Paul Koenig Loses Hopeless Appeal

Post by the Hawthorne Hawkman, top photo from Koenig's defunct blog, bottom photo from Johnny Northside.

I can't think of a better way to close out the year than to close out yet another chapter in Paul Koenig's ongoing legal failures.  For those unfamiliar with Koenig at all, Ed Kohler of the Deets compiled a list of (at the time) all the northside blog posts about this guy.  Koenig came on to the radar almost a decade ago, buying up tons of vacant land and putting down "Dream Homes," poorly-built houses with six bedrooms, no basement, no garage, and basically destined to be section 8 rentals.  He and his investment partners lied about how much rent they pulled in, were sued, and lost.

Koenig managed to shift the blame onto his partner, picked up many of the Dream Homes post-foreclosure, and started a new wave of slumminess under various LLC's.  Pamiko, Marklee Construction, and MCK Investments were the most prominent of the three.  Despite siphoning off tons of money to fund a lavish lifestyle, (or perhaps because of that) he couldn't make the payments, let his properties deteriorate, and then lost them to foreclosure.

He has since been involved in a legal battle in which he claims that he redeemed several of his foreclosed properties for a dollar each.  In reality, this fight was little more than a charade so that Koenig could continue to make life miserable for Minnwest Bank with the slim hope that he could temporarily collect additional revenue from these rental units.

Oh, and in the midst of his housing hand grenade exploding across NoMi, Koenig was largely believed to have been the primary contributor to the Jordan Hawkman blog.  Good riddance.

Now, about that ruling...

And the Minnwest v. Koenig Verdict IS...

Post and stock photo by the Hawthorne Hawkman.

The Minnwest v. Paul Koenig, Aaron & Mary Durkop, Komo Group LLC, and Kaizen Property Solutions LLC is over.  Judge Susan Burke granted the Minnwest Bank request for summary judgment, and Minnwest is now the owner of the six properties at issue in this case.  There was a court hearing scheduled for Monday March 21, 2011, but that apparently has been canceled.  I showed the final documents to a real estate attorney, who confirmed they contain the final ruling, unless of course Koenig or any other defendant wishes to appeal.

In the last post regarding this trial, I mentioned that I was missing some previous documents, such as Paul Koenig's affidavit and the Defendants' Memorandum in opposition to summary judgment.  The defendants do make some interesting, although ultimately fruitless, claims.  Such as...

Koenig "Ignores Some of the Most Basic Principles of Mortgage Priority," Appears Set to Lose Case

Post by the Hawthorne Hawkman, photo from Johnny Northside originally appeared on Paul Koenig's blog, used under First Amendment criticism and commentary.

Before we begin, let me get one thing out of the way.  I don't have all the documents or information I need in order to write what I would consider a complete blog post.  But since it's going to be a few days before I have time to get downtown again for what may be the last round of Pamiko court documents, I'm writing with what I've got.  In a way, this is oddly appropriate.  I'm somewhat of a completist, and when I first discovered a $2.5 million-dollar foreclosure, I wanted to do more research and get the whole picture before writing anything.

Instead, my friend, neighbor, and fellow blogger John Hoff told me about "All the President's Men," in which reporters who uncovered the Watergate scandal knew they had a lead on something, but didn't know how big it was going to be.  "Just write what you've got, and people will start contributing more information, and the rest of the story will happen," was essentially what John advised.  And now look where we are, with Paul Koenig and his various LLC's being perhaps the most extensively covered topic in the NoMi blogosphere.

So we press on, knowing the picture is not yet complete, telling the story with what we've got, confident that the rest of the information will indeed follow.  We start with the Affidavit of Minnwest President William Swanstrom, which states...

The Koenig Apologist(s) Might Have a Point

Post by the Hawthorne Hawkman, stock image from www.failblog.org.

In some recent posts about Paul Koenig, one or more anonymous commenters have said that Paul Koenig is at least partially a victim of bad timing, and have defended him to varying degrees.  I've stuck to my opinion that, no, Koenig is pretty much the main character at fault and brought about his own financial demise.  In so doing, I've repeatedly said that Mr. or Mrs. Anonymous should show me somewhere in either the Koenig loan documents or the FDIC-mandated plan where Minnwest is either forced or allowed to arbitrarily change various terms on Koenig's loans.

In preparation for a post still in the works, I read the Affidavit of Minnwest President William Swanstrom, and the corresponding exhibit A.  That exhibit is the loan document for Koenig's $2.5 million loan at 2420 Bryant Ave N.  In that document, a series of events that would qualify as a default are listed.  Those events, in particular the last one, are listed verbatim after the jump...

Koenig Court Proceedings: Affidavits and Answers

Post and photo by the Hawthorne Hawkman

When we last touched on Paul Koenig's court proceedings, he had just transferred at least a half-dozen properties to his name, and then shifted title to a new LLC, Komo Group.  Minnwest alleges, and I agree, that such a purchase and transfer didn't even satisfy the basics of title transfers and foreclosures in Minnesota.  Koenig and at least one anonymous commenter here feel otherwise.

Last week I had some spare time and was able to swing by the Government Center again to peruse more docs.  We start with the affidavit of Toni Warren, who states for the record that...

Paul Koenig's Dollar House Program

After foreclosure, Paul Koenig paid $1 for this.

After foreclosure, Paul Koenig paid $1 for this.

After foreclosure, Paul Koenig paid $1 for this.

After foreclosure...well, you get the idea.

$1

Should Paul Koenig buy a cheeseburger at McDonald's, or a house?  With $2, he can have BOTH!

Post and photos by the Hawthorne Hawkman.  Photos originally appeared on the JNS story, "Pamiko Property Photo Tour."

I'll give Paul Koenig this much:  he's got chutzpah.  What he is trying to do to retain ownership of "his" properties in NoMi (and a few in south) is nothing short of astonishing.  Koenig bought dozens of houses in Minneapolis, and at least one commercial building in St. Paul with four loans from Minnwest Bank totaling roughly five million dollars, and another half-million from Aspen Financial.  These commercial loans were cross-collateralized, a procedure that looked awfully suspicious to many, but may have been at least somewhat of a solid business practice.

Cross collateral means that several properties were the collateral on more than one of the million-dollar lines of credit.  The reason for this is so that if some properties go vacant, in need of repair, or otherwise stop producing income streams to support loan payments, spreading them out this way creates an intermixed income stream to support several lines of credit simultaneously.  In the business world, this model apparently works rather well, provided your borrower isn't a flat-out lying scumbag.

Which, in my opinion, sums up Koenig quite nicely in light of his recent actions.  Minnwest foreclosed on the Bryant property above, to the tune of $2.5 million, along with a bevy of other houses attached to that loan.  They did the same with the $1.1 million foreclosure of a commercial building in St. Paul.  Where it gets tricky is...

Hennepin County Pamiko Court Documents, Round 1

Post and photo by the Hawthorne Hawkman. 

After trekking to downtown St. Paul and finding virtually nothing in Minnwest's Ramsey County civil case against Pamiko, I expected much of the same here in Minneapolis.  Boy, was I wrong.  The Hennepin County case has three file folders marked as full.  (Hennepin rules prohibit the photographing of actual court documents, but the folders and stop markers are fair game.  The other rule in play here is they only allow five documents to be copied at a time.  More than five and you have to fill out a work request and then it takes a week to get done.  Got to love bureaucracy.)

Now, because of the sheer volume of documents and the aforementioned rule, I picked five docs from the first file that seemed pertinent.  We'll be playing catch-up as I'm able to obtain and review the documents.  For instance, I can already tell you that Minnwest's temporary restraining order was denied, although I didn't read the denial to find out specifics yet.  And in another filing, the plaintiffs eviscerate the Koenigs' maneuverings of properties between LLC's during the foreclosure process.  I cannot WAIT to sink my teeth into that one.

The Complaint lists Minnwest Bank Metro as the Plaintiff, and the following defendants:  Komo Group LLC, Kaizen Property Solutions LLC, Paul Koenig, Aaron Durkop, and Mary Durkop.  Komo Group LLC had its office or at least a mailbox at 8632 Tamarack Village in Woodbury, the same address as Pamiko.  The Complaint states, "Upon information and belief, Koenig is the sole member and chief manager of Komo."  Kaizen Property Solutions sounded awfully familiar to me.  Why does that name ring a bell?  Oh, NOW I remember...

NXNS Exclusive! Paul Koenig Sued by Minnwest Bank!

This guy, going up against...

...them.

Post by the Hawthorne Hawkman, first photo from Johnny Northside, second photo from www.classicglassandmirror.net.

Last year, when the City Pages and Star Tribune simultaneously published stories on Paul Koenig (pronounced Kay-neg) Comeuppance Day, we wondered when (not if) the Koenigs would be sued.  A source close to one of their many, many creditors said rather ominously, "Just watch the courts."  Well, NoMi bloggers have been doing just that.  For whatever reason, these cases filed in mid-2010 didn't show up on any of our searches until just now.  But the Koenigs and a host of others are now subject to multiple lawsuits from Minnwest Bank.

Johnny Northside passed on to me the Register of Actions for both cases.  I won't have access to a vehicle to get to a scanner until tomorrow, so in lieu of pdf files, the text of each document is retyped after the jump...