The legal fallout from DJE Texas Management Group’s collapse keeps widening.
Denver-based Platte Canyon Capital filed a new lawsuit against the multifamily syndicator’s former chief, Devin Elder, accusing him of fraud and breach of contract tied to the July sale of a San Antonio apartment complex, the San Antonio Business Journal reported.
Platte’s suit seeks more than $1 million in damages and accuses Elder of effectively stealing $52,000 in rent from the property after the sale, records from Bexar County’s 37th Civil District Court show. The complaint centers on the 268-unit Allure Apartments at 7770 Pipers Lane, one of several DJE assets unloaded this summer amid the firm’s unraveling. Platte claims Elder and his affiliates, including DJE Properties and 7770 Pipers LLC, misrepresented the building’s occupancy rate and financial health leading up to the sale.
DJE allegedly told Platte the complex was more than 90 percent leased, with tenants lined up to fill remaining vacancies, according to the Oct. 6 petition. But once Platte took over, it found that numerous tenants were delinquent or had stopped paying rent altogether — and that DJE hadn’t filed any evictions or taken steps to address the arrears, the lawsuit alleges.
The actual occupancy rate, Platte contends, was about 15 percent lower than DJE represented.
On top of that, the lawsuit accuses DJE of continuing to collect rent for two months after closing, taking in more than $52,000 through its online payment portal in violation of the sales agreement. Elder has not returned the money, Platte alleges.
“Elder’s communications convey not refusal, but inability, to return what is in effect stolen rent,” Platte’s attorney David Denton wrote. “Platte construes the inability to pay to mean that the money is already disbursed and gone — especially given the backdrop of lawsuits, investigations and investor demands.”
The sale was financed with an $18.2 million loan from Prime Finance Partners, though the full transaction terms weren’t disclosed. Platte and its attorney declined to comment. Elder, his counsel and broker Newmark did not respond to requests for comment from the outlet.
Elder and DJE’s pile of legal and regulatory troubles has grown since February, when communications to investors abruptly stopped. Multiple investor lawsuits are pending, and the FBI is investigating DJE for alleged money laundering and wire fraud.
In August, federal investigators opened a criminal probe into Elder’s DJE Texas Management Group, following a June warrant to seize DJE properties, including over 1,000 acres of land tied to Elder’s DJE portfolio across six counties in South Texas.
— Eric Weilbacher
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