Uncovering the Tangled Web: Allegations of Misappropriation and Loan Defaults Plague Jackson Apartment Complex

In a complex legal battle unfolding in Hinds County Chancery Court, a Jackson apartment complex, PF Woodville Plaza LLC, finds itself at the center of a storm of allegations and financial troubles. The property, linked to Chaim Puretz, is facing a lawsuit from Wells Fargo and others over a $2.5 million loan default, as well as claims of mismanagement and disrepair.

Unraveling the Allegations: Misappropriation Scheme and Unpaid Utility Bills

Misappropriation Allegations in Indiana

A WLBT investigation earlier this year revealed that a man with the same name, age, and business address as Puretz, the owner of PF Woodville, is facing multiple charges in Indiana for allegedly stealing renters' water payments from four apartment complexes, causing the water to be shut off for tenants. The Indiana Courts website shows Puretz is facing felony counts, including corrupt business influence, theft of property valued at less than $50,000, and theft of property valued between $50,000 and $750,000.

Unpaid Utility Bills in Mississippi

The financial troubles of PF Woodville extend beyond the Indiana allegations. According to filings in U.S. District Court, the apartment complex currently has a $125,000 past-due balance owed to JXN Water. Additionally, a second complex with ties to Puretz, Addison Place Apartments, had $267,000 in past-due water fees back in April, as reported by JXN Water.

Testimony from Utility Employee

Carla Dazet, an employee with the utility, has been subpoenaed to testify in the Wells Fargo case, with the bank saying her testimony "will provide crucial evidence of the property owner's mismanagement."

Loan Default and Alleged Mismanagement

The legal battle between PF Woodville and Wells Fargo centers around the $2.5 million loan default. Wells Fargo alleges that PF Woodville failed to pay on its loan for two months, in violation of the terms of the loan agreement. The bank also claims that PF Woodville brought on a new third-party firm to oversee the apartments without the bank's knowledge and has allowed the complex to fall into disrepair.

Tenant Payments and HUD Funding

Federal court documents reveal that "substantial portions" of the rent payments are funded by the U.S. Department of Housing and Urban Development (HUD), and a portion of those funds are supposed to go to cover water fees. However, JXN Water says it set up a repayment plan with Puretz to allow the past-due amount to be paid in monthly installments, but no payments have been made per that agreement since June of this year.

PF Woodville's Response

In its 22-page response, PF Woodville refutes Wells Fargo's claims, stating that it has made all the loan payments in question and has been making payments for the last seven years. The apartment owner also contends that bank officials were well aware it was bringing on a new apartment manager, and that the action was taken "for the express purpose of benefiting the property… as the prior manager had ceased to satisfactorily perform its duties in operating and managing the [site]." Additionally, PF Woodville argues that the building conditions cited by Wells Fargo have been addressed, providing photographic evidence to support its claims.

Receiver Appointment and Accounting Requests

Wells Fargo is asking the court to appoint Trigild LLC as the receiver for the Woodville Plaza Apartments. The bank also wants an accounting of all rents and income generated by the property, damages for breach of contract, and any other relief the court may deem appropriate. PF Woodville, however, argues that granting the request should be denied, stating that appointing a receiver should only be done if there is "no better course" and that the lender's claims are "false, inconsequential, or have been (or are capable of) easy remediation in the ordinary course."