Burned investors fault Cape financier

Thomas Belekewicz promised his investors high rates of return on their money. He signed promissory notes guaranteeing their investments. He swore he’d be there for them and their financial needs.

But when the real estate market turned and the economy began to sink, his investors’ money was nowhere to be found.

Now the Sandwich resident finds himself under investigation by state regulators while facing the bankruptcy of one of his businesses, multiple lawsuits and plenty of anger from those who consider themselves his victims.

“He just always made it make so much sense,” said Amy Kelly of Pocasset, who invested $225,000 with Belekewicz.

Belekewicz, meanwhile, says he fell victim to the recession.

According to documents filed in federal bankruptcy court, Belekewicz and a partner formed Investment Realty Funding in 2002. The company borrowed money from individual investors and then loaned it to residential construction and condominium conversion projects. Investment Realty Funding would generally charge an interest rate of 16.5 percent and return interest to its investors at a rate between 12 and 14 percent.

In 2006, the company also began developing its own real estate projects using investors’ funds, according to the bankruptcy documents.

To find investors, Belekewicz turned to his customers — some of whom were also social acquaintances — at Sherwood Mortgage in Mashpee, where he was vice president at the time.

According to accounts from multiple investors, Belekewicz pitched them on the investment when they came in to refinance their current homes. Investors said he noted the amount of equity they had in their houses, and then encouraged them to take out a larger mortgage than they had originally intended, investing the extra money in his fund.

Putting money in the fund was a safe as depositing it in a bank, Belekewicz told would-be investors, according to a lawsuit filed in Barnstable County Superior Court by Dominic Aquilano, a Sagamore resident who invested $320,000 in the fund between 2003 and 2006. He even promised to pay back any investment from his personal funds if anything went wrong, according to Aquilano’s complaint.

Belekewicz backed up his pledges with signed promissory notes.

And for a few years, investors received monthly interest checks, which reassured them that they had made a sound decision. Some invested yet more money, refinancing their houses again to get the funds.

Beginning in late 2006, however, investors started to sense trouble.

In November 2006, Belekewicz rewrote the promissory notes securing Aquilano’s investments, changing the interest rate from 12 percent to 11 percent, according to the lawsuit. A year later, a second rewrite dropped the rate to 9 percent.

In August 2007, Kelly requested the return of $15,000 of her investment to cover medical expenses for an ailing pet. Belekewicz, she said, promised to deliver the money quickly, but never did so. Kelly even offered to pick up the check from his house, but he kept putting her off.

Another investor, Warner Group Holdings, demanded repayment of its $150,000 investment in July 2007, according to a complaint filed by the company in Barnstable Superior Court. By January 2008, the funds had still not been returned.

That case has since been settled, according to the court system’s electronic records.

Investors say that throughout this time, Belekewicz used his personality — friendly, cajoling, confident — to deflect their concerns.

“He would be very reassuring to get you off the phone,” Kelly said.

In one conversation, she said, he told her, “I am absolutely hellbent on getting you something.”

In an e-mail to James Grover of Warner Group Holdings, included as an exhibit in the company’s lawsuit, Belekewicz wrote, “I’m sorry this has taken so long “¦ Please call me our relationship is not based on e-mails.”

Belekewicz said his business was just another victim of the plummeting real estate market. Those to whom he had lent money were unable to pay back their loans, leaving Investment Realty Funding unable to pay its investors.

“It was unfortunate, but we got caught up in the whole subprime mess,” Belekewicz said in a brief phone interview. “I don’t think anything was done wrong.”

The state Securities Division, part of Secretary of the Commonwealth William Galvin’s office, has confirmed that it is investigating claims against Belekewicz.

In October 2008, a consulting group sent a letter to investors outlining the company’s financial troubles and explaining that any “funds that come in are being equitably disbursed.”

Regarding the promised regular monthly payments, “no assurances can be made at this time,” the letter said.

In March 2009, Investment Realty Funding petitioned for Chapter 11 bankruptcy protection. According to documents filed as part of that process, the company owes more than $13.7 million to dozens of investors and other creditors, and has $9.5 million in assets.

The bankruptcy case has since been converted to Chapter 7, which means that all of the company’s assets are being liquidated by a court-appointed trustee.

Aquilano, Kelly, Warner Group Holdings and other investors, however, are listed as having unsecured, nonpriority claims on the proceeds from the liquidations.

“I don’t think any of us are going to see anything back anytime soon,” Kelly said.

This story was published in the Cape Cod Times on January 13, 2010. Read the story at CapeCodOnline.com.