A federal grand jury on Thursday indicted a top executive of a notorious Kansas City landlord in connection with fraudulent applications he allegedly made to obtain $28 million in bank loans.
Michael Fein, an owner and manager of companies affiliated with T.E.H. Realty, is charged with two felony counts of bank and wire fraud.
The 13-page indictment, handed up in St. Louis, accuses Fein of submitting false documents, inflating rent rolls and rental income, and lying about occupancy rates to obtain loans used to acquire or refinance apartment complexes in Kansas City, St. Louis and Tulsa, Oklahoma.
One of the complexes was the Green Village Townhomes, a 304-unit building on East 20th Street in Kansas City. The indictment says Fein obtained a $12.5 million loan through fraudulent means to refinance a loan on the complex.
“A $12.5 million refinance loan for a Kansas City, Missouri, apartment complex was just one part of a $28 million dollar fraud scheme alleged to have occurred in three cities,” Tim Garrison, the U.S. Attorney in Kansas City, said in a statement. “Today’s indictment alleges the owner of T.E.H. Management and affiliated companies defrauded several financial institutions, illegally enriching himself even as he provided substandard living conditions for his low-income tenants.”
T.E.H. Realty has been the subject of numerous complaints about living conditions at its apartments in Kansas City and in other cities where it operates.
Last month, a Jackson County judge fined one of its corporate affiliates $7,500 a day for ignoring court orders in a lawsuit brought by tenants of Ruskin Place Apartments in south Kansas City.
The tenants complained of leaking water, mold, sagging floors, inadequate heat, unsecured doors and “large critters” roaming through the apartment units.
T.E.H. was founded in Israel in 2006 and specializes in acquiring low-income housing units. The company, through its affiliates, owns and manages apartment buildings in the Kansas City area, St. Louis, Tulsa, Indianapolis and Reading, Pennsylvania.
Each of the charges against Fein carries a maximum prison sentence of 30 years.
The U.S. Attorney’s office in St. Louis said the case was investigated by the inspector general’s office of the Federal Housing Finance Agency and the U.S. Department of Housing and Urban Development.
Among the lenders allegedly defrauded by Fein were the Federal National Mortgage Association, better known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, better known as Freddie Mac.
Fein could not be reached for comment.
