Norwich - The Better Business Bureau closed Donna Butler's complaint against Zane Megos and referred her to the state attorney general's office or to state Consumer Protection.

The Norwich housing and building inspectors told Butler "our hands are tied," and referred her to city police and Small Claims Court.

"We just didn't know where else to go," Butler said.

An investigation by The Day has found that, since 2009, Megos has been accepting cash deposits and rent for apartments that were in condemned buildings or that he did not own and therefore were unavailable.

A number of those people with complaints about Megos' business dealings, however, have been frustrated in their attempts to get reimbursement of down payments. Municipal and state agencies have just referred them to other agencies.

Butler had taken money out of her 401k retirement fund and borrowed money from a friend in late December to help her daughter, Racheal Perry, put down the $1,785 needed to pay Megos to secure an apartment at 75 Fourth St. - in a building that had been condemned since September.

Many Norwich city departments are aware of Megos and have heard complaints about cash paid for apartments that are never provided. But those complaints often fall through the cracks of regulatory authority. Most of the tenants are never housed, so they do not qualify for either rental assistance or relocation funds Norwich Human Services, Director Beverly Goulet said.

Human Services and the city assessor's office have referred people to Small Claims Court and the police. Several would-be tenants told The Day they have filed police complaints, but the police would not say whether they are investigating.

Lisa Lassiter filed a complaint with the state attorney general's office Nov. 9, 2009, claiming she gave Megos a $1,400 deposit on a home purchase that never came to fruition.

"Unfortunately, this matter is a private legal dispute between you and Mr. Megos," then-Attorney General Richard Blumenthal responded on Feb. 7, 2010. "However, given the amount in question, this matter would be appropriate for Small Claims Court in your area."

Lassiter had already filed a complaint in Small Claims Court in November 2009 for $1,400, but the case was dismissed in 2011 when she did not file an amended complaint and no parties showed up for a court hearing.

The Better Business Bureau merely offers to mediate disputes between willing parties. In Donna Butler's case, Megos did not respond to "multiple" attempts by the bureau to contact him, and the BBB "is obligated to close your complaint as a 'no response.'" Megos' Meyers & Bailey Investment Co., however, was given a D- rating on the BBB website as a result of the lack of a response.

Megos does not have a valid state real estate license, so he is prohibited from marketing apartments for rent or accepting rent money on buildings that he does not own, according to Claudette Carveth, spokeswoman for the state Department of Consumer Protection.

Megos voluntarily turned in his license on May 22, 2006, after the department received a complaint that he had forged the signature of a building owner in a sales contract.

"In order to act, we would need complaints from individuals that contend they rented an apartment from an unlicensed individual," Carveth said.

In an interview Tuesday at the New London office of his attorney, Harry Traystman, Megos said he does not need a real estate license "because I'm an investor."

Regular inspections

The Norwich Housing Management Team, which is headed by Human Services staff, has alerted city building inspectors when they hear about attempts to rent the condemned properties.

Assistant Building Official Greg Arpin said he had visited the five-family house at 75 Fourth St. about once every two weeks to make sure no one was living there. Frequently he found open doors, but no tenants.

On April 23, as he was reposting bright yellow condemnation signs, two people approached and told him they had paid a deposit to rent an apartment there seven months earlier and wondered if it was ready. Arpin said he referred them to Norwich police.

Norwich Code Enforcement Officer George Gardner has been keeping tabs on the three-family house at 25 Rogers Ave. since it was condemned in 2009.

A lengthy file in the building department includes a hand-written note stating Norwich social workers had learned that Megos had purchased the building and was attempting to rent it. Gardner scribbled on July 1, 2009, that he "left a message bldg has not been approved for re-occupancy." On March 21, 2011, Gardner sent a letter to DECO Drive LLC, the Megos company that owns the building.

"It has come to the attention of this department that an attempt to rent the lower level apartment has been made," Gardner wrote. He attached a copy of the condemnation order and wrote that inspections and approvals would be needed from both the building office and the city fire marshal.

Constitution State Mortgage, which filed for foreclosure on 25 Rogers Ave. in August 2010, claimed that Megos' company had failed to make any renovations or obtain property insurance. Megos in turn blamed the mortgage company for not releasing funds and is contesting the case, which is pending.

c.bessette@theday.com