Property Wars
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Property Wars’ Scott Menaged and the Fall of Densco

Were these Guys Really Making this Much Money?

Property Wars was a somewhat popular TV show that ran for two seasons on the Discovery Channel.  It featured several Phoenix area property flippers that hung out in front of foreclosed houses as their bidders placed bids on properties at trustee sales downtown.  Like other property flipping shows, it seemed like they were constantly making easy money, bidding on houses and locking in big profits.  Well apparently this was not always the case.

After the suicide death of Denny Chittick, a well-known hard money lender in Phoenix, a receiver was appointed by Maricopa County Superior Court to wind down Chittick’s Densco Investment Corp.  The receiver conducted a forensic accounting of Densco and reported a number of findings in court filings and status reports.  A December 23, 2016 status report of Arizona Corporation Commission v. DenSco Investment Corporation (Case No. CV 2016-014142) made several shocking allegations.

Findings from the Report

The “First Fraud”: Sometime in 2011 or 2012, Scott Menaged began obtaining two hard money loans on hundreds of properties.  The total value of both loans far exceeded what the properties were worth.

The lenders thought they were the only loan and had first position.  In most of the cases, Densco was the out of luck lender whose lien was in second position.

The “Second Fraud”: By January 2014, Menaged was obtaining loans against properties that he never actually bought.  He would just find properties going to trustee sale, tell Denny Chittick he had bought them, then keep the money.

By the date of the receivership, there were 84 loans totaling about $28M for properties that Menaged never bought.

In a separate sworn deposition, another show star Lou Amoroso (aka Luigi Amoroso) said that Menaged forged Lou’s names on trustee sale receipts to make it look like he had actually bought the properties.

Insolvency: Because of two types of fraud conducted by Menaged, Densco became insolvent as of Dec. 31, 2012.

Ponzi Scheme: DenSco became a Ponzi scheme as it relied on payoffs and interest from third party borrowers and investor deposit to pay principal and interest to investors from the date of insolvency through June 30, 2016.

Sad Ending for a Guy That Everyone Seemed to Like

Denny was well-liked and the preferred lender for many of the investors that were buying trustee sale properties following the Great Recession.  He was the easiest hard money lender to work with.  (In retrospect he made it too easy)  He trusted people and didn’t use the same controls that some other hard money lenders were using.

In Arizona, you have to pay the first $10,000 in certified funds at the auction and then the balance to the trustee by 5pm the next day.

Other hard money lenders would make the check out to the trustee, deliver the check and obtain the receipt.

Denny would wire the funds directly to the borrower and wait for them to pay and provide him a receipt.  He was setting himself up to be taken advantage of by a dishonest borrower.

Lou Amoroso reported that the other trustee sale investors were so upset about Denny’s death that they let it be known to him that they thought Menaged was a terrible person and beared responsibility.  Lou himself was distraught because he just worked for the guy as a bidder and did not have any involvement in the criminal activity.  He did not want to be associated with Menaged in any way.

Scott Menaged was ultimately found guilty and sentenced to 17 years in prison.

Denny’s suicide came less than ten years after the suicide death of another well-known Phoenix hard money lender, Scott Coles of Mortgages Ltd.  Once again, it’s a very tragic and sad ending for a Phoenix real estate lending icon.


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