19 Claim They Lost Savings in Home-Buying Club Collapse

Times Staff Writer

Flowers Home Club offered houses at bargain basement prices, but the Inglewood firm's real stock in trade was hope.

For tenants who had long since given up the thought of owning their own homes, club president Seroy Flowers promised to build three- and four-bedroom houses whose monthly mortgages seemed more like a car payment.

To some black working-class renters the pitch was particularly potent: a black man offering to break barriers that he said had been erected by white loan officers and real estate agents.

In one moment of hyperbole, the 29-year-old Flowers even compared himself to Martin Luther King Jr., a home club member recalled. "(King) took you to the bottom of the mountain," Flowers reportedly boasted. "But I'm going to take you to the mountaintop."

But nine months after it opened--promising homes to as many as 60 members from Inglewood and at least 10 other communities--Flowers Home Club has closed in disarray.

Flowers was arrested in September on suspicion of fraud, grand theft and violations of the state securities law. No charges have yet been filed but police continue to investigate allegations by 19 home club members that they have lost a total of $29,000. And detectives report that new complaints are filed almost daily.

Flowers could not be reached for comment but police said he has denied that he did anything wrong.

The club's president liked to tell his clients that they could beat the system by working together. Their first venture, members said, was to be a 12-home development on Cloverdale Avenue that would bear the name Flowers Home Club Estates. But members said they later discovered that Flowers never owned the project site and zoning prohibited more than one home on the lot.

"This guy is up there and I'm listening to what he's saying," said Kenneth Lewis, a Hawthorne airline mechanic who reported a $3,000 loss. "I'm figuring he's black and I'm black and he knows what I'm going through trying to purchase a home and that he is really going to try to help me. That is what really hurts. It hurts me to see black people hurting each other like that."

Life Savings

The amount of money reportedly taken--an average loss of $1,500--represents the life savings of many of the victims, said Inglewood police Detective Paul Harvey.

"These are middle- or lower-income people who otherwise probably wouldn't qualify in 100 years to buy a house," Harvey said. "They had a little money put away and this guy took it away from them."

Flowers denied the fraud claims and asked for an end to the police investigation in a June letter to Inglewood Mayor Edward Vincent. "If there is any way you can stop them from making false accusations . . . toward Flowers Home Club without proof, please contact me immediately," Flowers wrote.

In the letter, he also threatened to go to court to stop the investigation by police, who said in interviews that they discouraged at least 50 people from joining the home club.

Police said prospects were ripe for the Flowers Home Club in communities like Inglewood, where a vast majority of residents don't share in the American dream of home ownership. More than one-third of the city's households have incomes of less than $15,000 a year, according to 1980 census figures. Only one-third of the city's homes are occupied by their owners, whereas two-thirds are rented. (In Los Angeles County as a whole, nearly half the homes are owner occupied.)

The home club concept was appealing.

All members had to do was find a vacant lot. If Flowers deemed it appropriate for construction, he told members he would buy the land once a "membership fee" was paid. Fees ranged from $2,700 to $6,000, depending on the size of the home, and could be paid off at less than $100 a month.

Members told police that Flowers said he would begin construction without any down payment, once the club had title. Even then, monthly payments for the most lavish home would be only $1,108, to pay off a 30-year, $210,000 mortgage at 3% interest, according to a home club flyer. Similar terms could bring members $120,000 homes for $633 a month.

One home club document promised that 50 homes would be built in three years.

Flowers' literature said that he could make such fabulous deals by eliminating the costs of dealing with home sellers, real estate agents and lenders.

"I thought he was risking his own money and he was going to pay for a lot up front," said Sheila Hill, 26, a legal secretary from Cheviot Hills who reported a $756 loss. "And I thought I was risking nothing, virtually. It was kind of like a dream come true."

But Detective Harvey said Flowers had created an elaborate Ponzi scheme, which depended on investors for cash that the company did not have.

Flowers gave his rationale in the letter to the mayor. ". . . . they are saying I can't use the public's money to make money, but they can't explain why the banks and/or financial institutions have been doing it for years."

Letters Mailed to Members

The difference, police said, is that lending institutions are licensed by the state and federal governments. Because the club risked members' money, it should have been registered with the state Department of Corporations to sell securities, Harvey said. Records indicate that neither Flowers nor the home club were registered.

Under state law, Flowers could be charged with fraud and grand theft for each member who paid more than $400 and received nothing in return, police said.

Members first telephoned Inglewood police last spring to complain about the club. More complaints were lodged in response to letters that Detective Harvey mailed to all 60 people on a membership list.

Investors said they sensed trouble when Flowers reportedly delayed the completion dates for their homes, and when others learned he did not even own lots that they thought he had purchased. At least two members received refund checks that bounced, Harvey said.

The odds are not good that any of the money will be returned, he said.

On Oct. 6, Flowers reported a burglary at his Inglewood Avenue office. He said that $238,000 was stolen from the safe, along with furniture and power tools valued at $14,000. Flowers said the stolen cash had just been moved that day from a bank deposit box. But police said they believe the burglary was faked.

For Benedict Baldwin and several others, Flowers presented an opportunity to own property in Baldwin Hills, a community east of Culver City to which many urban flatlanders aspire. "It's the hill," Baldwin said. "It's a sign that you've made it for some people." Baldwin thought his $4,000 investment was a first step toward owning one of the homes in Flowers Home Club Estates. He bought into the deal as an investment, and several friends and relatives joined him in the deal, planning to live in splendor on the hill.

"He definitely played on people's hopes," Baldwin said.

Members said Flowers looked mature beyond his 29 years. He came from the Midwest with a high school education and was a licensed carpenter who had worked locally since he was 22, according to a credit report obtained by police.

The club's courteous president sometimes wore clothing that was a little worn, and he sometimes came on too strong, members reported, but he surrounded himself with charming people, including the staff and his 25-year-old wife, Jacqueline.

Members reported that the club's office was usually abuzz with activity: Draftsmen worked ceaselessly on floor plans, members perused several carpet samples, and a full-time clerk was on hand, ostensibly to complete property purchases. To some members, Seroy and Jacqueline talked about cruises and other outings that the entire membership would take.

'Family' Must Stick Together

They created the impression that the home club was a family that would succeed if everyone stuck together, several members said.

Baldwin recalled the reaction when he told relatives he thought that the club was a fraud. "I was more or less like a whistle blower," he said. "They thought I was just crying or complaining, or that I was cheap" and wanted to get out.

Some members said they are still not convinced that Flowers acted maliciously.

Joe Renkow, who rented office space to the club, said he thinks Flowers' intentions were good. "He was in way over his head," Renkow said. "But I think he was actually trying and that he thought he was doing something good for the community, and also making a buck at the same time."

Some members concede that it sounded too good to be true, but they took a chance anyway.

"I thought there was hope," said Ann Williams of Gardena, who, with her daughter Vera, invested $800. "It was kind of like a dream come true, but then I guess I should have realized that not too many of them come true, especially for me."

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