Attorney General's News Release

October 5, 2006

Nixon obtains preliminary injunction against Kansas man connected with Jackson County land tax sales

Kansas City, Mo. — Attorney General Jay Nixon on Wednesday (Oct. 4) obtained a preliminary injunction against a Lenexa, Kan. man and his businesses to stop what Nixon says are misrepresentations in connection with the sale of real property at Jackson County land tax sales. Jackson County Circuit Judge John O'Malley's order prohibits Cyrus D. Contractor and his businesses, National Recovery Title and Property Clearing House, from making misrepresentations or failing to tell consumers critical information to defraud them in connection with the sales.

Nixon sued Contractor and several other defendants in August, alleging they used misrepresentations to deceive more than 50 people who had property sold on the steps of the Jackson County courthouse in land tax sales. Nixon says the victims were misled into signing papers that resulted in them being paid pennies on the dollar for excess proceeds from the sales.

In addition to Contractor, Nixon also sued Edward Pendleton of Kansas City and his business, Equity Recovery CO., 1819 Vine, Kansas City; Gregg A. Kugler (now deceased) and Ronald Blum, both of Kansas City, and their business, re Vitalized, 455 W. 58th Terrace, Kansas City; and Victor W. Kearns Jr. of Shawnee, Kan., and his business, Land Title Services, 6552 Maurer Road, Shawnee.

Nixon has obtained consent preliminary injunctions against Kearns and his business, and against Kugler and Blum and their business.

Nixon says the victims would receive small amounts — typically from $100 to $500 — in exchange for signing over assignment of rights, warranty deeds or quit claim deeds that enabled the defendants to seek thousands of dollars in excess proceeds. Some victims were led to believe the defendants were interested in purchasing the property. While the court rejected some of the applications for proceeds from the defendants, other claims were paid, with the defendants often receiving proceeds of $10,000 to $20,000.

Land tax sales are used in Missouri to satisfy delinquent taxes on real estate and, in many counties, take place on the courthouse steps after notices are posted in local newspapers. Proceeds of the sales are first used to pay the delinquent tax bills and the costs of holding the sales. The circuit court then determines how the excess proceeds will be distributed; parties that want to apply for excess proceeds must submit a form for the court's consideration. Unclaimed proceeds go back to the state after two years.

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Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

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