Tuesday, January 27, 2015
Video- Amarillo TV coverage of Wallace-Bajjali shutdown
Jake Zimmerman to run for attorney general
Pledging to fight for fairness and equal treatment for all Missourians, Jake Zimmerman today announced that he will officially enter the race for Missouri Attorney General. As Missouri’s top law enforcement official, Zimmerman said he would draw on his experience as a former prosecutor, lawmaker, and the current St. Louis County Assessor to advocate for crime victims, consumers and taxpayers.
“Everyone has a right to fairness, regardless of whether you’re a millionaire or a single mom who is just trying to make ends meet,” Zimmerman said. “Whether it’s prosecuting corporations that are cheating their customers, or cracking down on casinos and developers who are trying to avoid paying their fair share of taxes, I’ve dedicated my career to fighting to make sure people are treated equally under the law. It’s a fight I want to continue as Missouri’s Attorney General.”
Monday, January 26, 2015
City of Amarillo official statement on Wallace-Bajjali shutdown
The following news release was issued by the City of Amarillo, Texas, where Wallace-Bajjali had been the master developer of a downtown project, backed its way out of most of it and was still supposed to be building a $14 million parking garage with city money.
Based on the developments regarding Wallace Bajjali Development Partners, LP vacating their offices in Joplin, MO., and related information gained throughout the day, the Amarillo Local Government Corporation (LGC) is in contact with its legal counsel to determine a proper response. The LGC anticipates meeting as early possible to address these concerns.
In the meantime, the LGC wishes to confirm that the contract related to the development of the Convention Center Hotel is with Newcrest Image and construction will proceed as scheduled. The recently approved contracts on the Convention Center Parking Garage allow for the continuation of the construction of the garage so that it will be open in time to support the hotel.
The construction and prompt completion of the Multi-Purpose Event Venue (MPEV) – commonly referred to as the ballpark – remains a priority for the LGC. The Amarillo LGC remains committed to all three projects and looks forward to their successful conclusion.
City of Joplin Official Statement on Wallace-Bajjali exit
Today the City received an email from Costa Bajjali that confirmed his resignation from Wallace Bajjali Development Partners, LP, as of January 23, 2015. Also included in the correspondence was a copy of David Wallace’s resignation letter, dated January 7, 2015, from this same firm. Prior to receiving these notices, the City was unaware of either representative’s actions, other than third party information it had received last week about the Joplin offices of Wallace Bajjali being closed.
As a result of this information, the City is reviewing its options regarding the contractual agreement the Joplin City Council entered into with WBDP on July 2, 2012.
In the past two and a half years, the City has paid Wallace Bajjali approximately $1.68 million for work performed. This includes:
• $1 million, which represents a 50% reimbursement of the actual costs ($2 million) spent by the master developer for their work in the community;
• $475,000 fees for land purchases (this cost will be reimbursed when the property is sold to WB)
• Some $200,000 has been paid for work performed in the revenue and cost benefit analysis of the TIF formation (tax increment financing), and legal fees for tax credits that the firm helped in acquiring.
On January 16, 2015, City Manager Sam Anselm notified Wallace Bajjali that their insurance had lapsed, and they had 30 days to cure this default, as stated in the master predevelopment agreement. The City has not received a response from WBDP on this matter.
Although the status of the master development firm is uncertain, City officials remain confident in the continued efforts of rebuilding and development of Joplin.
“The new library project is on track,” said Joplin Mayor Mike Seibert. “The City Council will vote on the contracts for the architectural and engineering firms at our next meeting. I would expect to have a groundbreaking event in the near future.” Currently the library is limited to 35,000 square feet, does not meet ADA compliance, and is landlocked from any expansion at its current location in the 300 block of South Main Street, which prevents any future growth of services.
City staff is also seeking direction from the Economic Development Administration to utilize a portion of the EDA $20 million stimulus grant for infrastructure needs of an adjoining retail development in that area. This could include publicly-owned items such as sidewalks, streetlights, or stormwater work for the area.
A request for proposal (RFP) for a senior citizens housing complex will also be released in upcoming weeks.
“This is an unfortunate occurrence with the master developer, and we will keep the public informed as we learn more about the outcomes of the firm’s partners’ resignations,” said Seibert. “In the meantime, the City does have several projects in motion, with great staff in place. We will continue moving forward in order to rebuild Joplin and keep our commitment to our citizens in making this city better than it was prior to the tornado.”
Joplin man sentenced to seven years for shooting death of Granby woman
Daniels pleaded guilty November 24 in Jasper County Circuit Court to involuntary manslaughter and Judge Gayle Crane ordered a presentence investigation.
Daniels was initially cited for second degree assault and armed criminal action after the shooting, which took place at a home on County Road 10 in the eastern part of Jasper County. The charges were upgraded after Ms. Crawford’s death.
Judge to Joplin developer: You're not going anywhere
Assistant U. S. Attorney Stephen Mohlhenrich, in documents filed in September, says that even jail has not stopped Gregg from breaking the law.
First, he conspired with his son, Trevor Gregg, to commit bankruptcy fraud by concealing bank assets and financial transactions from the U. S. Trustee.
Second, he conspired with Trevor Gregg to continue to conceal a Toyota FJ vehicle he should have disclosed on his bankruptcy schedules.
Third, the defendant home was foreclosed upon and sold, however defendant has abused the legal process to prevent Regions Bank from taking custody of his property unless the bank sells the home to the defendant's business associate for substantially less than it is worth and further has conspired with Trevor Gregg and others to physically steal the gate and home theater equipment from that property belonging to Regions Bank, if Regions Bank prevails in the legal action.
The government recorded Gregg committing these acts, according to court documents:
During a September 12, 2014 prison visit at Greene County Jail, the following exchange took place:
RICHARD GREGG: “I’ve already told Bruce what to do on the – I mean if it, worst comes to worst we get the front, the back gate, the theater room and all that stuff goes into the storage building. And he –
TREVOR GREGG: okay
RICHARD GREGG: he has already been told what to do . .
Information on the other crimes was also obtained through recording Gregg's phone calls from the jail, according to court documents.
.The crimes Gregg is in jail awaiting trail for are described in the following release from the U. S. Attorney from the Western District of Missouri after Gregg was indicted by a federal grand jury:
Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Springfield, Mo., businessman has been indicted by a federal grand jury for additional bankruptcy fraud, after being indicted last year for a series ofbank fraud and wirefraud schemes that totaled more than $3.3 million in losses.
Richard Thomas Gregg, 59, of Springfield, was charged in a 25-count indictment returned by a federal grand jury on Wednesday, July 24, 2014. This superseding indictment replaces the original indictment returned on Feb. 28, 2013, and adds eight additional counts of bankruptcy fraud.
Gregg is charged with four counts of bank fraud, 10 counts of money laundering, two counts of wire fraud and nine counts of bankruptcy fraud.
Gregg was the principal shareholder and director of Southwest Community Bank in Springfield, which failed in May 2010. He and his wife were majority shareholders in Glasgow Savings Bank in Glasgow, Mo., which failed in 2012. Prior to Glasgow SavingsBank’s failure, it was one of the oldest operating banks west of the Mississippi River. Gregg was also a real estate developer, an investor and a licensed insurance agent for the Shelter Mutual Insurance Company. Gregg had ownership interest in and controlled a number of business entities.
More Than $180 Million in Debt
According to the indictment, Gregg and his business entities accumulated substantial debt. On the May 14, 2013, statement of financial affairs Gregg filed in his personalbankruptcy case, he reported owning assets valued at $145,030,779 and total debts of $325,512,798, reflecting a deficiency of $180,482,019. As of Feb. 28, 2013, the indictment says, approximately $14.6 million of the known debt attributable to Gregg and his business entities had been “charged off” by the creditor financial institutions, meaning they had defaulted and the financial institution had “written off” part or all of the loan because it determined the debtwas not collectable.
Bankruptcy Fraud
Gregg was a managing member of and decision maker for 1717 Market Place, LLC. He was also designated as the tax matter partner for 1717 Market Place and provided the information to accountants who prepared tax returns for 1717 Market Place. On July 17, 2012, 1717 Market Place filed a Chapter 11 voluntary bankruptcy petition, which was dismissed on March 12, 2013.
Gregg was charged in the original indictment with one count of bankruptcy fraud. On Aug. 14, 2012, Gregg allegedly made false declarations by submitting false Schedulesof Assets and Liabilities and a false Statement of Financial Affairs (SOFA) in hisbankruptcy proceedings. Gregg stated that the bankruptcy debtor, 1717 Marketplace, LLC, owed him $868,000 for a “personal loan,” and owed another person $801,000 for a “personal loan.” In fact, as Gregg knew, neither he nor the other person had lent 1717 Marketplace, LLC funds in those amounts.
Four of the additional eight counts of bankruptcy fraud also relate to the false statements made by Gregg in the same bankruptcy proceedings.
In submitting the company’s schedules and SOFA, Gregg allegedly omitted any reference to substantial amounts (in excess of $9 million) that he and others owed to 1717 Marketplace. He also allegedly omitted any reference to the company’s payments, totaling approximately $151,000, to himself and another person within the year immediately preceding the date of the bankruptcy filing. Gregg allegedly omitted any reference to his transfer by warranty deed of his interest in two parcels of real estate, a 97.2-acre tract and a 6.4-acre tract, both in Nixa, Mo.
Four of the additional counts of bankruptcy fraud relate to the allegedly fraudulent transfer of property in Gregg’s personal bankruptcy case, which he filed after having been indicted last year for, among other crimes, bankruptcy fraud.
The indictment alleges that Gregg, in contemplation of his bankruptcy case and with the intent to defeat the provisions of Title 11, transferred his interest in two parcels of real estate, the 97.2-acre tract and the 6.4-acre tract in Nixa. The indictment also alleges that Gregg, with the intent to defeat the provisions of Title 11, fraudulently transferred property of the bankruptcy estate when he filed a document with the Christian CountyRecorder of Deeds that purported to place $250 million in liens on the real and personal property of Gregg and the entities he owned and controlled.
The indictment also alleges that Gregg, with the intent to defeat the provisions of Title 11, fraudulently transferred property of the bankruptcy estate when he signed an offer that purported to place liens on the real and personal property of Gregg and the entities he owned and controlled. On May 24, 2013, after his personal Chapter 11 bankruptcycase was converted to Chapter 7 and a trustee was appointed, Gregg accepted an offer on behalf of FRS, LLC, and 1717 Market Place, of $40 million “in the form of Property Tax Abatement based on a certain lien recording against this subject property.” According to the indictment, however, Gregg’s interests in those companies and in his personal property had become the property of the bankruptcy estate upon the commencement of his personal case on March 19, 2013.
The remaining charges contained in the superseding indictment remain unchanged from the original indictment.
Fremont Property
The federal indictment alleges that Gregg engaged in a scheme to defraud Southwest Community Bank in 2008. As a part of this bank fraud scheme, the indictment says, Gregg sold the bank a piece of commercial real estate at 2814 S. Fremont in Springfield for $1,551,944. Gregg allegedly knew that amount was significantly above fair market value.
Gregg, who was Southwest Community Bank’s principal shareholder and was on its Board of Directors, did not disclose to the bank that he had purchased that property for $775,000 a few months earlier, the indictment says, nor did he disclose to the bank that two appraisals had been conducted on the property in recent months. One appraisal valued the property at $762,000. The second appraisal was cancelled when Gregg disagreed with the preliminary work. After Gregg cancelled the appraisal, the indictment says, his son (who worked at Southwest Community Bank) ordered an appraisal of the Fremont property by another appraiser, who valued the property at $1,580,000. Gregg allegedly did not disclose to the bank that this appraisal was not an independent valuation of the property, but rather was something Gregg had, in essence, directed.
The indictment charges Gregg with four counts of money laundering related to thisbank fraudscheme.
Stock Shares
In February 2009 Gregg borrowed $2 million from Great Southern Bank, using 160,000 shares of stock for First Bancshares, Inc. (FBSI), the holding company for First Homes Savings Bank, as collateral. Gregg physically deposited the stock certificate with Great Southern Bank.
According to the indictment, on May 6, 2009, with a $1.5 million balance remaining on theloan from Great Southern Bank, Gregg checked out the original FBSI stock certificate from Great Southern Bank, using as a pretext the stated purpose of separating the largecertificate into multiple smaller certificates. He signed a trust receipt promising to return to the certificate to the bank within 30 days. Instead, the indictment says, Gregg deposited the collateralized FBSI shares into his account at Scottrade, a privately-owned retail brokerage firm located in St. Louis, Mo. On May 28, 2009, Gregg allegedly borrowed $440,000 from Scottrade, from the margin account on which the defendant used the FBSI stock as collateral. Gregg chose not to return the FBSI certificate or any proceeds he received to Great Southern Bank, according to the indictment, and instead used the funds for other purposes.
Collectible Cars
The federal indictment charges Gregg with two counts of bank fraud related to schemes to use collectible automobiles as collateral to obtain loans, then sell the automobiles without paying back the loans. In January and February 2010 Gregg allegedly executed separate but related schemes to defraud Great Southern Bank, Metropolitan National Bank and People’s Bank of the Ozarks. As a part of these schemes, the indictment says, Gregg sold seven collectible automobiles at the Barrett-Jackson Auto Auction in Scottsdale, Ariz. Five of the automobiles were encumbered at the three banks.
According to the indictment, Gregg borrowed $400,000 from Great Southern Bank in October 2007, which he secured with four collectible automobiles, including a 2006 Ford GT. Gregg consigned the 2006 Ford GT with the Barrett-Jackson Auto Auction in Scottsdale, Ariz., where on Jan. 23, 2010, the vehicle was sold at auction for approximately $150,000. Gregg allegedly chose to not return the proceeds of the sale of the Ford GT ($138,000 after deducting the auctioneer’s fee) to Great Southern Bank and instead used the funds for other purposes. When Gregg defaulted on the loan, Great Southern Bank realized a $129,644 loss.
According to the indictment, Gregg borrowed $400,000 from Metropolitan National Bank in 2005. He secured this loan with a “floor plan” financing, meaning the loan was a revolving line of credit made against specific pieces of collateral, in this case automobiles. When each vehicle on the floor plan was sold, the loan advanced against that piece of collateral was to be repaid. This loan was renewed in December 2009. In January 2010, the collateral included a 1971 Chevy Cheyenne Pickup. The portion of the loan’s balance collateralized by the 1971 Chevy Cheyenne Pickup was $17,221. Gregg also consigned the 1971 Chevy Cheyenne Pickup with the Barrett-Jackson Auto Auction, the indictment says, and it was sold for approximately $29,000. Gregg allegedly chose to not return the proceeds of the sale ($26,680 after deducting the auctioneer’s fees) to Metropolitan National Bank and instead used the funds for other purposes. When Gregg defaulted on the loan, Metropolitan National Bank realized a $17,221 loss.
The indictment charges Gregg with six counts of money laundering related to these bank fraud schemes.
Oklahoma Casinos
The federal indictment charges Gregg with two counts of wire fraud related to bounced checks at two Oklahoma casinos.
On Jan. 3,2012 Gregg allegedly presented five checks, payable to Buffalo Run Casino in Miami, Okla., each in the amount of $10,000. Gregg allegedly knew his credit union account contained insufficient funds to cover those checks.
Between Feb. 16 and March 1, 2012, Gregg allegedly presented five checks payable to Downstream Casino and Resort in Quapaw, Okla., in the total amount of $60,000. Gregg allegedly knew his bank account contained insufficient funds to cover those checks.
This case is being prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the FDIC Office of Inspector General and IRS-Criminal Investigation.
David Wallace: I quit; Joplin's master developer cuts and runs
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Just like he has done so many times in the past- from various projects to an aborted run for former Congressman Tom DeLay's vacated seat, to his marriage of 30 years- Wallace is walking away from Wallace-Bajjali and its ongoing projects in Joplin and Amarillo, Texas.
Wallace announced his resignation in a letter issued today. At this point, it appears Wallace did not send the letter to the city of Joplin since it is dated January 7. (Update: The city of Joplin received the letter today.)
The purpose of this letter is to inform you, that effective immediately, I hereby resign from any
and all capacity of officer, manager, director, advisor, consultant, agent, etc. for each of the
attached entities.
Furthermore, to the extent that I am presently an authorized signer on any bank account in the
name of any of the attached entities, I would hereby demand that I be removed immediately as
an authorized signer on such account.
Finally, I have removed a number of articles which represent my personal belongings from the
Sugar Land office, however, there are a number of files (electronic and paper) which are mine
and I will make arrangements to retrieve them in the near future. Until I remove them, I would
demand that they not be destroyed or altered in any way.
Thank you.
The letter listed more than 70 companies he was cutting all contact with, all of which were offshoots of his various development projects, and many of which have been the subject of lawsuits and bankruptcies that have been detailed in the Turner Report over the past couple of years.
One of those was Wallace-Bajjali Development Partners, the city of Joplin's master developer, which has yet to get one project started, though it was hired by the city nearly three years ago and went through millions of dollars.
Wallace drops bid to force Bajjali out, can't afford the cost
Documents filed in Fort Bend County, Texas District Court indicate that Wallace-Bajjali Development Partners CEO David Wallace tried unsuccessfully to force his partner of nine years, Costa Bajjali to sell his 50 percent share of the business.
In a lawsuit filed December 22, Wallace said he had sent a letter to Bajjali August 14 saying he was exercising his option under their original partnership agreement to buy him out for $200,000.
Bajjali informed Wallace on December 12 that he did not intend to sell his share of the company.
On January 13, Wallace filed notice that he was dropping the effort. That decision came one day before Wallace filed a request in Fort Bend County District Court to reduce the amount of support he has to pay to his ex-wife Kathryn Lynn Wingo.
"The petitioner lacks the ability to provide spousal maintenance in the amount ordered, lacked property that could be sold, mortgaged, or otherwise pledged to raise the funds needed, attempted unsuccessfully to borrow the needed funds and knows of no sources from which the money could have been borrowed or otherwise legally obtained."
State auditor investigating city of Joplin's relationship with Wallace-Bajjali
Spence Jackson a spokesman for the state auditor's office, confirmed that in a statement given to the Amarillo Independent. Wallace-Bajjali has also been serving as a developer for that city.
“I can confirm that we are conducting an audit of the city of Joplin and that we have looked at the relationship between the city and Wallace Bajjali,” Spence Jackson, a spokesman for the Missouri state auditor said in an email to The Amarillo Independent.
Jackson would not comment on whether the auditor has subpoenaed anyone from Wallace Bajjali in its investigation.
In an earlier article, the Joplin Globe confirmed that some members of the Citizens Advisory Recovery Team (CART) had received subpoenas.
Joplin City Council sets emergency session tonight: Where's Wallace-Bajjali?
The Joplin City Council has scheduled a Special Meeting at 5:45 p.m. on Monday, January 26, 2015 in the 5th Floor Dining Room at Joplin City Hall, 602 S. Main.
The Council will convene and vote to go into a closed session. The agenda states: “Vote to go into closed session, which shall pertain to legal action, causes of action, or litigation involving a public governmental body and any confidential or privileged communications between a governmental body or its representatives and its attorneys as set forth in Section 610.021(1) RSMo, as amended, 2014. This meeting, record, and vote to be closed to the extent provided by law. The City Council shall adjourn at the end of the session.”
Mayor Mike Seibert will briefly address news media at the conclusion of this meeting.
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