Monday, February 02, 2015

Wallace-Bajjali abandoned another town before Joplin, Amarillo

The departure of Wallace-Bajjali Development Partners from Joplin and Amarillo earlier this month is not the first time the firm has abandoned a city (though it is the first time the partners have abandoned the company).

Joplin city officials appear to have been blissfully unaware that Wallace-Bajjali had abandoned a project in Corpus Christi, Texas, just one year before the firm was hired in Joplin and only three months before the Joplin Tornado.

The Turner Report noted Wallace-Bajjali's activities in Corpus Christi in this post from July 15, 2014:

City officials were entranced as the former mayor of Sugar Land, Texas David Wallace presented a multi-colored power point presentation of how a blighted area of the community would look once his firm, Wallace-Bajjali Development Partners finished with their plans to revive the area.

It was the same process Wallace would use a couple of years later when his firm became the master developer for the city of Joplin.

The city officials who watched this presentation were from Corpus Christi, Texas. The presentation was titled "Corpus Christi: A New Vision."

In a city publication printed a few months later, the project was described in this fashion:

"A master plan for redevelopment of property stretching from Sam Rankin Street to Interstate 37 to the waterfront."

That plan included mixed-use development, a water park, and a hotel.

The vision, according to the city publication, would "enhance streetscape and restore economically depressed neighborhoods."

And perhaps it would have, but Wallace-Bajjali Development Partners walked away from the project a few months into it, when city-owned land it wanted to use for the project was not made available:

"There wasn't enough low-hanging fruit that they could wrap their arms around and get involved right away," said Mayor Joe Adame, who recruited the developers to Corpus Christi and strongly supported the plan.

Bill Durrill, whose family owns several large tracts of the land proposed for development, met several times with the developers. Those meetings ended several months ago, he said.

"They lost interest," he said. "They didn't see enough skin in the game."

The Corpus Christi project is still included on the Wallace-Bajjali website as a public-private partnership accomplishment despite the departure and the lack of skin in the game.

1 comment:

Anonymous said...

Be sure to read - Woes of Wallace, Bajjali continue in the Sugar Land newspaper,1051,1423055612910

Woes of Wallace, Bajjali continue
• Wed, Feb 04, 2015
The latest development involving David Wallace and Costa Bajjali, erstwhile principals of Wallace Bajjali Development Partners, is taking place in the U.S. District Court for the Southern District of Texas in Houston.

The court-appointed receiver Thomas L. Taylor III in the civil action styled SEC v. Kaleta, et al., as equity receiver for defendant Kaleta Capital Management, Inc. and BusinessRadio Network, L.P. and Daniel Frishberg Financial Services, Inc., filed a motion on Jan. 29 asking the court to enter a judgement against Wallace, Bajjali, and other entities for breach of personal notes and guarantees furnished by Wallace and Bajjali. They failed to pay more than $1.5 million, per the settlement ordered by the court. The receiver also sought interest at the rate of $300 per day from Jan. 30, 2015.

As the final deadline passed on Dec. 31, 2014 and the receiver’s written notice on Jan 5 and Jan.14 to Wallace and Bajjali elicited no response, the receiver filed the complaint.

The Receiver’s investigation into the financial and business affairs of the Receivership Defendants revealed, inter alia, that KCM had transferred investor proceeds to, or made payments with investor proceeds on behalf of, Defendants Wallace and Bajjali.

The Securities and Exchange Commission in 2009 ordered Wallace and Bajjali each to pay a $60,000 civil penalty, without admitting or denying the SEC’s allegations of misusing investor funds.

During settlement negotiations, the Wallace Bajjali Parties provided to the receiver sworn affidavits of financial condition and other financial documentation, subject to confidentiality agreements. The receiver relied upon the representations made by the Wallace Bajjali Parties in their sworn financial disclosures -- and submitted these disclosures to the Court for in camera review -- in agreeing to the terms of the settlement presented to the Court for approval.

More than 50 investors, dissatisfied with the appointment of a receiver and his settlement with Wallace and Bajjali, appealed and lost.

On October 21, 2013 the receiver moved the Court to modify the Court-approved settlement, requesting a modification of the dates of maturity of the replacement promissory notes to December 31, 2014. The Court granted the requested modifications by Order entered on November 15, 2013. On or about November 26, 2013, the Guarantor Defendants executed the modified guaranty agreements with respect to the modified replacement notes pursuant to the Compromise Settlement and Release Agreement.

Meanwhile, the investors who lost more than $3 million have revived their own lawsuit against Wallace and Bajjali.

The true extent of Wallace’s liability is incomprehensible. For example, in his resignation letter Wallace had sought to resign from nearly 50 business entities and their solvency is not all clear.

Also, the list of businesses and projects initiated by Wallace or associated with Wallace, which failed or are embroiled in litigation, has been mounting day by day.

Wallace, the self-styled “turn around expert” piled up bankruptcies as if they were a medal of honor.

Bankruptcy and partnership litigation are the hallmarks of his business acumen and he mostly emerged unscathed.