Bankruptcy Proceedings About to Land Notorious Slumlord Paul Koenig in Financial Hot Water!

Post and illustrative stock photo by the Hawthorne Hawkman.

An anonymous commenter recently made readers of this blog aware of the fact that Paul Koenig, the slumlord behind Dream Homes, Pamiko, and a host of other slummy LLC's, as well as a failed attempt to keep his foreclosed properties for $1 apiece, can't even go through BANKRUPTCY without getting into more financial difficulty.

The man at one time owned eighty or more properties in north Minneapolis alone, and used this community as a cash cow to feed an extravagant lifestyle of motor homes, racehorses, and a mansion in Afton.  Oh how the mighty have fallen.

Documents are coming into my hands from a source associated with the Johnny Northside blog.  Two such docs are already here; one is a Notice of Removal transferring Koenig's bankruptcy proceedings to a different court, and the second is an Unlawful Detainer Koenig filed at his (now rental) property at 1775 Majestic Pines Trail, Afton MN.

I'm not an attorney nor have I ever declared bankruptcy, so what follows is a layman's reading of these documents.  However the very first time I noticed something odd about the Pamiko property empire, I posted what it was that I did know in hopes that more information would follow.  I'm employing the same strategy here, and eagerly await more documentation.

Let's jump in, shall we?

The primary document lists Terri A. Running as the trustee, seeking to move a matter to the United States Bankruptcy Court for the District of Minnesota.  The grounds for this move come from the allegation that Paul Koenig, Michelle Koenig, and an entity they own - MCK Investments - have commenced a proceeding in Washington County claiming interest in real estate.  However, in their bankruptcy papers, they apparently did not declare an interest in the property in question.  That property is the mansion owned by the Koenigs, which they tried to sell for $1.1 million just as their house of cards was collapsing around them.

While claiming no interest in the property in question, the Koenigs, though MCK Investments, filed an eviction notice on Matthew Cooper and Nina Cooper, who have been renting this property.  The Coopers should have been paying monthly rent of $4,650 beginning in May of 2011.  Between December 2011 and April 2012, they did not pay rent and MCK Investments is seeking the rent due, plus late charges, plus attorney's fees, in the amount of $26,294.

In another interesting twist, when MCK Investments last renewed their business license with the Secretary of State in December 2011, they listed Paul Koenig as the manager and 1775 Majestic Pines Trail as the Principle Executive Office Address.

Here's what the two documents in question seem to be telling us:  Koenig claimed no ownership interest, in the property, or at least an exemption from the bankruptcy proceedings.  He then proceeded to rent out the place, through an LLC for which he is the primary officer.  When the rent was not paid on time, he filed an Unlawful Detainer, which was discovered as part of the bankruptcy proceedings.  And something tells me bankruptcy judges don't look too fondly upon people who seem to be hiding assets.

This blogger has long opined that Koenig's financial misdeeds on rental properties throughout north Minneapolis should have landed him in jail a long time ago.  How poetic would it be if renting out his ritzy exurban mansion is what exacts the justice he deserves?

ADDENDUM:  Here is the text of the main document in question.

UNITED STATES BANKRUPTCY COURT

DISTRICT OF MINNESOTA

___________________________________

In re: BKY No.:  11-35286

Chapter 7

Paul M. Koenig,

  Debtor.

___________________________________

Terri A. Running, Trustee,

 Plaintiff,

vs.

Michelle Koenig,

Paul Koenig,

MCK Investments, LLC

   Defendant.

___________________________________

NOTICE OF REMOVAL

TO: Clerk of Court

United States Bankruptcy Court

District of Minnesota

Warren F. Burger Federal Building and U.S. Courthouse, Suite 200

316 North Robert Street

St. Paul, MN 55101

Court Administrator

Washington County District Court

 14949 62nd Street N.

 Stillwater, MN 55082

 Kenneth Hertz

 Hertz Law Offices, P.A.

 3853 Central Avenue NE

 Columbia Heights, MN 55421

PLEASE TAKE NOTICE that Terri A. Running, Trustee, by her undersigned attorneys,

removes this matter to the United States Bankruptcy Court for the District of Minnesota. 

The grounds for removal are:

1. Debtor, his spouse and an entity owned by Debtor have commenced a proceeding in

state court (Washington County Court File 82-CV-12-2576) claiming an interest in real property as

to which the bankruptcy estate claims an interest pursuant to 11 U.S.C. §541, namely 1775 Majestic

Pines Trail, Afton, Minnesota 55001.

2. The bankruptcy case was commenced on August 18, 2011, and the Trustee possesses

an interest in the subject real property and has collected rents.  Plaintiffs seek to interfere with

administration of the bankruptcy estate.  

3. Debtor claimed an exemption of $0.00 in the real property.

4. Debtor commenced the state court action only when his discharge was imminent.

5. This is a core proceeding.

6. All pleadings in the Trustee's possession are attached hereto as Exhibit A.

7. The above-entitled action is a civil action over which this Court would have original

jurisdiction pursuant to 28 U.S.C. §1334, and which therefore may be removed to this Court

pursuant to 28 U.S.C. §1441, in that the action arises under the laws of the United States.

8. The Trustee consents to this Court entering a final order.

LEONARD, O’BRIEN

SPENCER, GALE & SAYRE, LTD.

/e/   Matthew R. Burton 

Dated: May 3, 2012    By______________________________

    Matthew R. Burton, #210018 

    Attorneys for Terri A. Running, Trustee

    100 South Fifth Street, Suite 2500

    Minneapolis, Minnesota  55402-1216

    (612) 332-1030

ADDENDUM #2, the text of the UD coming soon, but clicking on the link at the top of the post will get that as well.

ADDENDUM #3, I have not posted the text of the UD, but did receive an email from someone claiming to be a resident of the property in question.  The relevant part of that message is pasted below.  It is considered credible but not verified:

In your blog you note that we were served an eviction notice for nonpayment of rent. For the record, we have been paying rent to the trustee of the bankruptcy estate of Paul Koenig, Ms. Terri Running, as instructed by Ms. Runnning's office, for a year now.

I would appreciate it immensely if you could update your blog to reflect that we have been paying rent the entire time we have occupied this property. It is noted in Ms. Running's filing, which you posted as well, however at first glance it gives the impression that we have not been paying rent which certainly is not the case.