TRENTON, N.J. — A class action lawsuit filed on behalf of shareholders of Hovnanian Enterprises, Inc., alleges that company principles including CEO Ara Hovnanian willfully misled and deceived them over the extent of liability the company faced in Florida real estate.
Hovnanian bought First Home Builders of Florida in August 2005 and knew of FHB's realtor scheme to sell "leased-up" homes to investors who expected to sell them in turn to leased tenants bringing a 14% return, the suit claims. The lawsuit details the methods used in the realtor scheme, including false documentation and inflated appraisals.
Many of the homes were funded through construction loans provided by Norlarco Credit Union, New Horizons CU and Huron River CU, all of which have since been conserved by the NCUA and assumed by other CUs.
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