Monday, January 24, 2011

Airing Pamiko's St. Paul Dirty Laundry

Pictured above:  The only Ramsey County property confirmed so far as owned by Koenig and financed in part by MinnWest.

Image originally from the Koenigs' blog, republished under First Amendment comment and criticism
Post by the Hawthorne Hawkman, photos originally published on Johnny Northside.

One of the two lawsuits against Paul and Michelle Koenig and Pamiko has been tracked down.  I went to St. Paul first since that would be the harder set of documents to obtain.  I'd love to publish every scrap of paper associated with this suit, but Ramsey County doesn't make it cheap to obtain court documents.  So the following links get you the most telling aspects of the case thus far:

Pamiko Register of Actions, Ramsey County
Pamiko Summons, Ramsey County
Pamiko Scheduling Order, Ramsey County

What these documents tell us, so far, isn't much.  Although there was another item wherein the attorneys for Minnwest attempted to go the direction of mediation as ordered by the judge, and were stonewalled by the Koenigs and their attorney.  As far as the summons and scheduling order go, the most important parts of those documents say...

...more or less what was uncovered on JNS regarding the Koenigs' dealings with Minnwest.  Apparently once they started to lose properties left, right, and center, they entered into some kind of agreement with Minnwest over the remaining ones.  That agreement is referenced in the court documents, but not spelled out specifically at this time.  But - and here's a shocker - the Koenigs through Pamiko allegedly failed to comply with that agreement, thus costing Minnwest enough money that they are now suing the Koenigs and others in both Hennepin and Ramsey counties.

Minnwest is alleging that due to the Koenigs' breach of their agreement, that arrangement should be rescinded, and compensatory damages awarded.

The court documents also lay out the timeline for resolution:
  • The discovery phase is to end by February 18, 2011.
  • The time to add defendants or expert witnesses has already passed.
  • Dispositive motions must be heard by March 18, 2011.
  • The deadline for mediation has passed, and mediation did not happen due to the defendants' unresponsiveness.
  • A pre-trial settlement conference is scheduled for June 28, 2011.
  • Barring a settlement prior to trial, a trial is set for a three-week block from August 8 to August 26, 2011.  The trial is expected to last one day, and neither side has requested a jury.
And there we have it.  NXNS will provide as much documentation and details as possible throughout both Koenig trials.

11 comments:

  1. Before a settlement or sentencing; perhaps the communities involved should have their community councils draft some letters stating the impact these properties and others like them have on the residents and neighborhoods.

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  2. As this is a civil, rather than a criminal case, I don't know if impact statements are admissible or not.

    This is certainly one of those times when being a fly on the wall could be handy.

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  3. Many times evidence deemed non-admissible for convection purposes has a dramatic impact on sentencing, and those sentences have an impact on others willingness to attempt the same scheme...

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  4. Come on - Leave Paul alone. Basically his financing fell apart during the credit crisis. During the demo phase 30-40 properties were left without adequate funds to complete the rehabs. When Minnwest Bank lost the ability to honor their commitment to Paul, Paul lost his ability to rehab the homes and honor his obligation to the community. What was the guy supposed to do? I’m not saying Paul’s completely innocent...BECAUSE HE’s NOT…..but I am saying the system is broken. Focus on the solutions instead of beating a dead horse. YES these investors were a problem. YES porches converted into bedrooms are a bad idea. YES inadequately financed investors are a problem. But what solutions are you presenting……NONE. Only one thing will fix the problem. HOME OWNERSHIP. The locals need to take PRIDE & OWNERSHIP in the community. That’s my 2 cents

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  5. @ Anon 10:58, Leave Paul alone? You have GOT to be kidding. How did "Minnwest [lose] the ability to honor their commitment to Paul"? Every shred of evidence I have seen indicates the exact opposite is true - or more likely that Koenig chose not to fulfill his end of the bargain while living a lavish lifestyle most of us would only dream of.

    Furthermore, Koenig did this not once, but twice in NoMi. One solution I'm offering is in the act of extensively documenting Koenig's misdeeds. Let other investors know that north Minneapolis is no longer their dumping ground. Let other investors know that there are dedicated, watchful neighbors who want good landlords and owner-occupants, but won't tolerate the slumlords anymore. Let the slumlords know that if they do slip by inspections, the community will be there to hold them accountable.

    On NXNS, JNS, and through my work as Housing Director for Hawthorne, I've offered and helped create plenty of solutions to the housing crisis in my community. Obviously there's still work to do, but to say I'm presenting nothing is a gross misstatement. If I'm doing a post exposing Koenig or other landlords, I have no need to rewrite a dissertation of possible solutions at that time.

    We do agree, though, that home ownership and community pride are absolutely necessary as solutions to this crisis.

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  6. Jeff – With all do respect, you’re wrong. Go back and look at the stability of financial markets from May 2008 – March 2009. The Dow went from 13000 to 6600 and YES there was a credit freeze by the banks. The Troubled Asset Relief Program (TARP) was implemented to get banks lending again. This wasn’t just a Minnwest Bank issue. All banks had liquidity problems. Paul bought a bunch (okay, a lot) of rehabber homes. A large percentage of the homes never made it to completion because of a worldwide credit freeze. Unfortunately the Northside is still picking up the pieces. Paul was playing text book 101 real-estate investing: Buy a property – fix it up – rent it out – harvest some equity…..What’s wrong with that? Here’s the real problem…..HIS TIMING SUCKED. I’d focus on homeownership initiatives, reducing the number of rental properties, having land lords post surety bonds, etc. What good does it do to point out that the rich spend a lot of money? How aPAULing!! (I thought you’d like that one) Again – Paul’s no angel……..but I think your point of view is clouded unless you consider the effects of the financial crisis. I like your efforts, just not your angle.

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  7. Well Anon, here is why I am not inclined to agree with you. I haven't heard one story from a neighbor about an ultimately positive experience with Koenig. Even when residents felt he responded - by "kicking out" drug dealing tenants in some instances - it turns out he just shuffled those tenants around to different Pamiko properties.

    It's not like we had interactions with Koenig where he was a magnificent property owner up until the credit freeze. The anecdotal evidence from neighbors has been consistently detrimental.

    Furthermore, as will be discussed in upcoming posts about the Hennepin County civil trial, Minnwest alleges that Koenig was attempting to illegally transfer properties to another LLC during the foreclosure process. If those allegations are true (and I believe they are), they indicate a deliberate attempt to defraud not only a lending institution but also public subsidies that pay out for low-income rental assistance.

    So until I see evidence to the contrary - and I will be reviewing the court case in great detail - my angle will stay the same.

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  8. Jeff -  Name (1) landlord who owns 5+ units in NoMi that isn't regularly referred to as a slumlord? YES Paul is a slumlord.  It didn't work out because of the financial crisis.  Why not just man-up and acknowledge that his timing SUCKED?

    Note the mention of the confidentiality agreement in the lawsuit. This has been very embarrassing for Minnwest and they are as much to blame as Paul.  They want this to quietly go away.  Believe me when I say this - the bank (Paul's partner) messed up and is as much to blame as Paul.

    Is he a slumlord....ABSOLUTELY

    Is he guilty of everything Minnwest is suing him for.....PROBABLY

    Did he defraud public subsidies.....UNLIKELY

    Are you beating a dead horse.....YES

    So why do I say leave the guy alone?  He's lost everything....and has suffered enough embarrassment.  I think it's time for you and John to forgive the guy and move on.  

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  9. All right, you got me. I can't think of an owner of multiple properties in NoMi that isn't referred to as a slumlord. I'd bet those owners are out there, and if so, they're doing their jobs and staying off of the radar. And if they're not, your argument still does nothing to absolve Koenig.

    How about Rosie Lee and her kids at 2420 Bryant Ave N? When they had to shovel feces out of their basement with plastic bags from grocery stores, did they suffer enough? What about the folks on Hillside who had multiple problem properties owned by Koenig? Has Paul's supposed suffering alleviated anything they went through?

    The houses Koenig either rehabbed or was trying to rehab before his own house of cards collapsed included attempts to reconfigure floor plans, close off porches, and add bedrooms. This is not indicative of bad timing, it's slumlording 101.

    Minnwest Bank probably did make some degree of error (or Koenig had an inside man helping push loans through, which may still be the culpability of Minnwest). That does not diminish the impact of Koenig's multiple foreclosure bombs in NoMi.

    In the Dream Homes court case, Kohlenberger admitted to lying about the receipt of public subsidies to entice investors. It is my belief that Koenig was in on that, but managed to shift the blame. Given that behavior and what is alleged so far, defrauding public subsidies isn't out of the question.

    Finally, he caused enough damage with the Dream Homes fiasco, then several years later Pamiko came along and gave us reruns, and even post-Pamiko it looks like Koenig has been trying to improperly transfer properties to himself. That court case is ongoing. So no, this is not a dead horse. But even if it were, I'd say we need to do the autopsy to understand what happened and keep it from occurring in our community ever again.

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  10. I think both Minnwest and Koenig should be charged criminally for what they have done in NoMi!!!!!!!!

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  11. Amen - Anon 9:11,

    Why do banks and financial institutions get a free ride?

    Anon 10:30...

    As I see it, a Good 5+ landlord in NoMi is an oxymoron.

    Why don't you show us a few 5+ landlords from NoMi that set an example for appropriate community stewardship?

    Or have you justified the standards for financial profitability so low that the examples set forth here are acceptable and the impact on others is immaterial?

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