Koenig Bankruptcy Update - Vegas Baby!

Post and stock photo by the Hawthorne Hawkman.

Every once in a while I wonder how my arch nemesis' long, slow fall from grace is going.  Over Christmas break, Johnny Northside poked around on PACER and sent along some updates.  Live links to documents will be procured as soon as I can get them, but for now I can tell readers that in conjunction with Dream Homes co-conspirators David and Sharon Kohlenberger, there is a $32,000 judgment filed against a Koenig LLC in Las Vegas.

Plaintiff William A. Leonard filed a claim against...

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...

Who Owns Them Now? (Not Paul Koenig)

Post and top photo by the Hawthorne Hawkman.  Bottom photo from Paul Koenig's now-defunct blog.

When a property becomes owned by a slumlord, or is touched by mortgage fraud, that property is quite unlikely to immediately go back into the hands of a quality owner - whether the house is homesteaded or not.  It's been long enough since the "One Man Housing Crisis" of Koenig/Pamiko/Marklee Construction/MCK Investments/Dream Homes/Did I forget any LLC? collapsed on itself, so its time to take a look at where those houses ended up, starting with...

Pamiko's Legal Struggles Continue

Post by the Hawthorne Hawkman, "Pamiko Rail" photo from the Hillside Chronicles blog.

Paul Koenig and his Pamiko Properties LLC are apparently still wrangling out differences with the powers that be in court.  I was given information that Pamiko and the State of Minnesota and Hennepin County still have issues to settle in Minnesota tax court.  Thanks to the government shutdown, the tax court website is not in operation and I can't even access the registrar of actions.  But the case number for Pamiko Properties LLC v. Hennepin County is 27–CV–09–13258.  From the rudimentary information passed my way, it appears as if Koenig is challenging the amount he owes on property taxes.  But the case summary does state that...

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's Impact on Minnwest Bank

Post by the Hawthorne Hawkman, image from the Investigative Reporting Workshop blog.

There's a financially nerdy aspect of the Minnwest vs. Paul Koenig legal showdown that I don't think should get lost in the shuffle.  Last year, I compiled quite a bit of information on Minnwest in a Johnny Northside post called "Minnwest Bank Metro - Breaking the Bank."  There's quite a bit of technical stuff to digest there, but the key point in relation to this post is that Minnwest was found to have a dangerously high level of bad commercial debt in comparison to their total assets.  That's a red flag for regulators.

The Investigative Reporting blog link above is helpful because you can drag the mouse over various points on their graphic to see exactly where Minnwest stood from one quarter to the next.  The statistic shown there is slightly different.  It compares the sum of troubled assets with the sum of tier 1 capital plus loan loss reserves.  Basically, the amount of bad debt compared to two kinds of assets a bank has.  I'm pointing out the obvious when I say that the higher ratio this is, the worse off the bank, its shareholders, and those who hold deposits are.  Readers are encouraged to compare the blue line (national median) to the yellowish line (Minnwest's ratio).

The troubled asset ratio comes into play because thanks in part to Paul Koenig's and Pamiko's massive loan defaults, Minnwest Bank was put on notice by the FDIC that they had to improve those numbers--or else.  That order happens to be exhibit 30 in our court case.  Granted, Minnwest made a rash of high-end bad commercial loans, such as when they wound up holding the bag on the failed Ramsey Town Center.  But let's take a look at that graph above and see what connections there are to Koenig's mass foreclosures in Minneapolis and St. Paul.  In the case of the $1.3 million-dollar loan at 4652 Aldrich Ave N, the sheriff's sale was scheduled in the last quarter of 2009, coinciding with a huge jump in the troubled asset ratio that quarter.  That was also the same quarter when 2420 Bryant Ave N ($2.5 million) had a sheriff's sale scheduled, although the intent to foreclose was filed one quarter earlier.  The 1417 Logan Ave N property ($1.5 million) followed the same pattern as the Bryant loan.    According to the Complaint documents, Koenig's St. Paul property ($1.1 million) was foreclosed in the same quarter of 2009 as well.

While I can't say with certainty when exactly the $6.4 million total default bomb exploded onto the chart above, there can be little doubt that the series of Pamiko foreclosures directly led to Minnwest being on the FDIC's naughty list.  Watch out banks, this is what lending to Paul Koenig can do to you.

On an appropriate note, since this post was finished after midnight, it officially hit on the 1-year anniversary of Pamiko Comeuppance Day.  Happy Pamiko Comeuppance everyone!

Former Pamiko Property Open to Trespass

Post and photos by the Hawthorne Hawkman.  Second-to-last image from the Johnny Northside blog.  Final image from www.cracked.com.

One of the nice parts about fresh snow is that when we have vacant properties on a block, it's far easier to tell when somebody's been snooping around.  On my way home for lunch today, I happened to drive past 621 26th Ave N, a property I know well.  Tracks in the snow clearly indicated somebody had been scoping the property out, so I followed suit.  I went around to the back and I found...

The Big Bang that Started Pamiko's Downfall

1211 Knox Ave N

2402 4th St S

2616 Cedar Ave

Post and photos by the Hawthorne Hawkman, although the photos first appeared on the Johnny Northside blog.  The three properties above were owned by Pamiko at the time of the photographs, and had been part of a lawsuit involving various partners who made up the numerous Dream Home LLCs.

POST IN PROGRESS - more hyperlinks to add back stories will be added later.

Physicists widely point to "The Big Bang" as a likely starting point for our universe, and although they can surmise the origins of the universe, there are two questions such a theory leaves unanswered:  1) Why did matter exist in the first place? and 2) What CAUSED the Big Bang?  We can measure up to the first few nanoseconds, but still are unable to fill in the gaps these conundrums leave us.

Likewise, NoMi blogs (more famously on Johnny Northside) have chronicled the downfall of Paul Koenig, Michelle Koenig, and their various LLC's - Pamiko, MCK Investments, and Marklee Construction.  However, we never really answered the questions of why Koenig was allowed to acquire so many properties in the first place (technically in the second place, since he screwed over north Minneapolis first with the Dream Homes and then through Pamiko).  Nor have we understood what was the spark that set off the 80-foreclosure powder keg.

Well, after finding a confession of judgment on the Dream Homes lawsuit (a previous JNS post chronicled much of that suit, but had not come across its conclusion), I now have a theory about what started Pamiko's foreclosures over a year ago.  Bear in mind, this is only a theory, and there may be equally valid theories out there - although I sincerely doubt "Intelligent Design" is one of them.

First, a brief history...