It should be said upfront that Eddie Hobbs’s Brendan Investments Property Management has issued a statement here in which it states that it is aware of legal action against a Michigan USA company called “Metro Property Group” but stresses that there is no claim or alleged impropriety being made against Brendan Investments. Brendan Investments is jointly owned by Eddie Hobbs, Dermot Flanagan, Hugh O’Neill and Vincent Regan, with each being a director. The company in its statement expresses confidence in the US company now being sued.
This week in a Michigan District Court, a group of investors represented by celebrity lawyer Deborah Schlussel has filed a case alleging serious misconduct by a Michigan property company, Metro Property Group and associated companies and individuals. The 116-page complaint is here and it makes for fascinating reading. In brief, a group of UK, Australian and Yemeni investors are claiming shenanigans on the part of Metro and others and want their investment back. Finance and economics pundit and TV personality Eddie Hobbs (50) is dragged into it because his company Brendan Investments has apparently teamed up – “partnered” according to the lawsuit claim – with Metro for property investment, though again, to stress, there is no allegation of any impropriety on the part of Eddie or his company.
The lawsuit does however refer to Brendan Investments and claims it has “recently partnered” with Metro with Brendan Investments “reportedly” providing what is called “an infusion of €15m”. A request for comment from Brendan Investments was made before 5pm today, but was not responded to at time of writing. There is comment reported in the old media from Hugh O’Neill, a director of Brendan, who says “there are a number of inaccurate references to Brendan Investments in the filing.” Ms Schlussel, the lawyer representing the plaintiffs, was asked for information relating to the alleged €15m infusion by Eddie’s firm, and again, there has not been any comment at time of writing.
So, what’s the beef? It is alleged that Metro buy extremely run-down houses in Detroit for between USD 500-5,000 and that they sell them to investors for USD 40,000-50,000 promising impressive returns of, for example, 16.9% per annum from rent alone, that the buildings aren’t habitable, that Metro manage the properties and after a few months, a tenant who may be a fake stops paying rent and the investors are left with dud property and no income. It is also alleged the buildings aren’t “up to code” and that investors have been fined by state authorities because of the condition of the properties. The complaint is written in colourful language and paints the Metro Property Group as a bunch of villains, accusing it of operating a Ponzi scheme “reaching mini-Madoff proportions”. It even suggests that profits from the alleged scam may have ended up with Iranian-backed Lebanese political and military group, Hezbollah, a group regarded as terrorists in the US.
There is no filing in the case, on Metro’s part yet but newspaper reporting carries comment from Metro that it says the action is unfounded and that Metro is confident the case will be thrown out of court. One of the defendants is a lawyer, Tarek Baydoun who has provided comment to the media and says “allegations of any wrongdoing are completely ludicrous” and “I’m firmly denying any wrongdoing whatsoever” The colourful language in the lawsuit probably won’t do much for its credibility over here where we’re used to more sober allegations, but having said that, there are very specific – and presumably easy to prove or disprove – allegations in the lawsuit which paint a worrisome picture, and although there is no allegation of impropriety whatsoever against Eddie’s Brendan Investments, he may find himself fielding questions about the safety of investments with this US company.
Eddie on the US property market:
” In the past two years however, together with my property partners at BIPM, we’ve been undertaking detailed due diligence on the US market in the expectation of strong recovery there. That work on the ground from our offices there has borne fruit and we’ve already invested quite substantial sums for a range of private clients in a very specific market sector where we have a very good operation.”“The results are that for c.€500k or $660k an investor can acquire a portfolio of 16 newly refurbished middle class homes, fully tenanted at gross yields after costs and local property taxes of 15% to 16%. There is no intermediation, no fund, the investor, whether private or a pension fund, holds the assets directly. When you net out taxes under the DTA, the return is double the after tax return in Ireland and the scope for capital uplift higher and quicker because the market is not subject to artificial distortion. As the housing recovery gathers momentum this window will close in the US market which we can reasonably say has hit a genuine bottom and clear out unlike the artificial situation here because of extend and pretend policies.”
http://www.diarmaidcondon.com/eddie-hobbs-us-property/
Eddie got the market right. He just forgot the first principle if property – location.
Looks like Eddie is in with a right bunch of vipers here. This is not looking good at all at all. It also looks like he is talking the old sales talk without knowing what is really happening on the ground.
“1 down 1.8bn to go” Schlussel the filing attorney after Bin Ladens death. When you check her on wiki you get to understand the hyperbole in her filing. the Metro guys are Muslims. The claim it seems relates to about four hundred grand across 11 properties, but the case seeks over €5m? It looks very spurious. The reference to Brendan Invts is inaccurate means that it has no JV with Metro as alleged by the attorney. BI has said that Metro are service providers and that it has full transparency which presumably means it controls the chain and just uses Metro for services which is why it states that it says no client concerns although I’d say they are deeply unhappy with this development
That’s on the one side. On the other if there is a scintilla of truth in the allegations Metro are toast but it’s hard to fathom fact from fiction when you have a racist running the case, not a clever choice by the lead complainant whom it seems is a property advisor herself. Rushing to judgement given the circumstances appears unwise at this point.
@Sean, from Deborah Schlussel’s own website
“Rot In Hell, Osama Bin Laden. One down, 1.8 billion to go. . . many of ‘em inside U.S. borders, with the U.S. government at all levels kissing their asses. [Despite #HAMAS terrorist co-conspirator CAIR Action Network’s claims to the contrary, I never called for killing 1.8 billion Muslims. Try reading, liars. When 1.8 billion Muslims stop supporting HAMAS and Hezbollah and Islamic Jihad and the Muslim Brotherhood, etc., then we will have succeeded. But that won’t happen.]”
http://www.debbieschlussel.com/36592/whoa-osama-bin-laden-dead-but-wont-make-much-diff-amid-growin-islamic-threat-to-west/
There is no rushing to judgment here at all. The claim is attached in its entirety and whatever comment forthcoming from the US defendants has been published by way of balance. There is nothing further from Eddie’s company in terms of comment at this stage. It has been stressed the claim is drafted in what we would tend to consider “colourful language” but the actual complaints themselves are very specific in the claim, and should be easy to prove or disprove.
It seems that the website for whatever venture exists between Eddie’s company and Metro, has been taken down or at least returns a message “Access denied, You are not authorised to access this page”. http://www.6tech.com/content/woodward-capital-team Brendan Investments appears not to have been aware of any pending lawsuit against Metro.
Here’s a Google cached version:
http://webcache.googleusercontent.com/search?q=cache:-ZzLKek53QgJ:www.6tech.com/content/woodward-capital-team+&cd=1&hl=en&ct=clnk&gl=ie
The Woodward Capital mention in the filing is the ‘wrongful’ link to BI is my reading of the Indo article. Unless more credible and reliable examples come forward it is hard not think that the filing is spurious given the remarkable record of the attorney and the silence on line of any other past examples for this Metro firm. But what I find extraordinary is why a forty grand property grievance is presented as a Multi million dollar law suit? Leave aside the obvious politics of the attorney and it doesn’t add up. I guess we’ll have to await due process. It is either true or it’s a grossly over the top try on.
@Sean, no word from Brendan Investments by way of comment on Woodward and the alleged €15m “infusion”. However the BI page which has been taken down does seem to confirm a tie-up between BI and Metro in the Woodward venture.
There is no evidence that the allegations made in the complaint have been referred to law enforcement which given the nature of the allegations seems surprising. Also, we have yet to see the Metro response to the complaint but it should hopefully be filed over the coming days.
Yes, the US lawyer has an outlook that many might characterise as dingbats, but the allegations with respect to the property dealings appear incredibly detailed and specific, so Metro should be able to clearly address them in their reply.
The allegations made in the law suit are incredibly specific. They detail forged lease documents which are exhibited. They detail forged Section 8 Audits which are exhibited. They detail Section 8 Rent Abatement notices provided by the Detroit Housing Commission which prove beyond doubt that the homes were unfit to live in and were not receiving any rent even though the Defendants were paying “rent” on a monthly basis to the claimants to fool them into thinking they were.
Who has decided that all the defendants are Muslims? Who has decided that all the claimants aren’t? The lawyer may well be regarded as a dingbat by some but to suggest the claimants who have been defrauded are bringing a spurious case based on religious and racial hatred is very unwise surely.
Nothing odd about law enforcement not being involved…at the moment. This is the US, it is perfectly normal for civil cases to happen long before the law gets involved.
Word on the mean streets of Detroit is that the Baydouns can’t take a leak without the permission of the Irish guys.
@Wisemama, the latest from Detroit is the judge has ordered the claimants to “show cause” or for the claimants to demonstrate the court has jurisdiction to hear the claims against all the defendants, it appears to be a territorial matter, are they all US companies and citizens.
Click to access judgeshowcause.pdf
I don’t think anyone in this part of the world cares if the claimants or respondents are Arabs, Sheikhs, Hindu, Sikhs or Jesus freaks. The interest is the claim that Eddie Hobbs’s company has an allegedly substantial relationship with a company against which serious allegations have been made. The Detroit company and respondents that have provided comment deny any wrongdoing and of course we are still awaiting a response from the respondents to be filed.
As for civil preceding criminal process, I seem to remember Bernard Madoff was arrested lickety-split when allegations emerged, and the civil claims followed suit. And since this company is accused in the claim of operating a Ponzi scheme of “mini-Madoff proportions” we might have expected a similar sequence.
I aint no lawyer but having had a quick read through the link you posted the judge appears to be saying that while it is obvious that the members of the LLC’s are Michigan Residents, by law, the Attorney must make a “simple Statement” alleging that each member of the LLC’s is a resident of Michigan. They have already been identified as residents of Michigan in the suit so it looks like a formality…every t crossed and i dotted I guess.
You don’t need to be a lawyer to work out what the scam is here. Its set out in enormous detail and appears to be backed up by hard evidence. All the lawyers and the chief financial officer are being sued for fraud so this is really serious stuff. The lawyer bringing the case may be a fruit loop but she must also be the worst nightmare for this company. This must be a gift from above to her.
Brendan Investments have said they have no reason to doubt the integrity of metro……….SERIOUSLY? Doesn’t the fact that a whole group of people are bringing a massive suit for fraud against Metro give them some reason to doubt their integrity? It seems that Metro never warned them this was coming…….any clues there in how much they can be trusted?
I believe Brendan Investments have adopted a very cavalier attitude towards something so serious. This is not in the least reassuring.The investors at Brendan Investments can only hope that Hugh O’Neill has had the good sense to employ a completely independent law firm in the US to look at the case and advise on what has been going on (even though he must be able to work it out for himself) and advise them how to distance themselves before the proverbial really hits the fan. Brendan Investments should put out another statement assuring their investors that they will be doing no further business with these “Service Providers” as they call metro and reassure their investors that millions of dollars of their money is NOT tied up in this mess.
@Bo52, it’s an *alleged* scam, denied by the respondents, also Brendan Investments has expressed confidence in Metro.And it looks like six applicants which appears to be a small part of Metro’s pool. We’re still waiting for Metro to file its response.
Until the counter is filed it is far too early to rush to judgement. There’s a few very odd factors IMHO. First the filing Attorney is anti Muslim and the principles are Muslim, she draws in the Hezzbollah in the filing. Secondly the suit is for millions per property worth about €34 grand which seems very strange and will undermine the case if it’s shown that they refused cash back which is my guess. Thirdly if fraud has been involved why is there no police report linked to the filing? Fourthly, having just checked, since publication there is zero evidence of anyone else coming forward, nothing on line? I’d have expected that if there was systemic fraud in a Ponzi scheme, many others would have come forward. For these reasons significant doubt remains despite the specifics in the filing. Time will tell.
As for Hobbs firm, it has stated publicly that it has been wrongfully mentioned and that this Metro firm is a service provider. There is no evidence that this is untrue.
I disagree there is no evidence to show that Brendan Investments is partnered with Metro, quite the opposite in fact. I do agree though that it is very odd indeed that these people were not just given their money back.
Sean Bean: It states in the case that they repeatedly asked for their money back and were sent threatening emails by the lawyers and the Baydouns – all documented one assumes. It also says one of the investors was threatened with violence.
Could it be that metro had a financial partner they were trying to keep this from? After all $400K will buy about 100 properties in Detroit (no I am not kidding) so how do you explain to your partners (whoever they might be) that you have sent spent $400K of their money on a handful of crummy houses with no tenants in them that are falling apart?
The suit also lists each law that has allegedly been broken and there appears to be a statuary fine to each of those laws – three times what the claimant lost in most cases plus punitive damages in some.The case lists something like 12 laws allegedly broken each with it’s own statuary consequence so the sums of money involved are easily understood….however, what are the chances this company have any money to settle up any kind of law suit in reality.
Looking at the timeline the engagement with the plaintiffs was in 2011 a year before Metro became a “service company” to BIPM. This separates by a year the main contention of some kind of linkage. CRO reveals no link to Woodward Capital so it is plain that Schlussel is simply wrong which is why the story hasn’t had any further legs.
It’s a different matter I agree about the filing itself and the specific allegations made but what is very odd is the lack of local media. This indicates a nervousness with quoting anything Schlussel might allege given her record. He is now attacking Angelina Jolie and suggesting that the breast cancer gene is Jewish. If there has been a ponzi scheme, no one else has come out to put up their hands and there is no website chatter. The longer this pertains the less credibility I think in the filing. Finally there has been no police complaints or investigation, so you’ll understand why judgement should be carefully reserved here.
But the ultimate test will be the counter filing which we await. It needs to deal fully with each allegation otherwise Metro are in real difficulty.
@SB, That particular breast cancer gene is Jewish in origin. It is an inherited gene defect in those descended from Ashkenazi Jews.
http://theoncologist.alphamedpress.org/content/1/5/335.full
The Irish writer Emma Hannigan author of the book about her own breast cancer experience “Designer Genes” is a case in point.
My understanding is that it is not ‘Metro’ who need to respond to the accusations but the defendants – lots of them, not sure exactly how many. So unless I am wrong each one will have to deal fully with each accusation, as Sean Bean has pointed out. The one with the biggest problem I think (just my opinion) is the accountant. How is he going to explain why he was paying out rent on properties that were either empty and not fit to live in, or had tenants who were not paying any rent because the conditions were so bad, or tenants who were paying hundreds of dollars below the rent he was paying out. The obvious answer is it was coming out of the investors own investment money (that is how Ponzi schemes work) but of course he may have a perfectly simple explanation. Looking forward to seeing it.
Actually having had another quick scan through it I think (again only my opinion) that the guy who repeatedly (allegedly) signed two leases – one for the investor and one for the actual tenant – has got some explaining to do. Aren’t leases legal documents? Pretty sure they are. Then there is the lawyer who is allegedly evicting people that don’t exist. Then there is some other lawyer who is threatening to send them all (the complainants) to jail for 25 years (allegedly).
The whole thing begs the question………what person in their right mind would invest any money in this place to begin with! And what were Brendan Investments thinking of when they decided to invest their clients money in a place so notorious for property scams. Still, according to Brendan Investments statement, Metro have been totally transparent with them so there can’t be any surprises here and so it follows they must have all the answers to the above.
It’s an interesting conundrum. AFAIK in these situations the property is bought for small change. It awaits full refurb pending its vacancy usually when the tenancy is up or forced eviction in some harder cases. The balance of cash is held in escrow and released to do the refurbishment. Once complete the property has a normal market value. As for Detriot itself it ranks with Arizona and Atlanta as the fastest bouncing property market but parts of it are no go areas. Ditto Chicago. It depends as ever on location. The Detroit region is vast, about half the size of Ireland, far as I know.
Archived Blog found today…see below. Wonder how this person was persuaded to remove it?
THURSDAY, 29 MARCH 2012
Metro Property Management Detroit have ripped me off – beware
If there are any UK property investors with properties in Detroit or are thinking about doing so…..do not use Metro Property Management- Due to there incompetence in handling the rental of my property to HUD Section 8 of Detroit City Council I ended up with a non authorised occupier that stayed in my house for over 4 months rent free….Metro did not adhere to procedures , allowed the tenant to sign a lease without getting the property inspected and authorised by Section 8 housing and guess what….HUD did not recognise the lease and refused to pay the occupies rent…..I had to get legal support to evict the occupier which cost me $300 and once they had left the property which I had paid to be refurbished in the first place ….approx$1200 …..I then had to spend a further $800 to get the mess the unauthorised tenant had left my unmanaged property in….thanks Ali and Samir Bayoun…..oh and by the way as token or gesture of compensation Metro offered tp pay me $300 to cover the eviction costs….which I accepted….and guess what…they have not paid me….Avoid this company like the plague…they are sharks and do not work by the rules and they have cost me a fortune…..