The head of a private collection firm that goes after unpaid taxes in Fulton and Gwinnett counties has been slapped for not paying some of his own debts.
Vesta Holdings and its network of companies routinely buy liens against property owners who fail to pay taxes, reaping profits through penalties and interest, or by acquiring the properties and selling them. Homeowners frequently complain about Vesta’s tactics, saying they were unaware of the debts until their homes were headed for auction on the courthouse steps.
Now a federal judge has ordered Vesta President John “Buddy” Ramsey and five of his companies to pay nearly $10 million for defaulting on loans from Branch Banking & Trust.
Last month, a judge told the Fulton County Sheriff’s Office to levy any properties owned by Ramsey or the companies in order to settle the debt. A levy is the right to seize a property and sell it.
Ramsey has filed a notice that he will appeal that decision to the Eleventh Circuit Court of Appeals, according to court documents.
“Unless he’s got deep pockets like (Donald) Trump, he’s in a lot of trouble,” said Hugh Wood, a partner with Wood & Meredith, a law firm that handles real estate litigation. Wood is not involved in the case but read court filings.
Court records on the case are sketchy and don’t spell out why Ramsey and the companies took out the loans. Some Vesta-related entities, though, have routinely needed backing from Wall Street investors and large creditors to purchase tens of millions of dollars worth of liens from the Fulton and Gwinnett tax commissioners’ offices.
Ramsey’s attorney, Bob Proctor, would answer only limited questions by email.
“This case remains in litigation and involves loans for real estate acquisition and development,” Proctor said. “As often happened to business owners and individuals during the recent recession, the real estate loans in question were in good standing and were being paid down when the lender declined to renew.”
He stressed that while the case initially involved Vesta Holdings, Inc., that entity “was merely an administrative company” and has changed its name to Penia Holdings, Inc., “to distinguish it from similarly named companies in the lien transfer and servicing business.”
Penia is Latin for poverty.
The other companies involved are Dominus Holdings, The Harpagon Company, Harpagon MO Company and Zacchaeus Holdings.
“The loan has no connection to the servicing of tax liens and the company you know as Vesta Holdings is not one of the defendants,” Proctor said.
Wood, however, said the case documents show that Ramsey and the companies couldn’t collect on tax debts fast enough to keep up with their own debt payments amid the market downturn.
“We all experienced this,” the attorney said. “When the music stopped, it stopped, and everything stopped right about that time and for the years they’re going after.”
In another stroke of irony, the debt was sold during the course of the litigation. BB&T filed suit in U.S. District Court in 2010, then later transferred the debt to Rialto. A subsidiary of homebuilding giant Lennar Corp., Rialto is known for its unyielding debt collection practices.
A spokesman for Rialto and Lennar wouldn’t comment about the case, nor would attorneys hired to pursue the debt. Case documents show that the creditors have zeroed in on property some of the Ramsey companies own north of Kansas City, Missouri.
Vesta and its associated entities are, by far, Fulton County’s largest buyers of tax liens. Vesta spent about $350 million to purchase about 89 percent of all liens sold by Fulton from 2002 through the fall of 2012, according to an analysis of tax data by The Atlanta Journal-Constitution.
It bought 35 percent of liens sold in Gwinnett last year, according to the tax commissioner’s office.
Vesta has stirred controversy for both its practices and its ties to Fulton County Tax Commissioner Arthur Ferdinand. An AJC investigation revealed last month that Ferdinand has been personally profiting from lien sales and lien payoffs, using an old state law to collect 50 cents per transaction and boosting his income by tens of thousands of dollars per year.
An earlier AJC investigation found that, over an 11-year period, Ferdinand handed Vesta the potential to earn $20 million in revenues — with a corresponding $20 million loss to taxpayers — by allowing it to buy tax liens before adding a 90-day, 10-percent penalty.
Taxpayers have long complained that Vesta makes little effort to inform them of debts and can be difficult to contact when they try to pay them off.
Henry Lorber, a real estate and finance expert with Hays Financial Consulting, said that if the judgment prompts the Vesta companies to sell some of the thousands of tax liens they hold, indebted taxpayers may be better off.
“If the buyer is merely responsive, they’ll be better than Vesta to deal with,” Lorber said. “Vesta has been historically a nightmare to reach.”
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