White Paper: Unmasking PropTech Exploitation — EasyKnock, Financial Engineering & The Legal Loopholes Threatening Homeowners in Texas & Illinois

Executive Summary 📌

This white paper examines how PropTech company EasyKnock and its affiliates exploit loopholes in real estate and consumer lending laws, disguising high-interest bridge loans as “sale-leaseback” agreements.

These practices replicate the exploitative structures identified in Texas Appleseed’s 2015 report on payday lending—now deployed digitally and backed by private equity.

This report highlights how EasyKnock’s structure violates the spirit and potentially the letter of Texas and Illinois law, and how multiple courts, including the U.S. Supreme Court, have confirmed the legal principle of “substance over form”—if a transaction is functionally a loan, it must be regulated as such, no matter how it is labeled.

The “Substance Over Form” Doctrine: When a Duck Is a Duck

The U.S. Supreme Court has long affirmed that courts must look beyond labels to the substance of a transaction. This principle is central to analyzing EasyKnock’s business model.

Key Supreme Court Rulings:

• Gregory v. Helvering, 293 U.S. 465 (1935): “The rule which excludes sham transactions from consideration for tax purposes also applies where transactions are real in form but lack economic substance.”

• Commissioner v. Court Holding Co., 324 U.S. 331 (1945): “The incidence of taxation depends upon the substance of a transaction. The tax consequences… must be determined from the reality and not the form.”

• Frank Lyon Co. v. United States, 435 U.S. 561 (1978): Held that even formally compliant transactions can be recharacterized when they do not reflect genuine economic substance.

Modern application: If a sale-leaseback is functionally a loan with a repurchase right, courts and regulators are obligated to treat it as such—especially where consumer protections are being bypassed.

Entity Structure Flowchart: Obscuring Ownership to Evade Lending Laws

Below is a flowchart demonstrating how EasyKnock uses affiliated entities—including Moderne Capital funds and TVC Funding SPVs—to structure deceptive transactions. These entities act as third-party buyers and landlords but are capitalized by the same private equity network.

Note: These SPVs are functionally indistinct from loan servicer's  or note holders in securitized mortgage trusts. But they are deliberately structured to avoid the regulatory oversight typically required of mortgage lenders.

Documented Abuses in Neal v. EasyKnock and Johnson v. EasyKnock

1. Notary Fraud Across State Lines

• In Neal v. EasyKnock (Texas), a Florida notary was used to execute a Texas deed. The notary has since been removed from the Florida notary registry after a complaint regarding fraudulent execution.

• In Johnson v. EasyKnock (Illinois), a Florida notary notarized a deed involving Johnson’s homestead of over 50 years in Markham. No Illinois notary or broker was involved, violating 225 ILCS 454/20-20 and potentially Illinois Notary Act (5 ILCS 312/6-102).

• These are not isolated errors—they represent a systemic evasion of local consumer protection laws.

2. Misleading and False Documents Filed

• In Neal, Blueprint Title, EasyKnock’s partner, recorded an affidavit of facts containing false representations and used a commercial deed for a single-family residence zoned property, which may violate Texas Local Government Code § 211.003.

• Johnson’s transaction was executed through ClearEdge Title, which is also a named title agent in the Roberts v. AOI Partnership Solutions litigation (federal case involving EasyKnock affiliates).

• Both cases show the use of non-judicial methods to launder fraudulent or defective transactions into valid chain-of-title records, damaging consumer homestead rights.

Legal & Regulatory Implications for Texas and Illinois

Texas Violations

• Texas Constitution Art. XVI §50: Homestead protections may not be waived; commercial transactions disguised as leases violate this.

• Tex. Fin. Code §393.001: Credit must be arranged “by others,” not related parties. EasyKnock SPVs are under common control and violate this separation.

• Deceptive Trade Practices Act (DTPA): Misrepresentation of services, failing to disclose material facts.

Illinois Violations

• Residential Landlord Tenant Ordinance (RLTO): Displacement of tenants without valid lease protections violates local housing ordinances.

• Illinois Mortgage Act & Consumer Fraud Act: Mislabeling functional mortgage as a sale to avoid lending regulation is a deceptive act under 815 ILCS 505/2.

• Illinois Real Estate License Act: Unlicensed broker activity violates 225 ILCS 454/20-20.

Conclusion: A New Digital Predation Model Requires Urgent Oversight

The evidence reveals that EasyKnock’s model—like payday lenders of the last decade—is deliberately structured to evade consumer finance laws, prey on homeowners in distress, and remove critical protections under the guise of innovation.

We call upon regulators and lawmakers in Texas, Illinois, and at the federal level to:

1. Classify EasyKnock’s model as a disguised loan, subject to Truth in Lending Act (TILA), RESPA, and state homestead protections.

2. Investigate notary fraud and improper title recordings across multiple states and title companies.

3. Disallow commercial deeds on single-family residential (SFR) properties, especially when not intended for commercial use.

“If it walks like a duck and quacks like a duck, it’s a duck.” – U.S. Supreme Court, paraphrased in substance-over-form decisions.

Appendices & Supporting Documents

• Title affidavits and notary records (Neal and Johnson)

• Entity Registry Data: Blueprint Title, ClearEdge Title, Moderne Coinvest Fund, TVC SPVs

• Federal Litigation Citations: Roberts v. AOI Partnership Solutions

• Texas Appleseed Excerpts on CAB and lender overlap