A downtown San Antonio property tied to embattled syndicator Devin Elder is headed for the auction block — though investors shouldn’t expect much relief.
Federal prosecutors are seeking court approval to sell the two-story Leeds Building at 345 West Commerce Street for about $1.4 million, according to a Tuesday filing in the U.S. District Court for the Western District of Texas, the San Antonio Business Journal reported. The property is owned by an entity linked to Elder, the former principal of DJE Texas Management Group, who pleaded guilty this month to one count of wire fraud.
The buyer is Las Vegas-based GXM Investments. Prosecutors said the deal was negotiated before charges were filed. State records show GXM is affiliated with Gerard Morales, founder and CEO of Texas Veteran Security. Morales did not respond to a request for comment from the publication.
The sale is part of a broader federal effort to unwind what the U.S. Attorney’s Office alleges was a $69.5 million Ponzi scheme. Prosecutors said Elder solicited funds from more than 300 investors and misrepresented how their money would be used. Under a plea agreement in the Western District of Texas, Elder is expected to repay roughly $66 million, though the full terms remain under seal.
To claw back funds, the court appointed Dan Kubinski of Crowned Eagle Realty as receiver to market and sell 21 Elder-linked properties across South Texas. The Leeds Building, however, illustrates how thin the recoveries might end up.
After satisfying a pre-existing lien held by First Citizens Bank, along with taxes and transaction costs, the net proceeds from the Commerce Street sale are projected to total just $165,011. Government attorneys told the court that competing offers would have yielded no recovery for investors because of the bank’s senior claim, according to the publication.
“None of these would have resulted in monies being available for the benefit of victims,” the filing states, citing the outstanding lien.
U.S. District Judge Fred Biery has not yet signed off on the transaction, though he recently approved the sale of a separate 31-acre tract in Atascosa County tied to Elder.
— Eric Weilbacher
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