YARMOUTH — As part of Yarmouth-based Levee Breaks Investment Group LLC’s bankruptcy proceedings, three properties will be abandoned, one property has been sold and four others are for sale.

LBIG has filed for Chapter 7 bankruptcy October 22 a week after the state’s Securities Division filed a civil administrative complaint against LBIG, formed by Brian Serpone of Yarmouth in 2015, and Dennis Serpone, Brian’s uncle, for what he alleged be violations of Massachusetts general law and a willful violation of a consent ordinance they entered into with the state in May 2020.

Brian Serpone is listed as Director and Resident Agent on the Commonwealth Secretary’s Companies Division website for Levee Breaks. LBIG has used investor money to buy Cape Town properties, remodel them and sell or rent them out for a profit.

LBIG was not registered with the state securities division, as required by Massachusetts law, and the promissory notes they sold to investors were unregistered securities, according to LBIG records. ‘State.

Dennis Serpone had clashed with the state securities division before. In 1998, his registration as a brokerage agent was terminated as a result of regulatory action, records show.

What is abandoned?

On January 12, US Bankruptcy Judge Frank J. Bailey approved Trustee David Madoff’s petition for permission to relinquish two homes in Yarmouth and a lot in Dennis Port.

The decision did not come without controversy. Three creditors opposed the motion to abandon the properties, saying the values ​​used by the broker hired for the case were low. The judge dismissed the objections.

The three properties to be abandoned are 28 Seminole Drive in Yarmouth Port, 148 Wendward Way in West Yarmouth and 24 Indian Trail in Dennis Port.

The Seminole Drive home is valued at $438,800, according to appraisal records from the town of Yarmouth. LBIG purchased the 2,164 square foot home in May 2018 for $215,000. The three-bedroom, two-bathroom home on 0.35 acres was built in 1975 and renovations remain unfinished. The porch railings are missing, as is a window on the second floor.

A 960 square foot ranch sits on 0.44 acres on Wendward Way. The modest home with an unfinished basement is valued at $285,400, according to appraisal records. LBIG bought the home, which was built in 1960 and has three bedrooms and a bathroom, in November 2018 for $192,500.

Remodeling of the home halted after the city issued a stop work order in 2019 because the work was being done without a permit, according to Yarmouth Deputy Building Commissioner Tim Sears.

A now empty 0.3 acre lot at 24 Indian Trail in Dennis Port once had a 636 square foot home. Purchased by LBIG in 2019 for $185,000, the property had been appraised at $126,000.

Property value controversy

Denise Benjamin, one of 77 creditors and an investor in Levee Breaks on the debt register for bankruptcy proceedings.

The function of the trustee is to act as a fiduciary for unsecured creditors and to extract as much money as possible from the sale of assets. If a property is useless or worth less than the mortgage, it is of no use to the bankruptcy estate, said Michael Hillinger, professor emeritus at the University of Massachusetts Law School. In this case, the trustee can relinquish it to the hypothecary creditor.

Benjamin said the values ​​of the homes and properties were understated by the broker hired by the trustee in bankruptcy. In this case, it was Samantha Steward of Compass Realty, who was a partner of Brian Serpone in Team Serpone Steward LLC in 2018. This limited company was dissolved by court order by the Secretary of the Commonwealth in 2021, according to state archives.

Using figures from Zillow and Realtor.com, Benjamin said the estimated valuation for these properties was higher than the broker’s value opinions. Bailey disagreed.

In a Jan. 17 decision, Bailey wrote, “Based on the Court’s experience with these websites (Zillow and Realtor.com), I find these online ratings often unreliable. Bailey added that Madoff was exercising his business judgment correctly.

Madoff said the properties were abandoned because the amount owed to mortgagees was greater than the amount he would have gotten from the sale of the properties.

“If there is no benefit to the bankruptcy estate, the trustee’s job is to let the properties go so they don’t incur expenses that we have to pay,” he said. he declares.

Madoff said LBIG and Brian Serpone would not benefit from giving up the properties.

Madoff said the previous business relationship between Steward and Brian Serpone was disclosed in court. She was retained as broker after court approval.

“I felt that relationship didn’t stop him from representing us,” Madoff said.

But Benjamin claimed the original appraised value of a property was so low that a bidding war ensued at a bankruptcy hearing, evidence that appraisals were low.

The original sale price of 99 Berry Ave. in West Yarmouth was set at $475,000. At the court hearing for the sale, counter-offers brought the final sale price to $543,000.

“This bidding war was proof that these valuations are undervalued,” Benjamin said.

Properties being sold

Madoff said five properties are in various stages of sale. The sale of 99 Berry Ave. is concluded. Other properties for sale include 21G Fruean Ave. in South Yarmouth, $350,000; 55 Bayberry Road in West Yarmouth, $560,000; 3 Jerusha Lane, West Yarmouth, $543,000; and 14 Egg Harbor in West Yarmouth, $550,000.

Trustees must file motions to approve sales of properties in bankruptcy proceedings, and at each hearing counter-offers can be made.

Along with liquidating properties owned by LBIG, Madoff will need to review claims filed by creditors as well as timelines provided by LBIG.

There have been $4.5 million in total claims filed, of which $1.4 million are secured claims or mortgages, Madoff said. But Madoff will review each claim to determine if the records are accurate.

Madoff will eventually hire an accountant to review the company’s books and records.

“There was a lot of money invested and a lot of money unaccounted for,” Madoff said. “There have been a lot of suggestions from people as to where the money should go, so we’ll start looking at that.”

Madoff will eventually seek court approval to make distributions to creditors.

Benjamin said she was afraid that she would only receive pennies on her investment dollars.

Contact Denise Coffey at [email protected] Follow her on Twitter: @DeniseCoffeyCCT.