Lawsuit accusation: Wallace-Bajjali cheated local investors in Waco project

An adversary lawsuit filed in U. S. Bankruptcy Court in November 2011 alleges that David Wallace and his firm Wallace-Bajjali, the master developers for the city of Joplin's tornado-stricken area, cheated local investors in a Waco, Texas, development out of close to a quarter of a million dollars.

The lawsuit alleges that Wallace made sure that he got his money, did not give any to local investors, and then claimed there was no money left because of "legitimate partnership expenses."

The plaintiff in the lawsuit, NJSS Limited Partnership, claimed that could not have been the case because Wallace and Wallace-Bajjali hadn't done anything.

The lawsuit claims that Wallace and a partner named Michael Wray "descended upon Waco hoping to profit from the community's desire to revitalize downtown," and began pursuing local investors.

At some point, Wallace bought out Wray, according to the petition. The development was split into two phases with the small amount of property that was being developed included in Phase I. The project was almost immediately besieged by a "deluge of mechanics' liens and materialman liens" and inevitably, a bankruptcy, according to the lawsuit.

The petition claims that Wallace and a co-defendant Community Bank and Trust of Waco, Texas, refinanced loans, but not on the phase that included the local investors.

Wallace-Bajjali made $299,000 out of the deal, according tot the petition, which claims that $239,287.67 should have gone to NJJS Limited Partnership.

The Wallace-Bajjali engineered bankruptcy went through and court records indicate that the local investors were unsuccessful in getting their money back.

The bankruptcy, as noted in the February 15 Turner Report, was one of at least three filed by Wallace-Bajjali subsidiaries during a 27-month period.