"Look at your glass," James Wynstra
wrote his Homestead Northwest
investors on June 27, 2008.
"Is it half-empty or half-full?
Less than a year later, the glass was bone-dry.
But Homestead investors who relied on letters from Wynstra, the development companys president and founder, had little reason to suspect onrushing disaster.
"To provide you with some assurances, I am providing a little extra financial detail with this letter," Wynstra
said in a "Mid-year report" also dated June 27, 2008.
The assurances included a list of "assets that we control and manage" with an estimated value of $127 million.
But there was no information on how much debt Homestead owed on that property, and little indication that the market value of all kinds of real estate was plummeting at the time.
encouraged investors to keep their money with Homestead
, and add more.
offered a $25 gift certificate good at any of the company's restaurants for anyone who agreed to renew a loan to the company instead of pulling money out on the due date.
For those willing to add $250,000 or more, he
offered $250 gift certificates plus an interest rate of 8.5 percent.
On Oct. 31, 2008, Wynstra
opened another letter by noting that some of his
acquaintances had lost huge sums on their investments in Washington Mutual
and other stocks.
"Your investment with Homestead
is different in this respect: We hold hard assets that back all of our obligations to each and every one of you," Wynstra
As late as January 2009, Wynstra
was enticing new investment money with a "high yield Triple Ten program" promising 10 percent interest for investments of up to $100,000.
But in April 2009, Wynstra
stopped making payments to hundreds of people who had an estimated total of $65 million invested with the company.
At that point, Wynstra
apparently stopped taking new investments, but he
investors to stay loyal and give him a chance to salvage the company and pay them back.
As late as April 2011, Wynstra
was still writing to his
investors, offering brief summaries of his
efforts to keep Homestead afloat.
"Our overall goal is to maximize repayment to all of you whether you have a good or weakened collateral position or no collateral position at all," his
April 6, 2011, investor letter said.
Later, on the second page of the same letter, he
devoted one paragraph to the statement of charges filed against him and his
company by the Washington Department of Financial Institutions
"We have received a notice from the Department of Financial Institutions
that we have violated securities laws and of their intent to impose a $100,000 fine on me," Wynstra
"This notice was totally expected."
did not mention that among other things, the state agency accused him of violating the anti-fraud provision of securities law, partly because of the letters he
sent to his
investors attempting to assure them that Homestead
Investors like Sandberg got letters from Wynstra
warning them that if they demanded their money back or took legal action, the company would go bankrupt and nobody would get repaid.
boasted of his
own numbers-crunching ability when he
testified under oath to Department of Financial Institutions investigators in January 2011.
"I'm basically a numbers freak, and that's probably kept me from messing with computers because I am quick in terms of numerical analysis without machines," he
has rejected requests for comment.
But in his
January 2011 testimony to DFI, Wynstra
, too, is in bad shape.
"Basically, I have nothing," he
"I have evacuated myself to half of protected bankruptcy-level assets at this point, and put everything I have into trying to maintain these companies and see if there is a pathway through. ...
I get myself out of bed and go there (to his
office) and do what I can to find a pathway through these things, through these challenges that we have."
Since one of the Homestead companies, Homestead NW Development Co.
, filed bankruptcy in January 2012, Wynstra
has lost control over the remnants of his
During a January 2012 deposition in a civil case, and during a later bankruptcy creditors' meeting, Wynstra
refused to answer some questions and invoked his
"right to remain silent," although he
did not use the term "self-incrimination."
Incorporated 1991 by James Wynstra of Lynden.
April 2009: Wynstra
suspends payments to investors.
April 2011: Washington Department of Financial Institutions
investment plan violated securities law.
BELLINGHAM - Homestead Northwest's investors and other creditors had a chance to confront the company's president and founder, Jim Wynstra, on Monday, Feb. 27, as the company's bankruptcy proceeding got under way.
Few of the more than 50 people who showed up for the creditors' meeting at the Whatcom County Courthouse took advantage of their opportunity to question Wynstra in front of Virginia Burdette, the bankruptcy trustee.
Veltkamp handled the Jan. 18, 2012, bankruptcy filing of Homestead NW Development Co., one of several Homestead companies controlled by founder and president Jim Wynstra.
In an April 2011 statement of civil charges against Homestead's president and founder, James Wynstra, the Washington Department of Financial Institutions estimated that, taken together, the Homestead companies owe about $65 million to an estimated 350 investors.
"All we're trying to do is preserve the records," said Denice Moewes, the Seattle attorney working with trustee Virginia Burdette on the bankruptcy filed by Homestead NW Development Co., one of several firms linked to Homestead Northwest Inc. and its president and founder, James Wynstra.
During that testimony, Wynstra
said that the records of Homestead NW Development Co.
were stored at the same Guide Meridian office that held the records of eight other Homestead-related firms that will be filing their own bankruptcy cases soon.
In a Chapter 7 bankruptcy document filed Wednesday, Jan. 18, the company and its founder-president, James Wynstra
, report assets of between $1 million and $10 million.