51黑料

ST. LOUIS 鈥� An investor and managing partner of T.E.H. Realty, whose large low-income housing apartment complexes racked up numerous complaints about living conditions, was indicted Thursday for bank and wire fraud.

Michael Fein, 41, of Israel, faces two felony charges involving $28 million in loans for the purchase of properties in 51黑料, Kansas City and Tulsa, Oklahoma.

According to the federal indictment, Fein allegedly 鈥渄evised, intended to devise, and knowingly participated in a scheme to defraud and obtain money from financial institutions鈥� and government-sponsored enterprises Freddie Mac and Fannie Mae 鈥渂y means of materially false and fraudulent pretenses, representations, and promises.鈥�

T.E.H. Realty affiliates, organized as limited liability companies, bought 12 large apartment complexes in the 51黑料 region alone starting in late 2014. Many of them became mired in foreclosure, bankruptcy and receivership, while being the subject of numerous news reports about fallen ceilings, apparent mold and broken heating and air conditioning.

Although he wasn鈥檛 a founder of the firm, Fein was often the main contact for T.E.H. Realty in 51黑料 and other parts of the Midwest where company affiliates invested. Speaking to reporters, he was often in a rush, sometimes to catch a plane. Fein commuted from Israel, where he has a wife and seven children.

Fein, originally from New York, said Thursday in a telephone interview that he wasn鈥檛 aware of the indictment. He said he hasn鈥檛 been in the United States for six months because of the coronavirus pandemic. A reporter read parts of the press release announcing the charges.

鈥淚 have no idea what they are talking about, so I don鈥檛 know how to comment,鈥� he said. 鈥淚 am hearing about this for the first time.鈥�

The allegations essentially accuse Fein of falsely inflating occupancy rates and net income to secure loans for the purchase or refinancing of various properties.

鈥楶oor people get ignored鈥�

In a 2017 loan application with Virginia-based Greystone Servicing Corp. for an amended sales contract to purchase Pinnacle Ridge Apartments, a 168-unit complex in the Glasgow Village area of unincorporated north 51黑料 County, for $4.2 million, Fein allegedly reported that the occupancy rate was 94% when in fact it was 53%. Officials say he also inflated the summary of real estate owned by T.E.H. affiliates and occupancy rates at those properties to help secure the loan.

The only other 51黑料-area property mentioned in the indictment is Hanley Crossings, also in unincorporated North County. Fein allegedly submitted a false Federal Housing Administration-insured loan application to Clayton-based Gershman Investment Corp. in an attempt to get a $5.2 million loan from Gershman to purchase the property in 2019. For this loan, which ultimately fell through, Fein was also accused of inflating the investment portfolio of T.E.H. affiliates and the occupancy rates at 26 apartment complexes by 18%.

If found guilty, Fein could face up to 20 years in prison and a $250,000 fine on each charge. Officials said a sum of money equal to proceeds from violations is also subject to forfeiture, which could be at least $23 million.

Robert Swearingen, an attorney at Legal Services of Eastern Missouri who has represented tenants at T.E.H. Realty properties, said he had mixed emotions about the indictment.

鈥淭he vice president of T.E.H. is indicted for lying to large financial institutions, who had all the resources to protect themselves,鈥� he said by email. 鈥淏ut where were the prosecutors when hundreds of low-income tenants in 51黑料 and Kansas City were lied to and cheated by T.E.H., forcing them to live without basic necessities like electricity, heat and water? Banks get justice, poor people get ignored.鈥�

While living conditions weren鈥檛 mentioned in the 13-page indictment, Jeff Jensen, U.S. Attorney of the Eastern District of Missouri, on Thursday praised tenants for their cooperation.

鈥淚 want to thank the victims of this defendant鈥檚 alleged predatory practices for having the willingness to stand up and speak out,鈥� Jensen said in a press release. 鈥淲ithout the courage of these tenants, this case may never have come to be. As a group, they shed light on the unacceptable living conditions being forced upon them and served as the spark that uncovered this entire fraud.鈥�

鈥楪ood place to be鈥�

T.E.H. Realty was founded by Eliram Rabin and Gilad Israeli in 2006 in Tel Aviv. The firm eventually acquired at least 2,800 housing units in the 51黑料 region, including those at Park Ridge Apartments and Northwinds Apartments in the southeast section of Ferguson near where Michael Brown was shot.

鈥淭he market of 51黑料, it makes sense,鈥� Rabin told the Post-Dispatch in March 2019. 鈥淲e like this market. The economics are good here, and the properties are good. I believe in the future of 51黑料. It鈥檚 a good place to be.鈥�

At that time, Rabin acted as if he wasn鈥檛 aware of flooding, apparent mold and broken air conditioning at places like Springwood Apartments, a notorious complex that racked up numerous citations in Bel-Ridge. Springwood later fell into receivership and was recently up for auction. T.E.H. lost Park Ridge to foreclosure. There is an ongoing class-action lawsuit involving Northwinds.

In November 2019, angry T.E.H. employees blocked Rabin and an associate, Shlomo Lerner, in at Southwest Crossing Apartments in south 51黑料, demanding to be paid wages. The crowd didn鈥檛 let the executives leave until police arrived.

Though Rabin and Israeli aren鈥檛 mentioned in the recent indictment, a Cass County case mentions a $2 million judgment against them and T.E.H. affiliates that was rendered by the District Court of Tel Aviv-Jaffa, Israel. The amount owed in the judgment, growing at 20% interest, dated to 2018.

Slumlords

To many tenants and officials in Missouri, T.E.H. Realty became synonymous with slumlord. The firm rigorously fought through local court systems for unpaid rent but didn鈥檛 seem to reinvest into its properties. The Housing Authority of 51黑料 County eventually stopped paying subsidized housing vouchers to the firm; between 2015 and 2019, T.E.H. affiliates received at least $1.25 million for housing vouchers used in the county.

Momentum for T.E.H. seemed to slow after that. And while T.E.H. faced numerous municipal citations and unpaid water and trash bills, company representatives didn鈥檛 show up in court in places like Bridgeton, frustrating authorities and catching more attention.

In November, U.S. Sen. Josh Hawley, R-Missouri, visited Bridgeport Crossing, a 300-unit complex in Bridgeton that had a host of problems, including numerous broken heaters. What he saw motivated him to file a bill that would establish a national slumlord database. He also called on investigators to take action against T.E.H.

鈥淎ny law enforcement official, from the local, state and federal levels, anybody who has a lever to pull here, needs to pull it to hold them accountable,鈥� Hawley told the Post-Dispatch in February, renewing the call.

On Thursday, Hawley took note of the Fein indictment, saying via Twitter, 鈥淚 am delighted at this result for those Missourians who have suffered, and I again call on my colleagues in the Senate to take up and pass my bill creating a bad-landlord database to hold these slumlords accountable.鈥�

Updated at 8:13 p.m.