The state of Indiana suspended the real estate licenses of Joshua Lybolt and Magdalena Lybolt, who co-founded Prime Real Estate in Crown Point, which was recently recognized by Inc. Magazine as one of the fastest-growing privately owned businesses in the country for three years in a row.
The Lybolts rebranded the company as Lifstyl Real Estate last year and relocated to Colorado, though the company continued to maintain offices in Crown Point, Schererville and Valparaiso.
On Sept. 19, the Indiana Real Estate Commission board in Indianapolis voted unanimously to suspend the real estate licenses of the Lybolts for 90 days and appointed a trustee to close out the company.
The state of Indiana sought the license suspension for the Lybolts, whose company had licenses for five branch offices and 80 real estate agents in Indiana. Lifstyl Real Estate, which says it has 400 real estate agents across the country, was named to the Inc. 5000 every year between 2016 and 2018, when it claimed to have grown 197% over the previous three years.
"Upon information and belief, Respondent Lifstyl has begun failing to meet a significant number of its financial obligations, and in doing so has caused significant financial damages to its brokers, clients and employees," the state of Indiana said in its Petition for Summary Suspension.
The company had fallen into delinquency with bills such as utilities, which Joshua Lybolt told the company bookkeeper would be fixed when it got a significant sum of investment money, according to the petition. But employee paychecks failed to clear as of Sept. 3, the state's petition said.
A home buyer, a home seller, and several real estate agents filed complaints with the state that Lifstyl Real Estate has not paid them money they are owed. State investigators said in their report that the complaints suggested "significant financial disarray" at the company and that the "allegations are, in all likelihood, not exhaustive."
Real estate broker Valarie Kubacki, who served as regional vice president for Lifstyle, reported the Federal National Mortgage Association remitted $7,000 to the company to reimburse her for funds she personally paid for repairs on a property but that her employer withheld the money, according to the state's Petition for Summary Suspension.
"After not timely receiving payment of the $7,000 that Fannie Mae had remitted to Respondent Lifstyl, Kubacki inquired with Respondent (Joshua Lybolt), who asserted that Respondent Lifstyl was having difficulty conducting interstate wire transfers," according to the petition. "Respondent (Joshua Lybolt) further represented to Kubacki that this $7,000 disbursal could not be made to Kubacki at this time due to an ongoing fraud investigation by Chase Bank. Approximately one week later, Kubacki became aware of an incident in which $25,000 in earnest money was owed by Respondent Lifestyl to a title company for closing on a property, but the funds owed had not been available in Respondent Lifstyl's earnest money account. Per Kubacki, Respondent Lifstyl ultimately met this obligation by transferring funds from multiple other accounts."
She then became aware that a check Lifstyl made to Fidelity Title Company failed to clear and heard brokers were not paid commissions they were owed, "even several weeks after closing," according to the petition. She deposited a $10,000 check into the commission account and discovered it was still overdrawn by $14,000.
Kubacki, who has since transferred her real estate license, told the state she incurred $25,000 in personal damages after Lifsyl failed to meet financial obligations, including failing to pay her $18,000 for a demolition of a Fannie Mae property.
The problems extended to Lifstyl's central Indiana office. Central Indiana Managing Broker Timothy Reed reported to the state that he had not been paid more than $6,000 in management fees.
"Reed began noticing issues with Respondent Lifstyl's finances when Respondent Lifstyl began instituting increasingly longer delays in issuing commission checks to brokers," according to the state filing. "Delays began at three days, and Respondent Lifstyl later issued notification that commission checks would not be issued for one week. Reed was subsequently contracted on multiple occasions about severe delays by Respondent Lifstyl in payouts of earnest money and commission checks. Upon realizing that a significant issue existed with Respondent Lifstly's finances, Reed has advised other brokers affiliated with Respondent Lifstyl to include language in purchase agreements that earnest money would be held in escrow by the title company rather than by Respondent Lifestyle."
A company spokesperson said Prime Real Estate is restructuring under new management and plans to continue operations at its Crown Point location despite an eviction notice that was posted there, and expects the Lybolts' real estate licenses to be reinstated.
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