Saturday, March 31, 2012
CEO of proposed Joplin master development company paid $60,000 fine in SEC fraud case
That was the day Wallace, CEO of Wallace Bajjali, the company expected to be hired as master developer for the city of Joplin's tornado recovery efforts Monday by the City Council, made his last payment covering his fine for fraud.
It was Wallace's fourth payment of $15,006.72, covering his $60,000 fine plus interest. His partner, Costa Bajjali, also made his final payment for that amount Friday, according to U. S. District Court for the Southern District of Texas documents.
Both men entered into agreements May 24, 2011, to pay the fines, though neither admitted to any wrongdoing.
Joplin city officials say they are fully aware of the SEC fines and have corroborated Wallace's claim that others were at fault.
In its complaint, which was filed May 20, 2011, the SEC alleged that between November 2006 and December 2008, Wallace and Bajjali "offered and sold securities in two real estate funds they controlled in Houston, Texas, called the Wallace Bajjali Investment Fund II, L. P. and the Laffer Frishberg Wallace Economic Opportunity Fund, L. P. In written disclosures relating to the securities offerings, Wallace and Bajjali represented to investors that they would limit the Funds' investment in any one business or project to certain percentages of the money the Funds raised- no more than 33 percent for the Wallace-Bajjali Fund and no more than 20 percent for the Opportunity Fund. Contrary to their written representation, Wallace and Bajjali far exceeded these limits by heavily investing the Funds' money in Business Radio Networks, L.P, doing business as BizRadio, a struggling media company. As a result, they subjected the Funds' investors to substantially greater investment risk than the Funds' written materials disclosed."
The statement of facts filed by SEC says that by May 2007 the Wallace-Bajjali Fund had received more than $16 million and had invested more than $6.5 million in BizRadio. The ratio was even higher with the Opportunity Fund, where $7 million was raised and $4 million went to BizRadio, far more than the 20 percent limit.
Court documents indicate Wallace and Bajjali entered into an agreement with a company called Investment Adviser in Houston to handle the securities funds. It would appear that the two are casting the blame on that company for violating SEC regulations.
Wallace is scheduled to be in Joplin Monday night to make a presentation before the council.