Sunday, February 01, 2015

Joplin Globe, city officials ignored 2013 report that Wallace-Bajjali was $6.5 million in debt

Part of the spin that has surrounded the collapse of Wallace-Bajjali Development Partners is that many of the bankruptcies and financial problems surrounding the firm occurred long before it became the City of Joplin's master developer.

And that is what it is, complete spin.

 The Joplin Globe, purportedly the area's newspaper of record, and city officials have ignored reports that the company was having financial problems and that David Wallace was playing fast and loose with the truth,

The news that Wallace-Bajjali had a December 31 deadline to repay cheated investors in the BizRadio scheme was published June 26, 2014, in the Turner Report, but even if somehow the Globe and city officials ignored that report, or did not find it a reason to be concerned, there have been other reports that should have raised warning flags.

This was published in 2013 in the Turner Report:

Though the Wallace-Bajjali firm was not the name on the filing, Joplin’s master developers filed for bankruptcy January 1, 2013, and are more than $6 million in debt, according to documents filed in the U. S. Bankruptcy Court for the Southern District of Texas.

River Square Center Partners, the company that filed for bankruptcy, shares the same address and the bankruptcy petition was signed by Costa Bajjali. The River Square Center complex, which is operated by Wallace-Bajjali Development Partners, filed for Chapter 11 bankruptcy after defaulting on a $6,527,321.10 debt to Wells Fargo Bank, according to the court documents. The events leading to the bankruptcy were described in court documents:

The Debtor is the owner of a three-story 92,874-square-foot former warehouse building located at 215 2nd Street & 217 Mary Avenue in Waco, Texas, that has been converted to retail, restaurant, and office space and is currently considered a focal point for night life in downtown Waco.
The project is 93.0% leased to 17 tenants and has adequate cash flow to service principal, interest, taxes, and insurance on an on-going basis. The building was purchased by the Debtor in 2007 and renovated shortly thereafter.
Despite what appeared to be a good faith transaction, the seller of the Property used his relationships with existing tenants to lure them into another building nearby that offered below market rates due to redevelopment incentives provided by the City of Waco. This resulted in tenant rollover of of over 50% within a 24-month period and lowered overall rents generally – the majority of re-tenanting income fell into 2010 and 2011.
Since the Debtor did not have adequate funds to cover the unexpected releasing costs, the principals covered the majority of these costs out-of-pocket. By late 2011, however, the cumulative effect of the drain caused the Debtor to be late on a couple of payments which resulted in the assessment of default interest and late fees.
Even though the Debtor subsequently made payments in full and on time, LNR Partners (as special servicer for the Lender) applied the payments to default interest and late fees which left the loan constantly in default and subject to ever increasing late charges. In late 2012, significant negotiations with the special servicer of the Secured Debt were had in order to resolve the outstanding defaults.
The Debtor believed that a financial agreement had been reached, however the special servicer instead posted the Property for foreclosure for December 2012. In order to preserve the value of the Property, the Debtor transferred approximately $290,000.00 toward payment of the Debt. The December foreclosure was passed with this payment, however the Property was once again posted for a January 2013 foreclosure. The Debtor did not have the funds to again meet the financial demands of the special servicer and this Chapter 11 was filed in an attempt to preserve the equity in the Property and to address all the Debtor’s financial obligations.
From all apparent indications, neither the Joplin Globe nor city officials ever looked into this.


Anonymous said...

Even if they had read the Turner Report, why would they believe it? Every one knows you just make up lies and innuendo because you're bitter at being fired from the city of Joplin...oh, wait, never mind. Keep up the great job Randy Turner!!

Anonymous said...

Nor did the City Council or Globe react to the Loraine Investigative Report except to blame the messenger.
The report to censure Woolston, to terminate the relationship with WB, to investigate further the Kuehne/Woolston/WB connections, the Chamber of Commerce (which gets City funds) loan to Colbert-Keane..........nothing was done with these by Council, by the prosecuting attorney, or even by the Globe to expose all of the potential wrongdoing.
Shaw's church was instrumental in defending Rohr (who had an undisclosed counseling relationship with Councilman Shaw).
And yet NOTHING was done with the things pointed out in the Loraine report.

Anonymous said...

Reading this detailed account, with clear hindsight, is maddening.
The 794 million dollar man indeed.
"But here’s David Wallace, coming to town with big plans and his major re-imagining of Joplin. He’s coming to a Tier 3 city and promising Tier 1 amenities and a world-class lifestyle. Frankly, he’s promising everything short of a new Guggenheim.

Wallace suggests that he can see the road from Joplin today to Joplin tomorrow."

"But some things from Wallace Bajjali’s background nearly derailed a deal. In February, the comapny agreed to a deal with the Securities and Exchange Commission (SEC) to pay back $1.2 million to investors. The SEC says the company was involved in a fraudulent scheme involving a media entity called BizRadio. The investors were less kind, saying Wallace Bajjali knowingly backed a Ponzi scheme.

In Amarillo, Texas, where Wallace Bajjali is working on a $113 million development project, one of their partners was forced into bankruptcy.

Rohr says he personally investigated the matters. He says he’s spoken to multiple officials in Amarillo about Wallace. When asked by council members about the SEC fines, Rohr says: “I described David as being a very trusting person. And in some of his business dealings, he got involved with people that, in retrospect, didn’t warrant that trust.”

How did the city ever agree to enter into a contract with David Wallace? All the red flags were there.

Anonymous said...

Some folks in Sugar Land are saying Wallace is on the beach in Costa Rica sipping some cold ones.