THE BUBBLE: Like many people bankrupted when the housing market collapsed, Jose "J.R.' Sandoval and his family lost their life savings in a fraudulent rent-to-own scheme. Photograph by Chip Scheuer
Jose J.R. Sandoval, his wife and three children load into the family car and drive to a residential street not far from San Jose’s Los Lagos Golf Course. With the engine off, they sit and stare at their dream house. Their thoughts don’t touch on what might be, only what once was.
These mournful car rides started six years ago; five houses ago; a life savings and dozens of unemployment checks ago.
“I was so excited,’ J.R. says now, without a shred of enthusiasm. A 50-year-old housing contractor whose health has prevented him from working in recent years, Sandoval talks about how his American Dream—buying a home for his family—turned into a recurring nightmare. The story starts like so many others before the housing bubble burst. “I answered the ad, the gentlemen came to my house, brought info, and my wife and I talked about it,’ J.R. remembers. “I said, ‘It looks like it’s going to be a good deal. Let’s do this.’‘
That was in 2004. The gentleman they say met with them was Ken Gervais, a licensed real estate broker and owner of My Triangle Realty, which operates in the South Bay. The third time the Sandovals toured a home handpicked by Gervais, they signed a few documents and Gervais handed over the keys. “He said, ‘Here, you just became homeowners,’’ Sandoval recalls. After nearly three decades of saving, J.R. and his wife, Marcelina, parents of three children, had done it. Buying a home for the first time never seemed so simple, and they put $40,000 in life savings to improving their new house.
In reality, though, the Sandovals owned nothing.
According to the Sandovals, Gervais told the unsophisticated homebuyers they were signing up for a rent-to-own contract, yet Gervais was pocketing at least a portion the rent—with no intention of ever transfering ownership. In early 2006, when the Sandovals started to prepare their taxes, and claim a first-time homebuyer’s credit, Gervais’ scheme started to unravel. The broker offered to file their returns for them, which seemed fishy to them.
“I went to see my tax guy and he did a little checking for me,’ Sandoval says. “He called me up two or three days later and he said, ‘J.R., you don’t even own the home.’ And the nightmare began.’
On April 18, 2006, Sandoval and one of his sons returned home to find the house locks changed. Almost two years later, a Superior Court judge would agree with an arbitrator’s ruling that Gervais created a fraudulent contract and illegally evicted the family. Gervais has not faced criminal charges.
Gervais was ordered to pay half of a $469,798 judgment along with the house’s true owners—the second victim in this story.
While Gervais duped the Sandovals, he also playing Rakesh Vazir and his wife. He told the Vazirs—who wanted to invest in property before moving from San Jose to Texas—that they qualified to buy a home without so much as a down payment. A tenant’s monthly rent, the Vazirs say Gervais told them, would cover the monthly mortgage.
But when the Sandovals were evicted, rent payments ceased and the Vazirs found themselves not only facing a foreclosure but also liable for damages from Gervais’ fraudulent contract to sell the home to the Sandovals.
“It’s hard for me to trust anybody now because of what happened,’ Vazir says over the phone. He says the ordeal has left him financially ruined aside from a motel his family owns in San Antonio, Texas. “We are victims to this as well. I feel bad for what happened to [the Sandovals], but we are victims of [Gervais], too.’
John Crowley, an attorney who has represented the Sandovals since they were evicted in 2006—and is owed about $230,000 of the settlement in attorney fees, costs—is of the opinion that Gervais is “a danger to the community.’
When Crowley informed officials at the state Department of Real Estate of Gervais’ actions, they seemed to agree. Surprisingly, the agency that licenses Gervais says it’s helpless to stop him.
Gervais didn’t return multiple messages seeking comment. He continues to sell homes in the South Bay.