By Matthew Holloway |
The Arizona Corporation Commission (ACC) voted to close a long-running securities enforcement case against Densco Investment Corporation after recovering nearly $19.8 million for investors who lost money in the company’s real estate lending program.
The commission approved a request to close the Maricopa County Superior Court case Arizona Corporation Commission v. Densco Investment Corporation after funds were recovered and distributed through a court-appointed receivership.
The case originated in 2016, when the Arizona Corporation Commission filed a complaint alleging violations of multiple provisions of the Arizona Securities Act and seeking appointment of a receiver to manage the company’s affairs following the sudden death of Densco’s owner and sole operator.
According to a press release from the commission, Densco raised more than $40 million from investors and loaned those funds to real estate ventures. Investors were told loans would not exceed a 70 percent loan-to-value ratio and would be secured by first deeds of trust on the underlying properties. Investigators later determined those representations were inaccurate. Some loans were issued at loan-to-value ratios of 100 percent or higher, and some properties were not secured by deeds of trust.
During the claims process, the court-appointed receiver identified 113 investors who were collectively owed $31,446,001. Through recovery efforts by the receiver and the commission, $19,788,384 was recovered for distribution to investors.
The commission also holds a criminal restitution order totaling $16,946,384 for additional collection and distribution to investors. According to the ACC, investors have recovered more than 63 percent of their losses to date.
Earlier court-approved distributions had already begun returning funds to investors during the receivership. In 2017 and 2018, the Maricopa County Superior Court approved multiple payments up to roughly $7 million to investors as the receiver recovered assets tied to the company’s operations, as reported by the Arizona Daily Independent at the time.
Court records tied to related federal proceedings describe Densco as a private “hard money” lender formed by Denny Chittick in April 2001 that financed short-term real estate loans for investors. Federal filings describe fraudulent lending schemes connected to the company that resulted in losses totaling more than $31 million. Chittick reportedly died by suicide in July 2016, according to a Presentence Investigation Report cited by the court.
Documents related to the civil case are available through the Maricopa County Superior Court online docket under case number CV2016-014142.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
