Like the housing industry, real estate “guru” Mark Bosworth is in crash mode

The way it worked: When the home went up in value, an owner used extra equity (which is the difference between the estimated home price and what is owed) by borrowing against it. The bank figured if the owner defaulted on the loan, its risk was covered because it could sell the home at the higher price.

Bosworth's wife became a partner in Property Masters, a property-management company, in 1997.

Not only did Property Masters help find renters for the Bosworths' investment homes, it serviced about 300 other homes for a clientele of small-time landlords. The Bosworths bought out the partner two years later and, in 2001, changed the name to Home America.

The company grew to manage more than 2,000 homes. Bosworth began teaching seminars on how to invest in the Arizona real estate market by buying and renting homes. And he and his employees found eager investors to purchase homes through Bosworth's companies, which, conveniently, would manage rentals for the properties.

Bosworth didn't feel he needed a real estate or broker's license — he hired others with the proper credentials to do the deals. (Arizona's real estate department would later state in its April order against him that a license was, in fact, required for what he did.)

The plan worked well for a while, but he and many of his investors were devastated when property values started to take a dive in 2006.

One former investor in Bosworth's companies is Larry Hutchinson, a 53-year-old computer programmer and musician from Thousand Oaks, California.

Hutchinson tells New Times he met Mark Bosworth in December 2005 and came to invest nearly all his savings — about $700,000 — in 11 Arizona houses he bought through Home America.

"I lost everything in a year and a half," Hutchinson says bitterly.

Although the bad timing of the purchases seems obvious in retrospect (considering the market plunge that occurred soon thereafter), Hutchinson says he wouldn't have bought the property if Bosworth's employees hadn't lied to him about the strength of the investments.

Three years ago, Hutchinson had wanted to get into the red-hot Phoenix-area real estate market, but he didn't know the best way to go about it. He says a friend who lived here told him about Bosworth, who "had gotten a lot of press, a lot of visibility. He seemed to be one of the big ones [in the Phoenix area]."

His friend talked to Bosworth, and Bos­worth hooked Hutchinson up with Steve Van Campen, a top property manager for Bosworth's firm. Hutchinson says he was given the royal treatment — at first.

"Not only did they have the Escalade for driving clients around town, but they'd give you a tour of Bosworth's [fleet of] cars," Hutchinson says.

Van Campen, a private pilot, flew Hutchinson and his wife over the Valley in a small plane, pointing out Bosworth's mansion.

"So you're thinking, okay, Mark's been in this business since the '90s and has made millions of dollars, so this is the way we're going to go," Hutchinson says.

He laments that he didn't heed the advice of his wife, who believed from the beginning that something was amiss about Bosworth. He invested in the homes, though she persuaded him not to risk his 401(k) savings or their own home in the deal, which he had been leaning toward doing.

"Both Mark and Steve were recommending that," he says.

Van Campen tells New Times, "Larry has every right to be upset."

However, Van Campen says, he didn't know as a salesman how bad things would get for Hutchinson and other Bosworth clients.

"I lost 10 houses myself," Van Campen says. "I believed my own advice."

Hutchinson says it turned out he couldn't get anywhere near the rent money on his properties that Home America said he could. That, combined with the drop in housing prices, caused Hutchinson's investment to hemorrhage money.

At the same time, Bosworth's property-management company earned thousands of dollars from Hutchinson.

Home America received $50 to $75 a month to manage each property, plus a setup fee and ongoing fees to advertise and prepare the homes for rental. Bosworth claimed the average rental home managed by his company was occupied by tenants for about three years, with only 17 days of lost rent because of vacancy.

Some of Hutchinson's properties were vacant for more than 100 days, and when he complained that the Home America staff was not doing enough to find tenants, Van Campen told him to consider paying the company's staff members fees to motivate them, Hutchinson says.

"I threw some deals to the salespeople, said, 'If you can get one rented [by a certain date], I'll give you $200,'" he says. "It never made any difference."