New lawsuit- Fifty+ investors say Wallace-Bajjali operated Ponzi scheme

More than 50 investors filed a lawsuit Thursday in Harris County Texas District Court alleging that Joplin's master developer Wallace-Bajjali Development Partners operated a Ponzi scheme that ripped them off for more than $4 million that went to a failing media operation called BizRadio, an operation that was investigated by the federal Securities Exchange Commission.

The action is similar to other unsuccessful legal actions taken by the investors since the SEC reached an agreement with David Wallace and Costa Bajjali in 2012 that resulted in $60,000 fines for each man and required them to repay $1.2 million to investors with all but $450,000 coming from related companies.

The $450,000, as noted in a Turner Report post earlier this week, the only part that the Wallace-Bajjali firm was directly responsible for repaying, was due by December 31, 2012 and the WBDG could have received a $150,000 discount if it had paid early, but to date, it has not paid one cent.

David Wallace, in a sworn statement filed in federal court gave reasons why WBDG could not pay it on time and eventually the deadline was extended until December 31, 2014.

The latest lawsuit has officials in Amarillo, Texas, the other city in which Wallace-Bajjali has a major project going, reexamining their commitment, according to an article in today's Amarillo Globe-News:


“However, I have asked our legal counsel involved in the downtown development efforts to take a look to see if there’s any relevance at all, regarding our (Amarillo) relations (with Wallace Bajjali) or if this is just a rehash of a previous dispute that seems to have been settled on a couple of occasions previously,” said Gary Pitner, president of Amarillo Local Government Corp.

Amarillo City Manager Jarrett Atkinson said Costa Bajjali contacted him to inform him about the lawsuit and he, too, has asked city legal advisers to review the filing to prepare information for the Amarillo City Council and LEG.

The investor lawsuit filed in Harris County District Court calls BizRadio “a financial disaster as a stand-alone entity, losing millions each year” and alleges it was purely a vehicle to draw customers to the investment businesses of its operators, Kaleta and Frishberg, as well as Wallace Bajjali entities.

The investors assert claims of negligent representation, breach of fiduciary duty, common law fraud, violations of the Texas Securities Act and civil conspiracy against individual plaintiffs, including Wallace Bajjali entities, and combinations of plaintiffs in the lawsuit.