The state Department of Consumer Protection is investigating whether Norwich businessman Zane Megos is engaging in real estate activities without a license in violation of state law.
Meanwhile, Norwich police are investigating possible criminal activity.
Richard E. Maloney, director of trade practices for the consumer protection agency, said the agency has received "more information" regarding Megos' activities and is investigating him under state law governing real-estate brokers and salespeople.
The agency has a long record of complaints about Megos dating back to 1983, when he first became active in real estate in the Norwich-New London area. The file ends, however, when Megos voluntarily surrendered his real-estate license in 2006 after a complaint that he forged a property owner's name on sales documents.
In an investigation of Megos' activities, The Day interviewed more than a dozen people who said they gave cash deposits to Megos to rent apartments or purchase houses in Norwich and New London. Some of the houses are owned by Megos under two company names, while in other cases he allegedly told potential renters and buyers that he was representing the owners.
Under state law, a property owner does not need a real-estate license if he or she is selling or renting his or her own building, Maloney said. But a person cannot engage in real-estate business - acting for another for a fee or other consideration - without a Connecticut real-estate license, Maloney said.
"We will look at ownership under his company names," Maloney said. "Obviously, these are very complicated transactions."
Interviewed last week, Megos said he did not need a real estate license because he is "an investor."
Maloney said the investigation will entail reviews of Megos' ownership companies, advertisements posted on the Internet for buildings and complaints filed by individuals. He declined to comment on specific aspects of the investigation.
Maloney said consumers have to file complaints with the agency to trigger an investigation. Until Tuesday, the last consumer complaint about Megos was in 2006.
CJ Bardy, owner of a commercial building on Main Street in Norwich, said he filed a complaint Tuesday alleging that Megos showed him and a partner the Fairhaven apartment building at 26-28 Broadway, a 21-unit condemned building in downtown Norwich. The building was owned by a Peabody, Mass., firm under the name Fairhaven Apartments LLC.
"The guy is trying to sell something he doesn't own," Bardy said.
Bardy said he saw the for-sale sign in the Fairhaven window and called the phone number. The sign said "Over 50% seller financing, Many Updates." Megos answered and met them at the building for their self-guided tour.
"I asked him if he was a Realtor, and he kept saying 'I'm one of the parties involved,'" Bardy said.
Bardy said he spoke to his attorney, who gave him quick advice: "Stay away."
Last week, Megos declined to comment on his involvement with the Fairhaven buildings, saying he couldn't discuss any deals not completed.
A woman who asked not to be identified said she plans to file a complaint with consumer protection as well. She said she gave Megos $5,000 in $500 increments over several months starting in June 2009 as a down payment on a house at 107 Ocean Ave. in New London. The house had been owned by the Bank of New York, but Megos' company, Smithfield Associates, purchased the house in August and immediately sold it to Blackstone Realty Investments LLC.
The woman said that one day, a friend who lives nearby told her someone else was moving into the house after she had paid the deposit. She called the real estate company, and someone there told her the company had had other complaints about Megos.
The woman complained to New London police, who said it was a civil matter. On Tuesday, she called Norwich police hoping to be included in their investigation even though the property was in New London.
She said the transactions in her case were all made in Norwich at the former Tim Horton's doughnut shop on Route 82 - a favorite meeting spot for Megos and would-be tenants.