Thursday, January 29, 2015

Exclusive- Wallace and Bajjali resigned to avoid paying $1.2 million to cheated investors

Joplin master developer David Wallace resigned from his company Wallace-Bajjali Development Partners almost immediately after receiving a letter from a court-appointed receiver saying action was going to be taken to force the company to pay the $1.2 million it had promised the SEC it would pay cheated investors.

Wallace and his partner, Costa Bajjali, had made the final payments on their personal $60,000 fines from the SEC just three days before the City of Joplin hired Wallace-Bajjali as its master developer.

After buying time by taking care of their personal obligations, Wallace and Bajjali did almost nothing to repay investors. As of earlier this month, the duo still owed $1,174,058.20

The entire $1.2 million was supposed to be repaid by December 31, 2012, but Wallace kept pushing the deadline back, all the way to December 31, 2014, by feeding court-appointed receiver Thomas Taylor III a series of stories about the money Wallace-Bajjali was going to make on its projects in Joplin and Amarillo and the millions the firm would make when it went public.

When the December 31 deadline passed, Taylor sentJanuary 5 letting them know that the game was over and action was going to be taken against them and they had only 10 business days to repay the debt in full.
 letters to Wallace and Bajjali
By the end of those 10 days, Wallace and Bajjali had both resigned from all of the companies that owed the money, in what appears to be an effort to avoid paying what they owe.

The following letter was sent to both Wallace and Bajjali:

Reference is made to certain replacement promissory notes payable to the order of Thomas L. Taylor III, as Receiver for Kaleta Capital Management, LP, a Texas Limited Partnership as detailed below:

- Replacement Promissory Note dated as of May 6, 2006: 

-Laffer Frishberg Wallace Economic Opportunity Fund, L.P. in the amount of $25,000.00 plus accrued interest to date hereof in the amount of $6,743.15; 

-Replacement Promissory Note dated as of August 12, 2008: Laffer Frishberg Wallace Economic Opportunity Fund, L.P. in the amount of $250,000.00 plus accrued interest to date hereof in the amount of $119,383.56; 

-Replacement Senior Secured Promissory Note dated as of March 26, 2009: West Houston WB Realty Fund, LP in the amount of $360,176.35 plus accrued interest to date hereof in the amount of $101,599.33; 

-Replacement Promissory Note dated as of April 7, 2009: West Houston WB Realty Fund, LP in the amount of $20,000.00 plus accrued interest to date hereof in the amount of $7,769.32; 

-Replacement Senior Secured Promissory Note dated as of March 30, 2009 in the amount of $215,000 plus accrued interest to date hereof in the amount of $60,388.49. 

Copies of the above-referenced Promissory Notes are enclosed. 

Pursuant to the terms of the referenced notes, each was due and payable on December 31, 2014. Demand for payment in full of the principal and accrued interest was made on January 5, 2014. The Makers of the Notes have failed to make payment and are now in default. On November, 26, 2013, you executed a Guaranty as to each of the above-referenced notes. A copy of each Guaranty is enclosed. Pursuant to the terms of the Guarantys executed by you related to each of the referenced notes, demand is hereby made for payment in full of the principal amount plus accrued interest, due within ten business days of the date of this demand.

Earlier today, a federal court judge ordered a report on the status of the repayment. Judge Nancy F. Atlas of U. S. District Court for the Southern District of Texas ordered Taylor to have the report ready by Feb. 13. Any disputes of that report must be filed by Feb. 20.


6 comments:

Anonymous said...

Correct me if I'm wrong, but I thought Bajjali resigned on the 23rd.

I've also variously heard he wanted out in the middle of August, on Dec 15th, I think it was, Wallace offered a $200K buyout, or that Bajjali could do the reverse, that Wallace then filed suit to force the transaction, and asked the court to drop the suit this month when everything really started to fall apart.

Note that if the receiver can "pierce the corporate veil", resigning does not help them in any way. On the other hand, as you detailed when you first wrote about the judgement, or perhaps it was when they got their previous, and as it turns out, last extension to pay, it was clear they were going to have extreme difficulty paying it. Which would indeed seem to be what happened, and would explain why they've left the carcass for the receiver to pick over. Certainly going forward the receiver would not be inclined to allow them to draw money from the company (actually, 10s of companies) for salaries, company cars, and whatever they were drawing from it for themselves....

Anonymous said...

The Receiver is going to sue them personally. I hope the FBI finally takes this case seriously. What I wondered was: If they have no money to pay the receiver how can they buy each other out with $200K, when that money belongs to the receiver, not either one. The Receiver has a lot of power and I hope he uses it to the full extent of the law.

Anonymous said...

Bajjali was trying to resign in November. He knew deadline was looming and knew he didn't want to pay the estate. They both knew. Then they we're trying to buy eachother out. I'm sure receiver found out and may of told them no exchange of monies until you pay this estate. So the two got pist off and decided to get even by resigning.

Anonymous said...

Maybe Joplin can bail them out with a "prepayment". After all, in Rohr's opinion: it's all Joplin's fault anyway!

Anonymous said...

>>>Maybe Joplin can bail them out with a "prepayment". After all, in Rohr's opinion: it's all Joplin's fault anyway!<<<

There's no doubt that something needs to be done to atone for the pain and financial setbacks that Joplin has inflicted on these financiers. With the evil twins of unemployed bloggers and the common citizen peanut gallery how anyone can make an honest buck in Joplin is an obvious question (unless you are selling gymnasium seating).

It would take much more than a prepayment of money that Joplin owes to make things right for Wallace Bajjali. They did have some bad luck and experiences in Joplin. Why Bloomingdales or Hermes didn't decide to move into the old Coke Building is beyond me. Who could have known?

What is really needed to make things right for Wallace Bajjali is restitution. Moneys tight, so have a bond issue or two and pay off Wallace Bajjali and all their companies for their pain and suffering. Punitive damages could be had from Joplin or somebody, but these guys are too worried about their other deals for that. Then maybe they'll be happy to go away to Costa Rica or wherever the grass is greener.

It will probably be a long time before the likes of Wallace Bajjali decide to make a deal with Joplin. Since Rohr is gone this is even less likely to happen.

This is probably another comment I'll have to send to the Globe to get printed.

Anonymous said...

Unfortunate there are carpetbaggers. Probably didnt intend it to end this way but...