DETROIT (CN) - Three real estate companies with alleged ties to Hezbollah buy "worthless" homes in Detroit and dupe foreign investors into buying them for far more than they are worth, eight investors claim in court.
Lead plaintiff Kathryn Llewellyn-Jones and seven other foreign nationals sued Metro Property Group, Global Power Equities, Apex Equities, 10 individuals and three law offices, in Federal Court. All the defendants are listed at the end of this article.
The plaintiffs, citizens of the U.K., Australia, and Yemen, claim they bought 11 properties in Detroit from the defendants, whom they accuse of running a Ponzi scheme "encompassing multi-millions of dollars, and reaching mini-Madoff proportions."
The complaint states: "Defendants Sameer Beydoun, Ali Beydoun, David Makki, and Mike Alaweih, doing business as defendants, Metro Property Group, Apex Global Properties LLC, and Global Power Equities LLC, purchase extremely rundown, rarely tenanted, usually uninhabitable properties out of foreclosure from the City of Detroit, and they are, upon information and belief, the single largest purchaser of such foreclosed Detroit homes. Upon information and belief, Ponzi scheme defendants have purchased thousands of such homes for between $500.00 and $5,000.00 and/or similar small amounts. (Ponzi scheme defendants purchase a scant few homes for larger amounts.) They make a profit by duping and defrauding investors, including plaintiffs, into buying them for $40,000.00 to $50,000.00 and/or similar amounts.
"Defendants know that the homes, even if they are refurbished at a cost of thousands of tens of thousands of dollars (which is not the case with any of the homes that Ponzi scheme defendants sold to plaintiffs), will be unlikely to rent out to third parties because of their mostly undesirable and destitute locations, and that, even if the homes do rent out to third parties, the prevailing average amounts of rents in the areas in which the homes are located are so low that they will not cover the cost of repairs and the prices at which they sell the homes to third parties, including plaintiffs.
"Ponzi scheme defendants do not refurbish the homes nor make any attempt to bring them up to code requirements for a certificate or occupancy, much less Section 8 requirements for habitability, despite fraudulent guarantees otherwise to plaintiffs and other home buyers whom defendants cheated, deceived, and defrauded into purchasing the homes. ...
"Ponzi scheme defendants then market the homes to third parties - primarily foreign investors and retirees in foreign countries, including plaintiffs, who are unable and/or unlikely to make the overseas trip to visit Detroit to actually view the properties prior to purchasing them. On the few occasions that said foreign investors actually visit Detroit, Ponzi scheme defendants have shown the foreign investors, including plaintiffs, properties that have been indeed refurbished, but which are a ruse and staged fraud for the bait-and-switch sales of houses to the investors." (Parentheses in complaint.)
The plaintiffs accuse a former Detroit Free Press reporter, Darci McConnell, of aiding and abetting the scheme, though she is not named as a defendant.
"In support of this scheme, Ponzi Scheme Defendants hired former Detroit News and Detroit Free Press reporter, Darci McConnell and her McConnell Communications, to market Ponzi scheme defendants, specifically defendant Sameer Beydoun, as the 'savior' of Detroit in gushing, glowing feature articles in the Detroit Free Press, Bloomberg News, and other local, national, and international publications of note, furthering the Ponzi scheme and providing Ponzi scheme defendants with convincing mainstream media approval and cover for the Ponzi scheme fraud. In each of these cases, reporters did not speak to purchasers who were swindled and conned by Ponzi scheme defendants into purchasing the fraudulently marketed homes, nor did they view the shabby insides of the homes. In one case, the Detroit Free Press merely reprinted the 'before' and 'after' photos provided by Ponzi scheme defendants, without fact-checking their veracity," according to the 116-page complaint.
Beydoun's company Metro Property Group has bought more than 1,000 houses in Detroit in the past 20 months, according to a Feb. 26 Free Press article by John Gallagher.
The plaintiffs claim that Beydoun and other defendants have ties to the Lebanese terrorist organization Hezbollah.
"Tarek M. Baydoun, Sameer Beydoun, Ali Beydoun, David Makki, and Mike Alaweih are all from families that are well known to be prominent supporters and members of Hezbollah in South Lebanon," the complaint states. "Upon information and belief, Sameer Beydoun, Ali Beydoun, David Makki, and Mike Alaweih are also supporters of Hezbollah and have property and/or homes in Hezbollah strongholds in South Lebanon. Defendants Sameer Beydoun, Ali Beydoun, David Makki, and Mike Alaweih hired Defendant Tarek M. Baydoun as their attorney and in-house counsel despite and likely because of their knowledge that Defendant Tarek M. Baydoun was an open supporter of Hezbollah and helped raise money for its alleged United States affiliate, which was raided by the FBI.
"Given several of defendants' ties to Hezbollah, plaintiffs fear that the money from which they (and other similarly defrauded parties) have been defrauded by Defendants may have, in part, been laundered to Hezbollah," the complaint states. (Parentheses in complaint.)
The plaintiffs seek $300,000 per property in compensatory damages, and $1 million per property in punitive damages, for fraudulent misrepresentation, fraud, breach of contract, and racketeering.
They are represented by Deborah Schlussel, of Southfield, Mich.
Here are the defendants: Metro Property Group, Metro Property Management, Global Power Equities, Apex Equities, Sameer Beydoun, Ali Beydoun, Tarek Mahmoud Beydoun, Beydoun Law Group, The Meridian Law Group, Mike Alaweih, David Makki, Chris Picciurro, Kathy Messics, George Vanderburg, Allen Brothers Attorneys and Counselors, James Allen and John Allen.