Wallace Bajjali has been involved in two projects that hit difficulty. Rohr said the firm disclosed details of those problems in its Joplin proposal, and that inquiries by city officials verified the firm’s admissions. Those incidents involve a bankruptcy taken by some its partners in the Amarillo project, and fines paid to the Securities and Exchange Commission for investment fraud committed by two partners in a radio acquisition deal. - March 27, 2012, Joplin Globe
Two previous Wallace Bajjali projects hit snags because of problems involving partners. In one, work was delayed when a partner went bankrupt. In the other, a partner was found to have violated Securities and Exchange Commission rules in a business radio investment, which resulted in Wallace Bajjali paying a fine.
City Manager Mark Rohr previously said the firm’s principals voluntarily disclosed those issues, and a background investigation substantiated the firm’s disclosure. Rohr said he was satisfied that there was no wrongdoing on the part of Wallace Bajjali in those cases. July 2, 2012, Joplin Globe
That's it. The extent of the Joplin Globe's examination of the background of the Wallace Bajjali firm that has been entrusted to handle $794 million in development of the area struck by the May 22, 2011, is printed above.
And though everything that is written in those paragraphs may well be accurate, it certainly would be an excellent idea for the area's newspaper of record to examine Wallace Bajjali's problems with its developments in Waco and Amarillo, Texas.
It did not take me long nearly eight months ago to come up with this for the March 31, 2012, Turner Report.
As of Friday, David Wallace is free and clear as far as the Securities and Exchange Commission is concerned.
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.
Later that day, I followed up with information from the Amarillo Globe-News:
Earlier today, the Turner Report noted that David Wallace, CEO of Wallace Bajjali, the Texas firm recommended by the city of Joplin's Citizens Advisory Recovery Team to become the city's master developer in its tornado recovery, had made his final payment of a $60,000 fine for an SEC fraud violation.
Wallace and his partner, Costa Bazzali, neither admitted nor denied wrongdoing, but their deal also includes paying back approximately $1.2 million to investors.
From the Amarillo Globe-News:
The settlement approved Tuesday by U.S. District Judge Nancy F. Atlas ends claims that receiver Thomas L. Taylor asserted against Wallace Bajjali Development Partners entities in relation to an SEC investigation of Albert Fase Kaleta, Kaleta Capital Management, Daniel Frishberg Financial Services and BusinessRadio Network, Taylor said.
The settlement sets Dec. 31 as the final deadline for three Wallace Bajjali real estate investment limited partnerships to repay $879,176 in loans they got from Kaleta Capital Management, plus interest.
Under the agreement, Wallace Bajjali Development Partners also said it will pay an additional $350,000 to $400,000, with interest, from the firm’s private earnings from an Amarillo downtown revitalization project.
The SEC sued Kaleta, Frishberg and their businesses in 2009. The SEC appointed Taylor to trace money investors sank into Kaleta and Frishberg’s network of affiliated companies that allegedly commingled and misappropriated investors’ money, according to court documents in the ongoing SEC case and a related bankruptcy case.
Much of the investment capital allegedly misdirected by Kaleta and Frishberg went into the radio network, dubbed BizRadio, which “broadcast programming designed to attract clients” to a Frishberg financial services company and a Frishberg and Kaleta investment advisory business, according to a Feb. 11 status report in the bankruptcy case.
The SEC investigation extended to David Wallace and partner Costa Bajjali, who in May agreed to each pay about $60,000 in fines for exposing investors in struggling BizRadio to excessive risk, a situation Wallace blamed on the media company.
Isn't it about time the Joplin Globe did an extensive examination of Wallace Bajjali, if nothing else just to set residents at ease?
2 comments:
Agreed, particularly when I recall what Andy Ostmeyer (sp.) said in August 2011 when I had the opportunity to ask him what role The Globe would be playing in the overall rebuilding effort: "We'll ask a lot of questions." Personally, I like newspapers that are willing to advance a vision for a community by way of the editorial page, so I was hoping that Mr. Ostmeyer's answer would be something along the lines of "We plan to promote (this, that or the other) in the coming weeks and essentially drive the discussion," but to be perfectly honest about it, his response left something to be desired. But since he did indicate that the paper would be asking a lot of questions, then the paper needs to be asking a lot of questions and this would apply, of course, to the developers being considered by the city for the role of master developer. The Globe really needs to be the watchdog here!
25 yeentseKeep pressing... I don't feel that the Globe is doing an adequate job on digging into the process for spending $1 BILLION dollars for tornado redevelopment in a town of 50K with an outside firm leading the charge. I'm not antidevelopment & think the CART committee came up with some excellent proposals, but I think that Wallace Bajalli can't be viewed as the Wizard of Oz & just trust all projections for raving success. I think that if there's constant questioning & critical thinking applied to the entire process from start to finish that it will keep the firm & the city on its toes & hopefully towards the path of a full recovery. So far it seems the Globe is a glorified PR firm just reporting deal closings not questioning the process. About the best they can do is post a link on Facebook & report on the free-for-all on the comments. That's not journalism or investigative reporting. I, for one, don't think that a library with a movie theater on the second floor is a great idea. Even if it was, should that be the very first project through the pipeline? What about infrastructure? What about housing? For the sake of the future of Joplin please keep the heat on...
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