After a federal judge ruled a Bellevue-based real estate company a Ponzi scheme last October, investors were left with as much as $230 million in losses.
Now, they’re suing to get compensation.
On Friday, a liquidating trust representing more than 1,800 investors of the real estate investment firm, iCap, filed several lawsuits against the company as well as businesses that allegedly aided its scheme.
Defendants include iCap’s founders, those involved in the sale of iCap’s property, Seattle-based law firm Perkins Coie and Columbia Bank, formerly known as Umpqua Bank.
For over a decade, iCap’s founders, brothers Chris and Jim Christensen, promised investors steady, high returns in exchange for investments in the company’s real estate development projects, some of which were in the Seattle area, one lawsuit said.
Instead, iCap largely used new investors’ money to repay old investors, it claimed.
When the firm collapsed in 2023, iCap filed for bankruptcy. Bankruptcy court Chief Judge Whitman Holt said in October, “there is substantial, if not overwhelming, evidence” that the company operated as a Ponzi scheme between 2018 and 2023.
In a lawsuit filed Friday, attorneys claim the Christensens not only sank their money but also used investor money to enrich themselves.
They allege Chris and Jim Christensen transferred almost $28 million and $268,000, respectively, of investors’ funds from the iCap entities to themselves or to entities they owned and controlled for their personal benefit over a decade.
“The Christensens … stole Investors’ money to support their and their families’ extravagant lifestyles or to repay personal debts,” the attorneys said in the lawsuit against the Christensens.
Jim Christensen did not respond to requests for comment. Chris Christensen could not be reached.
The brothers told investors that one property called Colpitts Sunset, a mixed-use property located in Renton, would yield significant value for investors once fully developed, the attorneys allege, but the property quickly fell behind on its loans.
Investor attorneys said iCap sold the property under market value before it was completed, just weeks before the company filed for bankruptcy. Investors received nothing, but the Christensens — who used a $3 million loan from the buyers to purchase a 10% stake in the project — made away with cash, the attorneys said.
The property was sold at a price that benefited both the Christensens and the third-party buyers, the attorneys said.
The investors are suing the buyers and the real estate adviser and broker of the deal, Marcus & Millichap Capital Corporation, which they claim facilitated the deal and ignored red flags, including another alleged loan scheme.
Marcus & Millichap Capital Corporation declined to comment. The third-party buyers could not be reached.
Columbia Bank, whose Issaquah branch facilitated the Christensens’ significant cash deposits and withdrawals, is the subject of another lawsuit. In the complaint, investor attorneys allege the bank knew iCap operated as a Ponzi scheme and handled fraudulent money transfers, including moving investor funds into the brothers’ personal accounts.
In an emailed statement, Columbia Bank spokesperson Kurt Heath said the bank has previously disclosed the potential of such legal proceedings several times, including in a quarterly financial report filed with the Securities and Exchange Commission, and “intends to vigorously defend itself against any and all claims.”
Investors claim the law firm Perkins Coie, another subject of a lawsuit, also knew about the scheme as iCap’s legal counsel and ignored red flags.
“Instead of stopping or disengaging from the Christensens’ scheme, however, Perkins enabled it,” the attorneys said. “Perkins made millions of dollars in fees. The Investors lost hundreds of millions of dollars.”
Perkins Coie did not respond to requests for comment.
In all lawsuits filed Friday, the investors seek monetary damages, although they did not specify an exact total request.
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