MICHAEL B. SMUCK IS GOING TO JAIL Longtime Louisiana and Texas real-estate investor Michael B. Smuck pled guilty this week to one count of mail fraud in connection with the sale of the Briar Meadows Apartments on Dairy Ashford, just north of Briar Forest Dr. An investment company controlled by Smuck purchased the complex in 2004. Smuck sold the property in 2007, according to federal prosecutors, but didn’t tell his investors. Instead, he used the almost $3.5 million in proceeds to pay debts owed by other business entities he controlled: “Smuck continued to send documentation to investors in Briar Meadows in order to give the fictitious appearance that the investment property was still active.
Pursuant to the plea agreement entered into by the parties, Smuck faces a term of imprisonment of 30 months and a $250,000.00 fine. In an effort to make the victims of this crime whole, the United States has secured from the defendant an agreement to pay a minimum of $3,299,480 in restitution to investors in both Briar Meadows and Yellowstone Ranch, which are apartment communities in Houston, TX.” [U.S. Attorney’s Office; background; previously on Swamplot]
COMMENT OF THE DAY: I WAS A SCHMUCK FOR MICHAEL B. SMUCK “. . . 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]
THE MICHAEL B. SMUCK APARTMENT FLIPS BEGIN Triumph Land & Capital Management, the company that bought two other former Smucked apartment complexes, has already flipped a third: “‘The seller had bought the loan on Village at Loch Katrine, then foreclosed on it, then sold the property,’ says Russell D. Jones, vice president of Apartment Realty Advisors in Houston. He says Andrew Chong had signed the purchase agreement before Triumph Land & Capital foreclosed on the loan. Although Jones kept mum about the price, area sources believe the Village at Loch Katrine, situated at 16545 Loch Katrine Lane, sold for $6.5 million to $7 million.” [Globe St.; previously]
Another apartment complex rescued from the clutches of famed real-estate investor and apartment-maintenance whiz Michael B. Smuck! This time it’s the Lodge at Baybrook, a 12-building, 322-unit compound on 13.7 acres just behind Baybrook Mall in Friendswood. Globe St.‘s Amy Wolff Sorter reports that Chicago-based Adams LaSalle Realty has bought the complex from Smuck’s bankrupt MBS Properties for “well below” the $28.6 million it first listed for back in 2006.
The Lodge at Baybrook was built just 9 years ago, but apparently there’s plenty of deferred maintenance for the new owners to take care of. No word of any impending name change.
A Dallas real-estate firm is ready to rescue the Huntwick Apartments on FM 1960 near Wunderlich Rd. from receivership — and also from its management, before that, by Louisiana real-estate investor Michael B. Smuck.
As of last year, just as it prepared to file for bankruptcy, Smuck’s Louisiana-based MBS Companies owned 65 apartment buildings in Texas — 33 of them in the Houston area. Even prior to that, the company’s property-maintenance skills had reached legendary status. The president and executive vice president of the Houston Apartment Association relayed complaints from residents and neighbors of MBS apartments to the Wall Street Journal last year, and reported that the griping had only increased after the influx of residents fleeing Hurricane Katrina in late 2005.
Here’s a commenter on the Houston Politics blog back in April (quoted in Swamplot), describing the scene at the 288-unit Huntwick:
Balconies have collapsed, lots of overgrown vegetation, the paint is peeling, there is obviously a total lack of maintenance. A large tree split in half on their property adjacent to Coral Gables Dr., and after the dead half lay on the ground (in plain view) for over 6 months, a crew finally cut it into smaller pieces, which then lay in the same spot for another 6 months.
After the jump: What’s happening to the Huntwick, plus the complete Michael B. Smuck Houston apartment roster!
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