“I’ve always wondered who actually owns the properties CitiApartments manages. I made my checks out to a company with several Roman numerals at the end of its name. It always struck me as a odd, as though the numbers were part of a cataloging system — a way to keep track of different buildings and thus, different accounts.”
Sarah’s not the only person wondering: When we looked at the recent class action suit filed on behalf of former CitiApartments tenants who have been denied return of their uncontested deposits, we noted that the suit names not just CitiApartments, but 40-something other companies as defendants in this case.
Why are there so many companies named as the defendants on the complaint? Isn’t this just a suit against CitiApartments? We asked Devine on June 13, the day he filed the suit.
alter ego liability” Devine told us. Though there are several, associated companies named as the owners of these buildings under the CitiApartments umbrella, Devine believes they’re all operating all as though they’re one company. And, if that can be proven in court, under this alter ego liability rule, the solvent companies will be held responsible for the insolvent companies.“We think there’s something going on here called
“What we think could be going on here is that each company that owns the building is not well capitalized, so when the tenants ask for deposit money banked by one place, they’re moving the money to another company’s account.” What do you call this? It’s not a shell game…
“No, it’s more than a shell game, it’s siphoning off money, designed to leave one company broke and to get the money somewhere else where no one can find it. If they transfer all your deposits and rent money to another company, when you come to them wanting your deposit back, they can throw their hands up and say they have no money.”
On the heels of John Upton’s excellent Examiner piece on the most recent round of foreclosures on CitiApartments properties, we gave Devine a call to see what he was thinking these days.
In light of these new foreclosures, do you still think there’s this money-moving game going on, or are these people just idiots who don’t know how to handle their money? “I think it’s possible that they bought a lot of property at the top of the boom and are having trouble making the payments now — as happened to so many people.” But Devine insists “There still is money somewhere, funneled to another LLC or a family trust.”
“Right now we’re slogging through the records from all their (associated) companies, figuring out where the outflows are.” By following the money he is hopeful his law firm, Seeger Salvas, will be able to find a way to prove that CitiApartments can do more than just “throw up their hands” when departing tenants ask for their deposit.
But what about these foreclosures? What do they mean? “Anything I say would just be speculation” demurred Devine “but they do seem to be accelerating — I think there were nine this week alone. Who knows where they’ll end up?”
CitiApartments still has until August 13 to respond to the class action suit. Neither Devine nor his colleagues at Seeger Salvas have heard anything from CitiApartments or their general counsel, Ed Singer, and you probably won’t be surprised that they also did not respond to our questions for this story.