawsuit against Chart. "And messes like this, without funds, are particularly difficult to unravel."

IndyStar was unable to reach Chart President Robert Keck and co-founder Grady "Brian" Rogers, who joined Chart last year when he was released from prison after serving a 13-year sentence for convictions on 22 counts of securities violations.

A former company attorney Robert Cheesebourough, who filed the bankruptcy petition, did not return a call. And the company's communications director Bruce Pillow — who recently sent buyers a message saying he had been named manager of Chart and would be collecting their October payments — did not respond to a phone message.

'Its just not a good situation'

House, as well as other lawyers and fair housing advocates, said it is likely that ownership of the homes Chart bought and sold will revert to the original sellers, many of whom still have mortgages or hold legal title to the homes.

But that's not clear-cut. Other people are living in those homes now. They have signed purchase contracts and have given Chart thousands of dollars down and made monthly payments.

The other problem is that many sellers who've talked to IndyStar say they don't want their homes back. That's why they sold them in the first place. Some have purchased other homes. Others can't afford the mortgages. Some of the homes may have been damaged by the new buyers.

"Its just not a good situation," said House.

In a Hancock County lawsuit, House's client won a judgment against Chart, which failed to raise a defense. The suit contends Chart's business practices violated state securities and real estate regulations.

"Chart has at various times characterized the transaction in different and contradictory terms," the lawsuit alleges. "The shifting sands of Chart's interpretation of its own documents are all designed to avoid the statutory scheme regulating transactions in real estate in Indiana."

Several former clients told IndyStar they have been in contact with an investigator from the Indiana secretary of state's securities division. That's the same group that headed the investigation that resulted in co-founder Rogers' felony convictions. A spokeswoman for the Secretary of State Connie Lawson said she could not confirm or deny reports that there is an investigation into Chart.

House said he is convinced laws were broken.

"I always contended," he said, "that this was a kind of Ponzi scheme."

That's certainly not the way Chart pitched itself to potential sellers and buyers.

Doing the Lord's work

Keck told IndyStar in June the business was a Christian-based answer for Hoosiers unable to achieve the dream of home ownership the traditional way.

The evangelical real estate firm, where workdays often began with employees sharing devotionals, also positioned itself as a fast and easy way out for owners unable to sell their homes or struggling with mortgages they couldn’t afford.

Those services were widely pitched at churches, on religious radio and TV stations and via the Internet. Keck said in an interview in June that the company’s overtly Christian bent reflected the faith he shares with co-founder Rogers. It also provided a strong hook that appealed to many sellers and buyers, most of whom were struggling financially.

Keck was open and unapologetic in the June interview about Chart's focus on the financially distressed. 

"I will not be ashamed," Keck said in June, "to stand before Christ (on Judgment Day) and say that 'I did Chart for you.'"

In the majority of about 50 deals IndyStar reviewed, however, Chart sold the homes for substantially more than it was paying. In some cases the difference was more than twice as much. And, according to tax records, many buyers paid well above their new home's appraised value, which by law is supposed to reflect a fair-market value. 

Going to change the world

Chart’s unique quick-flip system was going to revolutionize the real estate market, Keck predicted in June. And not just in Central Indiana, where Chart snapped up scores of homes since late 2015, but across the country.

But it all came tumbling down. Facing three lawsuits and unable to pay millions it owes sellers and other creditors, Chart opted for bankruptcy rather than honoring its deals with sellers and buyers.

It is unclear exactly how many homes Chart flipped, but documents reviewed as part of the IndyStar investigation show the company, which was incorporated in 2015 in Nevada, bought and sold more than 60 Central Indiana homes in 2016 alone.

Chart was established by Keck, a Fishers resident who got into the real estate business following a career in the military. The company’s literature and website listed Keck and Rogers as co-founders. The pair met through a mutual friend while Rogers was in prison.

Keck told IndyStar in June that the company’s unique business strategy was developed by Rogers.

Here’s how it worked:

• Chart’s “purchases” were contract deals, made with no money down. They gave Chart immediate possession of the homes and called for Chart to make small monthly payments followed by a payoff of the balance after two years.
• As soon as Chart negotiated a purchase agreement, it put new rent-to-own-style “buyers” in those homes. A company brochure touted: "See the property at 4 p.m. and move in at 6 p.m. — SAME DAY!" All that buyers needed to do was give Chart a down payment, and start making monthly payments. The sales contracts also called for the buyer to pay off the balance of the purchase price after one year.

Despite what appears to have been a robust start, the company’s cash-flow problems surfaced in July. Chart stopped making payments to most sellers, who received messages stating the company was expecting an influx of investor funding that would allow the company to pay off sellers.

Meanwhile, Chart continued to collect from its buyers. And it didn’t inform them the company’s claim to those homes was in jeopardy.

In the end, the bad news that buyers may suddenly face eviction did not come from Chart. It came from the bankruptcy court.

This past week, the company's second-floor office suite in Cranbrook Center near 75th Street and Shadeland Avenue was locked. Empty and dark. Gone is the caricature of Keck and Rogers that greeted visitors and shared the company's motto from the Old Testament book of Proverbs: "Do not withhold good from those to whom it is due, when it is in your power to help them."

The only hint of Chart's presence there is a small decal on door. "In God We Trust", it says.

Tim Evans is IndyStar's consumer advocate. Contact him at tim.evans@indystar.com or (317) 444-6204. And follow him on Twitter: @starwatchtim.