Two Idaho brokerages, agents named in RICO suit

Real estate agents at two Bonner County, Idaho-based brokerages are facing charges of breaching fiduciary duty and engaging in a racketeering scheme with developers to sell defective homes. 

The suit was filed on Friday in U.S. District Court in Boise by plaintiffs David and Linda Wittwer, The Wittwer Family Trust, Daniel and Sharla Doyle, Daniel L. Doyle and Sharla K. Doyle Trust, Michael and Grace Williams and Lee Wilson. The plaintiffs all purchased homes in a Bonner County, Idaho-based subdivision called Mountain Homestead.

According to the complaint, the defendants committed real estate fraud by conspiring to sell defective homes and using fraudulent paperwork in order to successfully close the transactions. The claims in the suit include that of fraud, civil conspiracy, violations of the Idaho health and planning laws, gross negligence, breaches of fiduciary duty on behalf of the real estate agent defendants, as well as violations of the Racketeer Influenced and Corrupt Organizations Act.

The defendants in the lawsuit include the developers J&D Development, and Leatherman Development, which are owned by Joshua Pilch and Jacob Marble, who are also named as defendants, land surveying firm Glahe & Associates, septic design firm James A. Sewell and Associates, Pilch Custom Homes, which is also owned by Pilch and installed the septic systems, the developer for the plaintiffs’ homes Northstar Construction and Development, TitleOne, and two real estate brokerages: Century 21 RiverStone and Keller Williams Realty Coeur d’Alene. The lawsuit also names several real estate agents at both brokerages as well as employees of the developers and TitleOne as defendants. In addition, the lawsuit also implicated the Panhandle Health District, which was responsible for approving the septic and well systems, and it names several employees of the agency, as well as Bonner County Commissioners as defendants. 

According to the suit, the defendants illegally split a 41.6 acre parcel of land into more lots than legally allowed by using “Minor Land Division” rules which are looser than full subdivision rules. The complaint alleges that the developers and their co-conspirators lied on official applications, concealing their plans to illegally divide the land, and that they used their positions as planning commissioners to push the approval of these plans through. 

Additionally, the plaintiffs allege that part of some properties were built on a third party’s property without permission and that homes were built improperly over utility lines and that the developer defendants installed a community septic system and water wells that violate health and safety codes, and illegally converted the septic drainfield before the final inspection. As a result of these faulty septics, the plaintiffs claim there have been sewage overflows and water contamination. 

As for the real estate brokerage and real estate agent defendants, the complaint alleges that these defendants breached their fiduciary duty by withholding material information about serious defects in the Mountain Homestead development and that they conspired with the developers and other defendants to misrepresent the condition of the properties. 

“[The defendants] knew of the significant defects with and/or nonconformance of the MH development, including with respect to the drainage, Logan Drive, utilities, septic system and tanks, wells, and violation of MLD requirements,” the complaint states. “Nevertheless, these Defendants conspired to push the nonconforming MLDs through, install and approve the faulty and deficient septic system, negligently develop the lots, and dupe Plaintiffs Wittwer, Williams, and Doyle into buying the properties without disclosing any of the numerous defects that plague the development.”

The defendants did not return HousingWire’s request for comment.