Sunday, Jun 24, 2018
One of America's Great Newspapers ~ Toledo, Ohio


Receivers find $12M shortfall in Ulmer s Westhaven empire

A shortfall of nearly $12 million has been documented in the real-estate empire founded and formerly controlled by Ottawa Hills businessman John Ulmer, according to receivers appointed to liquidate the company.

The final calculation of the assets and liabilities of the Westhaven Group and its subsidiaries, which the Ohio Department of Commerce closed four months ago, were filed yesterday in Lucas County Common Pleas Court.

The holdings of Mr. Ulmer s company totaled just over $18 million; the liabilities were listed at almost $30 million. The report said 280 individuals who had investments in the company were owed in excess of $28 million.

The report of attorneys Gerald Kowalski and John Czarnecki, the court-appointed receivers, said the business had been losing money annually since at least 2000 and sank into insolvency after assets exceeded liabilities, causing the company s demise.

More money was going out in interest payments than was coming in and, in the late 1990s, Westhaven financials went upside down, the report said.

The report said that payments to investors were obtained through a Ponzi scheme in which investors were paid with new investor funds or bank loans, and not from the operations of the real estate business.

Insolvency, new investor money financing payment to earlier investors, high rate of return, commingling of funds, eventual collapse of the enterprise these are the indicia of the classic Ponzi scheme, and they are all present in this case, the report said.

The Ohio Department of Commerce suspended Mr. Ulmer; his son, Scot, two former employees, and Westhaven in November, alleging they violated securities laws and engaged in security fraud.

At least 37 lawsuits were filed by investors, whose monthly interest payments were suspended after the state took control of the business.

Jerome Phillips, an attorney retained by Mr. Ulmer, said the shortfall was not unexpected, but he added that he was surprised at the $12 million figure.

He disputed the receiver s characterization of a Ponzi, in part because Westhaven was making regular payments to investors in a timely fashion.

This business was in existence for over 20 years and never missed a payment until the state shut them down, Mr. Phillips said.

The investors would be the last line under the report s recommendation to Judge Thomas Osowik for distribution of the assets after liquidation of the company.

The distribution, as proposed by the receiver, calls for investors to get paid on a pro-rated basis only after receiver and administration costs and bank loans are satisfied.

Thomas Pigott, an attorney handling investor lawsuits, said the distribution formula was unfair to investors. I don t think the banks should be paid before the investors. The banks were in a much better position to research West haven than any investor. The banks can absorb this size of a loss much easier than an investor, he said.

The investors and other interested parties can oppose the receiver s recommendation and findings until May 15. Judge Osowik has scheduled a hearing for June 2.

Contact Mark Reiter at: or 419-213-2134.

Click to comment

Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem?

Temporibus autem quibusdam et aut officiis debitis aut rerum necessitatibus saepe eveniet.

Copyright © 2018 Toledo Blade

To Top

Fetching stories…