Update:

The complaint filed by Ames Larson against Chris Lundquist; et. al. was settled out of court and dismissed with prejudice in King County Superior Court on June 17, 2013.

With this week’s $3.3 billion settlement by banks who engaged in faulty foreclosures, you might think that the worst tales of the housing bust are behind us. But the predators of the foreclosure era are still out there, still making money on other people’s misery.

According to a complaint filed last month in King County Superior Court, just such a scenario happened to Ames Larson.

Larson is a 67-year-old Vietnam veteran and former prisoner of war who, as recently as this past December, owned his three-bedroom Lake City home free and clear. But that’s about all he owned. He lived on roughly $1,100 a month, most of it coming from Social Security, according to his attorney, David Leen, who recently started a non-profit called the Northwest Consumer Law Center. Larson couldn’t afford to pay his utility bills; Leen think he was using candles for light. He also couldn’t keep up with his property taxes.

Had he known about King County programs for seniors offering tax relief, he probably could have qualified, according to Leen. But he didn’t. In June of last year, the county initiated tax foreclosure proceedings against Larson. To stop it, he needed to come up with $11,000.

He didn’t have it. In October, however, several representatives from a business called Northwest Home Buyers knocked on Larson’s door. “We buy homes: any house any condition,” declares Northwest’s website, which also proclaims the ability to provide “quick cash” for homeowners facing foreclosure and other difficult situations.

The Northwest representatives offered Larson $120,000 for his home, according to the complaint But when another company representative, by the name of Chris Lundquist, showed up at the house a month later with paperwork for Larson to sign, the offer was reduced to $70,000. Zillow estimates the house to be worth a little over $300,000.

Leen says Larson felt he had no choice but to sign. His house was scheduled to be foreclosed upon in just two weeks. In the end, he came away with only about $40,000, after payment of back property taxes and various transaction fees, according to Leen.

Lundquist, a defendant in the lawsuit, did not return a phone call seeking comment and the person answering Northwest’s phone line said he was too busy to talk.

What happened after Northwest got its paperwork signed by Larson is a little complicated and indicates the intricate dealings of companies who make their money on distressed properties. Northwest never bought the home, Leen says, but turned it over to another company called Lynx Development. Lynx is managed by a man named Will Heaton, the same man who manages a lending company known as Intrust Funding, which provided a $143,500 loan to finance the sale, according to the complaint. Intrust specializes in providing “fast capital” by creating “loan scenarios that cannot be adequately handled by traditional lending sources,” according to its website.

The complaint alleges that the money obtained through the loan was then distributed to an array of people and businesses that somehow participated in this deal, including Lundquist (who got $22,500) and yet another company managed by Heaton called Invest Now (which got nearly $50,000).

It was all a way of “stripping money out of the house,” says William Snell, an attorney who is working with Leen on the case.

Reached by phone and asked about the Larson house, Heaton said: “I buy over 100 properties a year. I don’t know the details of each one.” Then he said he had to take a call and hung up.

Larson is still living in the house, according to his attorneys. By filing the lawsuit, he is temporarily prevented from eviction. The suit is asking that the sale be nullied. It claims that the defendants–not only the Northwest defendants but Heaton, his companies, and a few other players in the deal–participated in unfair and deceptive practices and ran afoul of a state law that seeks to protect distressed property homeowners properties. The defendants have not yet filed a response.