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.