Slumlord Millionaires - Real Estate, Retail Crime, Teachers, and Trump Media
Note: ASD will be off next week, back the following
Real Estate
These days, real estate ‘moguls’ do not have the best reputation in American culture. As our former president’s finances prove, it was and is possible to make a lot of money in real estate without actually building anything of value. Sometimes, it’s more profitable to take massive paper losses and bankruptcy your way out of trouble.
Nor was Trump the only lawbreaking slumlord in the family. The Kushners made a fortune buying ‘affordable’ housing properties and forcing tenants out with aggressive rent hikes or by allowing buildings to fall into disrepair so they could be turned into high-priced condos.
Since the 1980s, the Puretz family of New Jersey has been buying up subsidized housing, draining the properties of cash, and allowing them to go into foreclosure. They used a web of hundreds of LLCs and fake charities to secure billions in mortgages and loans from the government to strip-mine hundreds of apartment buildings across the United States, with few consequences.
Let’s back up. In the mid-2000s, patriarch Lieb Puretz used some of the money he made from twenty years of slumlording to build big condo and entertainment complexes in New Jersey. When the GFC hit, he defaulted on $140 million in loans, though bankruptcy and a family trust allowed him to shield most of his assets from the government.
With debts against his name, Lieb’s sons Aron and Chaikel set about buying up housing complexes across the country, using a mix of private capital and, eventually, HUD loans to amass a property empire.
Using a web of LLCs, often hiding their involvement, the Puretzes bought run-down properties on the cheap:
In a single deal, in 2013, companies linked to the Puretz company Apex Equity Group bought up 600 units across 10 Cincinnati complexes.
Within years, the buildings fell further into disrepair, with collapsing roofs, floods, and fires. The cut-out LLCs were sued, but the family opened new ones and, inexplicably, Apex continued to receive millions in loans. They even ran some as charities:
And their nonprofits — which helped them dodge taxes and access municipal bond financing — listed phony board members and hid the Puretzes’ involvement.
Meredith Rosenbeck, an Ohio lawyer who said she barely knew the Puretzes, set up the nonprofits, JPC Charities and JPC Affordable Housing Foundation. She also recruited the board members — all of whom resigned in 2016, soon after joining.[…]
One former board member said the Puretzes simply ignored his pleas to stop using his name.
“This is like a nightmare,” he said, speaking on condition that he not be identified. “I changed jobs, and I had to explain it. It’s this black mark that follows you around. Fraud is not something people take lightly.”
One way the Puretzes would extract money from the buildings they bought was to ‘pay’ their own management companies for phantom invoices. They collected rents and refused repairs to tenants, and many buildings soon became unlivable.
By targeting undesirable buildings full of tenants on Section 8, the Puretz family could buy properties with little money down, collect rental income for as long as it took for their creditors call in the loans, invest little to nothing in building maintenance, then drift into foreclosure and move on. Inexplicably, federal and state lenders kept giving them millions more to do it over and over again, for years.
They brazenly exploited courts and bankruptcy systems as well:
As it happened, already had an investment in Braddock Hills, outside Pittsburgh. In 2005, [Lieb Puretz] had paid $12.9 million for two 1960s-era HUD-subsidized complexes: Brinton Towers and Brinton Manor.
By 2015, those projects were part of his wave of bankruptcy filings.
Then, a buyer offered $17.25 million for the complexes. It was the Puretz-controlled nonprofit JPC Charities.
The bankruptcy judge questioned the apparent insider deal.
But Rosenbeck submitted an affirmation that the transaction was “without collusion, in good faith, and at arms’ length.”
Rosenbeck worked with the same underwriter — Cody Wilson, then of Stifel, Nicolaus & Co. — to get an $18.45 million Pennsylvania Housing Finance Agency bond for that project. The two also helped land the $29.5 million tax-exempt Pavilion bond.
[…]
Within a few years, both bonds were in default.
Each of those ‘bonds’ represents an apartment building with people living in it. Each time a Puretz buys a property with phony loans at an inflated value to extract as much money as possible before its seized by creditors, hundreds or thousands of people are forced into dangerous conditions, and sometimes put out on the street. These are often society’s most vulnerable - people on government assistance with no say in the matter, punished for simply trying to keep a roof above their heads.
A small crew of scoundrels has single-handedly disrupted the lives of tens of thousands. In exchange for the millions they’ve siphoned and lives they’ve ruined, there may now be some minor consequences - Aron pleaded guilty to conspiracy in a mortgage fraud case, and Chaikel has been charged by state prosecutors for felony theft and corrupt business influence.
It is a damning indictment of our banking and regulatory systems that one family was able to brazenly buy and discard hundreds of properties, stealing from banks, renters, and everyone along the way. The monetary and human cost is likely incalculable, and if there’s one thing we see with these sorts of schemes, the Puretz family are surely not the only ones exploiting the wide holes in the system to extract profits from the most vulnerable.
Retail Crime
For a couple years, we’ve heard a lot about ‘retail crime’, often via videos of groups of Black and brown youths looting drug stores. Heads of major retail chains blamed these gangs for billions in losses that even their own lobbying groups couldn’t provide evidence of.
Well, good news! They did catch the ringleaders of one of the only actual organized nationwide retail crime operations, and they’ve been sentenced to prison and ordered to pay millions in restitution. What does this criminal mastermind look like?
Oh, right:
Michelle Mack ran her operation from her 4,500-square-foot mansion in Bonsall, which is outside San Diego, where the California Highway Patrol says she oversaw a network of about a dozen people who stole millions of dollars in merchandise from Ulta, Sephora and other major retailers.
For ten years, Mack had been selling stolen beauty products through an Amazon storefront, to the tune of millions a year.
The couple received lenient sentences from the judge - Kenneth Mack will serve only a year of his sentence, and Michelle won’t go to prison until he’s released, so she can care for their children.
Elsewhere, a 19-year-old arrested as the ‘mastermind’ of a series of retail thefts in Philadelphia is in jail on $180,000 bail, for stealing an estimated $75,000 worth of workout gear.
Local news continues to mindlessly parrot retail industry talking points that ‘billions’ a year are being stolen by organized gangs, but thus far the worst offender they’ve turned up is a white lady selling Ulta lipstick out of her suburban mansion for over a decade.
Teachers
We talked last week about school vouchers, and the systemic effects of draining cash out of public school coffers. Even if the right gets its wish and billions of public dollars end up in the pockets of religious schools and private academies, it may not matter if there’s no one left to teach there, either:
Kansas faces the worst teacher shortfall in its history. The 4,000 teaching vacancies Florida faces as the new school year approaches “is more than the population of teachers in 19 of Florida’s smallest counties combined,” the state’s teachers union says. In Vermont, there are days when whole grades of students are sent home because there’s no teacher or sub available.
The teaching profession faces a morale – and staffing – crisis. A National Education Association survey of members found that, as of late 2022, a staggering 55% of educators were thinking of calling it quits.
Teaching was a thankless, increasingly dangerous position before a global pandemic brought out the worst in American parents. Any notion that a teacher’s primary role was anything other than a credentialed babysitter went straight out the window as furious parents insisted their kids be put back into schools before it was safe to do so.
According to surveys, Zoom schooling was far worse on teachers than parents or children. They were expected to deliver something approaching the same level of education, digitally, while personally navigating a scary, precarious time. A 2023 survey found the average teacher worked 53 hours per week before the pandemic, often for substandard pay - Florida teachers earn below the state’s minimum living wage.
Budget cuts are crushing schools around the country as pandemic aid funding expires, and teachers must deal with not only the constant threat of school shootings but new waves of parents angrily railing against health protections in classrooms. It’s no surprise nearly half of teachers are thinking about quitting, as there appears to be no end in sight to their professional mistreatment.
Trump Media
What do you do when you have a company that is essentially worthless for its business, but valuable to people who want to give you money because they belong to your cult?
You come up with new ways to take their money:
The plan, securities experts said, is a way for [Trump Media & Technology Group] to convert its astronomical value on paper into actual cash. That could secure a windfall for Trump, who owns a majority of the company. Even if excitement for the stock deflates, his company might still retain billions in cash value.
Trump Media has contracted with a small New Jersey firm called Yorkville Advisors which specializes in helping penny stock companies sell shares to retail investors. The only other major company they’ve worked with was Lordstown Motors which, well, yep.
Basically, TMTG will give Yorkville the ability to buy a large block of shares on order, and pay it a fee via stock grant and 2.75% fee above the shares’ value.
TMTG is currently sitting around a $5.6 billion dollar valuation, mostly owned by Trump, whose shares can’t be sold until September. You might be looking at a calendar and thinking ‘hm, September isn’t all that far away, why is he doing this now?’ to which the answer is, and always is, that Trump is the wealthiest broke person on the planet, and undoubtedly needs the cash to cover his 9-figure legal bills and settlements, as well as his lavish lifestyle hanging out at the world’s tackiest golf clubs.
TMTG is a media company that makes so little money it can’t even cover the salaries of its chorus of weirdos like CEO Devin Nunes who makes a couple million dollars a year to give interviews on Fox News about the evils of short sellers.
So, it is going to sell up to $2.5 billion in shares, most of which will presumably go into Trump’s pockets, and the ‘retail investors’ (the genpop rubes who are going to lose some or all of their money slavishly buying a fake stock) don’t seem to care, because handing your life savings over to a ruthless con man has become thoroughly encoded in the DNA of at least a few million of this nation’s most unpleasant people.
Short Cons
The Hill - ““Benjamin Netanyahu’s presentation in the House Chamber today was by far the worst presentation of any foreign dignitary invited and honored with the privilege of addressing the Congress of the United States,” Pelosi wrote…”
TechCrunch - “Spain’s competition authority, the CNMC, announced the opening of an investigation into Apple’s App Store Wednesday, citing concerns the iPhone maker could be imposing unfair trading conditions on developers who use its store to distribute their software to iOS users.”
The Verge - “Amazon’s plan to launch a paid version of Alexa is part of a strategy change to reverse the over $25 billion in losses that its devices business incurred from 2017 to 2021, according to a report from The Wall Street Journal.”
TechCrunch - “GM reported a financial charge of $583 million in the second quarter that is tied to the non-cash write-off of Origin assets and other restructuring costs. The Cruise subsidiary had an operating loss of $1.14 billion in the second quarter that included a $605 million impairment charge.”
The Guardian - “Toxic PFAS “forever chemicals” are widely added to pesticides, and are increasingly used in the products in recent years, new research finds, a practice that creates a health threat by spreading the dangerous compounds directly into the US’s food and water supply.”
Star Tribune - “HealthPartners says it will drop out of the network next year for UnitedHealthcare Medicare Advantage plans, claiming the nation's largest health insurer has an excessively high rate of coverage denials and frequently delays payment for services used by seniors.”
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