Swamplot Archives by Tag: Fraud

Tuesday, October 27, 2009

Comment of the Day: The Phantom Tollbooths of I-10

October 27, 2009 – 6:17 pm
   

“Ahe yes, the technology of the HOT lane. I had the opportunity to reverse communte I10 last week all week and every day I was the only car to correctly stay in the toll lane as I went past the toll gate rather than seamlessly merging into the high occupancy lane [and then] merging back out after skipping the toll. It looked like a peloton of single occupant cars as we sped along. Do they actuially intend to enforce the high occupancy part of this system somehow at some point[?]” [Jimbo, commenting on Paying Tolls on I-45, 290, and 59]

6:17 pm | 2 Comments | Read more about Comments, Fraud, Freeways and Toll Roads, Quicklink
Read more about: , , ,
Friday, October 23, 2009

Comment of the Day: How We Beat the Zoning Boards

October 23, 2009 – 1:17 pm
   

“. . . I’ll have to plead the 5th as to how I came to understand this, but let it be known that city councils and P&Z boards can be bought over quite easily. All it takes is for a developer to contract the consulting services of a well-connected ex-councilmember at some ludicrious price and send him to town with a five-figure entertainment budget (which sounds like a lot, but isn’t in the scope of a $50 mil. project); meanwhile, the developer ensures that their first renderings contain a few blatantly offensive architectural features that the targeted politicians can criticize. The developer makes the changes requested (which they would’ve made anyway) so as that the targeted politicians can save face with their constituents. And the really dangerous part of all this is that once a politician is clearly in your pocket, it’s hard for them to say no to just about anything else in the future so long as the developer provides them with a mechanism to save face. . . .” [TheNiche, commenting on Ashby Highrise Loses Appeal]

1:17 pm | 18 Comments | Read more about Comments, Crime, Development Regulations, Development Strategies, Quicklink
Read more about: , , , , ,
Friday, August 21, 2009

Comment of the Day: I Was a Schmuck for Michael B. Smuck

August 21, 2009 – 7:37 pm
   

“. . . We, as managers, were forced to lie to residents about repairs as no company would sell us supplies. We had numerous occassions where trash service and water were stopped due to non-paynment. New residents were moved into dirty apartments with shoddy repairs, old uncleaned carpet and were expected to deal with it. All ‘extras’ tenents had come to expect were discontinued when MBS took over. I was also employed when our christmas paychecks bounced, although it didn’t happen at all properties. Forget a refund on your deposit as well. Even if the apartment was left in perfect condition we were forcefully told to find something to charge them for to keep all their money. Keep in mind all of what I experienced happened before Katrina — I was long gone by then. Working for those people made me leave the apartment industry for good.” [Laura, commenting on The Lodge at Baybrook: Smuck Survivor]

7:37 pm | 1 Comment | Read more about Apartments, Comments, Crime, Fraud, Leasing, Quicklink
Read more about: , , , , ,
Tuesday, August 11, 2009

Okun Gets 100 Years; How Many for the West Oaks Mall?

August 11, 2009 – 11:54 am

High-stakes real estate swindler Edward H. Okun was sentenced last week in a Virginia courtroom to 100 years in prison for absconding with about $126 million in funds entrusted to his qualified intermediary company by 1031 exchange investors. Meanwhile, back on the corner of Westheimer and Highway 6, one of his former properties went up for sale.

Okun’s Investment Properties of America bought the West Oaks Mall for $110 million in 2005. The sellers of the bankrupt property might expect to get $20 million for the million-sq.-ft. mall today, reports Globe St.’s Amy Wolff Sorter:

The mall’s anchors include Dillard’s and Macy’s, which own their own space, and Sears, which is on a lease. [Holliday Fenoglio Fowler's Robert] Williamson says the Sears lease is up in 2010, but negotiations are underway to keep the retailer in place.

When Okun bought the mall from Somera Capital and CoastWood Capital a little less than four years ago, the asset was 95% leased, and sported $10 million worth of exterior and interior improvements. IPA had even larger plans for even more renovations on the 33-acre site, Williamson says.

Less than a year later, the owner was able to secure $86 million of permanent financing for the mall. Yet by late 2007, IPA had filed for bankruptcy protection to stave off foreclosure. Okun’s troubles and a failing economy dropped the mall’s occupancy to a little less than 70%.

How’s the mall looking these days?

Continue Reading This Story >

11:54 am | 4 Comments | Read more about 1031 Exchanges, Buildings for Sale, Commercial Real Estate, Foreclosures, Fraud, Leasing, Malls, Neighborhoods: Alief, Retail
Read more about: , , , , , , , , , , ,
Tuesday, April 28, 2009

Tracking the Disappearance of Antique Properties

April 28, 2009 – 10:32 am

Jerry and Wynonne Hart are scheduled to be sentenced today for “misapplication of fiduciary property” in the operation of their auction business at the Hart Galleries. In return for the couple’s guilty plea, prosecutors dropped charges of theft and money laundering.

11 News reporter Dave Fehling spoke to several former Hart Galleries customers:

The auction house thrived for years. The Harts enjoyed a sterling reputation among the rich and not so rich who all trusted the Harts to sell their valuables. But around 2003, something strange began happening . . .

. . . the Harts auctioned furniture and antiques for John Zielinski and his wife.

They were expecting to get $20,000.

“And I said, ‘where’s our money?’ And they said, ‘we’re having difficulty collecting some of the checks,’” said Zielinski.

The next thing Harts’ customers learned was that the couple was bankrupt.

Continue Reading This Story >

10:32 am | 5 Comments | Read more about Bankruptcies, Crime, Fraud, Furniture, Neighborhoods: Galleria, Neighborhoods: Upper Kirby, Redevelopment, Retail
Read more about: , , , , , , , , , , ,
Thursday, April 9, 2009

League City Condo Trap: Bad Conversion at the Fairways

April 9, 2009 – 1:40 pm

Just how did a group of Israeli investors get stuck with 114 condo units in this quaint converted apartment complex in League City? And why are they now suing the project’s developer and property manager?

The Galveston County Daily News’s Laura Elder explains:

The investors never intended to live in the units but instead were seeking to generate income by renting them to others, according to the lawsuit. Through agreements, the units owned by the investors were put in a rental pool managed by the defendants, according to the lawsuit.

But while Westcorp Management Group, of which Roni Amid is vice chairman, had been collecting rent from tenants, it failed to pay proceeds to the mortgage company or the investors for some units, according to the lawsuit.

Without rental income, some of the investors are unable to pay their mortgages, leading lenders to begin foreclosure proceedings on at least 30 units in the complex, said Danny Sheena, a Houston attorney representing investors.

The suit also claims the defendants used the investors’ units at the Fairways at South Shore as collateral for a $23 million loan from Deutsche Bank obtained behind their backs last August. Which means, the suit claims, the investors can’t sell their units.

And that Israeli connection? Looks like it’s all in the family:

Continue Reading This Story >

1:40 pm | Add a Comment | Read more about Condos, Foreclosures, Fraud, Hazards, Neighborhoods: League City, Real Estate Investing
Read more about: , , , , , , ,
Thursday, March 26, 2009

Comment of the Day: The Landlord Racket

March 26, 2009 – 5:10 pm
   

“I commented to my wife the other day that, in light of foreclosures on rentals, if we decide to rent a house instead of an apartment we will have to demand the right to a credit report on the landlord. I guess we’ll want a criminal background check also :)” [MikeRG, commenting on Serial Renter Meets His Match]

5:10 pm | Add a Comment | Read more about Comments, Crime, Fraud, Leasing, Quicklink
Read more about: , , ,

Serial Renter Meets His Match

March 26, 2009 – 11:16 am
   

There was something fishy about that home on Shady Canyon, Amber Rogers found out. She gave a $2500 deposit to Jonathan Soto, but it turns out he was renting out the same property to other people too. Cut to dual-renter ambush in Stone Gate subdivision: “Rogers says she hid in the garage and called 911. She came out right when Soto was giving his sales pitch. ‘When he turned around and saw me, I could have sworn he thought he saw a ghost. It almost knocked him off his feet. It was hilarious,’ Rogers said. Rogers says he tried to escape through a window. ‘I was the closest one to him. I grabbed him and I threw him into the wall,’ Rogers said. . . . Rogers says it was a good thing the police arrived when they did. Soto was carrying a gun, and according to her, he appeared to be reaching for it.” [11 News]

11:16 am | 5 Comments | Read more about Crime, Fraud, Leasing, Neighborhoods: Stone Gate, Quicklink
Read more about: , , ,
Tuesday, February 17, 2009

Feds Now Raiding Stanford Financial Group Offices in the Galleria

February 17, 2009 – 11:46 am

From the New York Times website this morning:

Shortly after 10 a.m. Central time, about 40 police officers and other law enforcement officials simultaneously entered Stanford Group’s two office buildings in Houston. Many of the law enforcement personnel carried large black briefcases. Stanford group’s headquarters are in two offices in Houston, one within a tower of the Houston Galleria shopping mall, and the other across the street.

Photo of Stanford Financial Group Offices, 5050 Westheimer: Stanford Financial Group

11:46 am | 5 Comments | Read more about Crime, Fraud, Neighborhoods: Galleria
Read more about: , , , ,
Friday, November 7, 2008

La Casita Apartment Takeover: How Does This Happen?

November 7, 2008 – 9:49 am

Late last night city officials were able to get an emergency court order allowing a trustee to take over the La Casita Apartments at 313 Sunnyside near Northline. And MGC Mortgage, the company left holding onto the foreclosed property, has “transferred oversight” of the 600-unit complex behind Gallery Furniture to a new management company. The agreements, along with other interventions by the city, mean the more than 1,000 residents of the all-bills-paid apartments will not be evicted, have their water or electricity shut off, or lose credit for the monthly rent they just paid:

Residents of the La Casita Apartments already felt neglected by managers who let buildings run down, even before Hurricane Ike broke windows and tore patches off roofs. But instead of starting on repairs to make the apartments livable after the storm, management skipped town, keeping the rent money and leaving the bills unpaid.

The apparent owner of La Casita is an Indiana company named Briarwood Houston LP. The complex failed a Houston Housing Authority inspection last month. Police officials are investigating the management company’s handling of the payments.

9:49 am | 1 Comment | Read more about Apartments, Foreclosures, Fraud, Hazards, Neighborhoods: Northline
Read more about: , , , , ,
Thursday, October 9, 2008

Delinquent Debt: West Oaks Mall Sale!

October 9, 2008 – 2:36 pm
   

Here’s another chance to clean up some of the wreckage left by mysterious investor Edward Okun: “West Oaks Mall in Houston . . . has $81.3 million in delinquent debt attached to it in the form of commercial mortgage-backed securities. Joseph Luzinski, the federally appointed bankruptcy trustee for West Oaks Mall, said he hopes to sell the mall by year’s end, though store closures continue to hamper its value. [The mall] . . . is about 80% occupied, having lost a J.C. Penney, Linens ‘n Things and Whitehall Jewelers. The mall recently cut a deal to keep its Steve & Barry’s LLC store open amid that retailer’s bankruptcy. The special servicer for the mall’s debt, LNR Partners Inc., attempted to foreclose in September 2007, but Mr. Okun forestalled the move by putting the mall into Chapter 11 bankruptcy protection the next month. A federal grand jury indicted Mr. Okun on fraud charges last March after his 1031 Tax Group LLP, a company that helped facilitate tax-free real-estate deals for small investors, collapsed into bankruptcy and didn’t return $132 million of investors’ money.” [Wall St. Journal; previously]

2:36 pm | 4 Comments | Read more about Commercial Real Estate, Financing, Foreclosures, Fraud, Malls, Neighborhoods: Alief, Openings and Closings, Quicklink
Read more about: , , , , , , , , ,
Thursday, October 2, 2008

Bill Heard Chevrolet: Nothing Must Go!

October 2, 2008 – 12:30 pm

Bill Heard Chevrolet Dealership, Sugar Land, Texas

Security Guard, Bill Heard Chevrolet Dealership, Sugar Land, TexasOn the lot at the shuttered Bill Heard Chevrolet off the Southwest Freeway in Sugar Land Saturday: a couple of armed security guards, hired by GM to make sure nothing leaves the lot.

Inside the dealership’s main offices it looks as though the entire showroom floor was frozen in time. Deflated balloons hang off of cubicle corners and showroom models. A loan application sits on a desk, unfinished. A framed picture of a family going down a roller coaster at Sea World hangs above an uncleared desk, one of many family photos that indicate the suddenness of the announcement.

If you’re to believe one of the managers of this particular dealership, the employees stayed late into the night helping customers get their plates processed and out the door. Contradicting this is an article from Wednesday in the Houston Chronicle in which the operations manager of Bill Heard Sugar Land, Linda Patterson, claimed they were selling vehicles into the night and would continue to stay in business. But by the next morning it was announced they would be closing, possibly for good.

After the jump: More on Bill Heard’s collapse, plus photos from Jalopnik’s (how’d they get?) behind-the-scenes report!

Continue Reading This Story >

12:30 pm | 1 Comment | Read more about Fraud, Neighborhoods: Sugar Land, Openings and Closings, Retail
Read more about: , , , ,
Thursday, September 4, 2008

Staff and Paperwork Reduction at Royce Builders and Hammersmith Financial

September 4, 2008 – 4:03 pm

What’s in the Swamplot inbox? More fun news and comments about Royce Builders and mortgage-y sidekick Hammersmith Financial:

According to a source all sales was finally let go yesterday. . . . Subdivisions have been completely stone cold. In addition, Hammersmith finished up last Friday. Between both, lots of shredding going on. The remainder of Royce is in the Hammersmith offices as well. Also, many who may be interested, [Royce Chief Operating Officer James] Hunter’s last day was a week ago Friday.

For any buyers out there who feel the have been defrauded by Royce, all they need to do is contact the Consumer Fraud Division at 713-755-5836. This is the DA’s office and there is the possibility that criminal charges may be filed if Royce knowingly defrauded consumers, but they MUST make the call.

A little bit more on the shredding:

Continue Reading This Story >

4:03 pm | 10 Comments | Read more about Hazards, Homebuilders
Read more about: , , ,
Tuesday, June 24, 2008

Finding Hidden Value in the Tremont Tower

June 24, 2008 – 5:00 pm

Tremont Tower, 3311 Yupon St., Houston

It didn’t garner much local attention, but a certain local condo building — along with a few close friends — made a star appearance in last week’s big mortgage-scam announcement by the FBI. More than 400 people were charged in 144 separate mortgage fraud cases nationwide over the last 3 months as part of the agency’s “Operation Malicious Mortgage.” Six of those arrests were in Houston:

This indictment charges Houston-area residents Frankthea Annette Williams, Ishmael Boyd Laryea, Charles Joseph-DeShawn Wilson, Kristen Anne Way and Robert Wilfred Stanley, and Tasha Rene Bellow, of Burbank, Calif., with engaging in a scheme to defraud by providing false and fraudulent information to residential lenders to induce the lenders to fund the purchase of single family homes and condominium units.

11 News reporter Allison Triarsi describes how the scams worked:

The suspects would find a home for sale, let’s say $200,000.

They would then get a phony appraisal that would almost double the home’s actual value. In that case, $400,000.

The culprits would then look for an investor. That’s someone to actually put the house in their name using their good credit for the closing and title.

A bank would then loan the money for the house, which has the phony appraisal value. The crooks would then pay the seller the $200,000 asking price and pocket the other $200,000.

Here’s a question. If you were trying to run this scam, where would you find properties you could get appraised for as much as twice their actual value? Sure, Houston had some price runups . . . and yes, appraisals can be played. But why fake something you don’t have to?

Continue Reading This Story >

5:00 pm | 9 Comments | Read more about Buying and Selling, Condos, Crime, Financing, Neighborhoods: Montrose
Read more about: , , , , , , , ,
Thursday, April 17, 2008

West Oaks Mall Bankruptcy Sale: JCPenneys on the Dollar

April 17, 2008 – 10:08 pm

An update on the 1031-exchange debacle surrounding the West Oaks Mall: In March, the mysterious Edward Okun — the mall’s owner — was indicted by a Virginia grand jury on charges of mail fraud, for misappropriating $132 million invested in his 1031 exchange company, 1031 Tax Group — along with bulk cash smuggling and related charges. Days later, Okun was arrested in his home on Hibiscus Island in Miami Beach.

To the 340 investors who had trusted $150 million of their 1031-exchange funds to supposedly-qualified intermediaries controlled by Okun, this was good news. But it doesn’t necessarily mean they’ll get their money back — or find a way around the huge tax liability now associated with their failed exchanges.

The 1031-exchange investors in Okun’s 1031 Tax Group had hoped to recoup some of their missing funds by raiding Okun’s other assets — including the West Oaks Mall. But the Okun-controlled companies that owned the mall declared Chapter 11 bankruptcy in October.

Today, the Costar Group reports that the freestanding building formerly known as JCPenney at the West Oaks Mall has been put up for sale, along with a mall in Salina, Kansas. The trustee in the bankruptcy case has hired Keen Realty, the new real estate division of KPMG Corporate Finance, to market both properties.

10:08 pm | 1 Comment | Read more about Crime, Financing, Fraud, Malls, Neighborhoods: Alief
Read more about: , , , , , , , ,