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Investment fraud could turn out to be the biggest alleged Ponzi - KOAA.com | Continuous News | Colorado Springs and Pueblo

Investment fraud could turn out to be the biggest alleged Ponzi scheme in Colorado Springs history

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One Colorado Springs woman awaits sentencing in what some close to the case are calling one of, if not the biggest alleged Ponzi scheme in Colorado Springs history.

Court documents acquired by News 5 Investigates show Karen McClaflin, owner of Home Source in Colorado Springs, solicited investors to flip houses and return a portion of the profits to them.

But, we’re told McClaflin is accused of defrauding the victims by selling the majority investment position in these properties to multiple people.

Initially, many investors believed they held the deed to the property a source said.

News 5 Investigates is told by a source that some properties had as many as eight different investors on the deed to the property.

Now, there are questions about whether or not the deeds are even valid and legal and it’s unclear who has rights to the property according to court documents.

These properties include several homes and one commercial building where Home Source was based according to court documents.

In court documents, McClaflin denies forging documents.

A source said a bank, which loaned some of the money to McClaflin found out she was underwater on the investments and escalated the rate of payments due to them in an effort to get their money back.  A source said McClaflin chose to go get additional loans from other investors to come up with the money, thus multiplying the impact of the fraud.

A source told News 5 Investigates victims are now struggling with losses ranging from $80,000 dollars to $200,000 dollars.

It all adds up to almost $30 million dollars a source said.

Getting that money back to the investors could be a big struggle because documents filed with the court show hard assets of Home Source add up to just under $8 million dollars.

To date, the money and properties are tied up in the courts and no money has been returned to the investors court documents show.

In court records, McClaflin denies the business was operating as a Ponzi scheme.

News 5 investigates reached out to investors to speak about their losses, but they declined pending a final decision from the court.

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