Kansas securities officials say they’ve taken no new action in their two-month-old investigation of Wichita’s two biggest downtown developers, named in November in a securities fraud case with other local businessmen.
The investigation continues after a cease and desist order issued Nov. 8 by Kansas Securities Commissioner Aaron Jack, state officials said. The order named Real Development and its principals Dave Lundberg and Michael Elzufon along with three other Wichita companies and associated individuals.
In mid-November, Lundberg told The Eagle he was confident he and Elzufon would soon be dropped from the order, saying the pair may have been defrauded when they purchased an interest in life insurance policies from one of the other firms named in the order, Hybrid Asset Management.
However, Whitney Whitson, a spokeswoman for Jack, said Wednesday morning there have been no new developments in the ongoing investigation.
“I’m, very, very, very, very disappointed it isn’t resolved yet,” Lundberg said Wednesday. “I can’t quite understand what they’re doing, other than they’re taking their time. It affects every portion of my life, and what do you do?”
The order alleges that Real Development, Hybrid Asset Management, Sutton MN and Churchill Capital Strategies violated the Kansas Uniform Securities Act by “attempting to deliver interests in fraudulent life settlement policies to a Topeka bank and unknown investors,” according to a news release from Jack’s office.
Hybrid Asset Management and Churchill Capital Strategies are listed in the cease and desist order as tenants at a Real Development property, Wichita Executive Centre.
Other individuals named in the order are Jeffrey K. Williams, Sherrilynn L. Frierson and Mark K. Nordyke, all of Hybrid, and former Word of Life Traditional School superintendent Gordon Schultz.
Lundberg said in November that one policy under state scrutiny — a life insurance policy he owned an interest in that covered an unnamed New York City resident — was “absolutely something I thought was a legitimate policy” when Williams offered it to the Kaw Valley Bank of Topeka as collateral on a bank loan on Sutton Place, one of Real Development’s downtown Wichita properties.
Williams could not be reached for comment at Hybrid’s downtown Wichita headquarters.
Since the order was issued, Real Development has significantly scaled back its Wichita projects, selling its interest in the $65 million Exchange Place project at Douglas and Market to Texas developer John McWilliams, and announcing plans to auction on Jan. 11 the Farmers and Bankers Building, 200 E. First St.; the Landmark Square Building, 212 N. Market; and the former Hubris Communications building, 216 S. Market, all with no minimum bid.
This fall, Real Development also rolled out plans for a destination entertainment complex in Kingsland, Ga., near the Georgia/Florida border, and a building project in Elmira, N.Y., both involving state and local government financial incentives.