Big Detroit property firm accused of global Ponzi scheme

By Steve Neavling on September 27, 2013774 Comments

Updated on Oct. 10, 2017: The owner, Sameer Beydoun, was sentenced to two years in prison after we first exposed him and his company four years ago.

The largest buyer of distressed homes in Detroit is accused of operating a multimillion-dollar international Ponzi scheme that bilked retirees of their nest eggs and contributed to neighborhood blight.

The scheme involves Dearborn-based Metro Property Group, which gobbles up hundreds of rundown homes a year at tax-foreclosure auctions and often sells them for more than $40,000 apiece to unsuspecting international buyers.

A group of eight overseas investors – all of them retired – has sued the real estate group, along with others connected to it, alleging racketeering and a “gargantuan enterprise of fraud.” One of the accused is attorney and Dearborn City Council candidate Tarek M. Baydoun, who intimidated investors and allegedly falsified legal records to cover up the bold scam.

Soon after the accusations, Baydoun severed ties with Metro Property, which is operated by family members.

“These investments took the bulk of our retirement savings in order to give us an income,” said U.K. resident Kathryn Llewellyn-Jones, who bought three homes in Detroit for $132,000 and is among those suing. “Not only is there no income, but these dreadful houses are costing us money.”
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Investors were lured by the promise of 16%-18% annual returns on houses that Metro claimed were occupied by tenants who were paying up to $1,050 a month. Metro Properties said its houses also were fully remodeled and habitable.

Turns out, neither was true, according to the lawsuit, which also names as defendants Metro Property Management, Apex Global Properties LLC, Global Power Equities LLC, Baydoun Law Group, Meridian Law Group and the the property group’s Sameer Beydoun, Ali Beydoun, David Makki and Mike Alaweih, among others.

Here’s how the alleged scheme worked: New homeowners paid a subsidiary, Metro Property Management, to maintain the properties and collect rent. To make it appear as though there were tenants, the management team sent the investors monthly “rental” checks for several months.

Then the eight investors were told virtually the same thing: The tenant was evicted and caused significant damage to the homes. The investors were billed for evictions that never happened, fined for housing violations and were given estimates of the required repairs, upwards of $13,500, according to the suit.

“Defendants have turned plaintiffs into unwitting and unintentional slumlords,” attorney Debbie Schlussel, who also is a conservative commentator, said in the lawsuit. “The property is not only worthless, but a money pit,”

When investors began to catch on, they received intimidating emails from Metro.

“If I wanted to give you the run around and do the dance, I would simply forward your last email to my attorney and instruct him to crush this case in court,” Sameer Beydoun, of Metro Property Group, wrote to one of the investors, Warren Grover, who was told he owed thousands of dollars in fees and $13,500 in repairs on a house that was supposed to be fully refurbished. “You would have to fly across the world just to lose in court.”

Baydoun, the Dearborn City Council candidate, threatened another homeowner with criminal action and up to 25 years in a U.S. prison in a snarky e-mail.

Baydoun declined to comment on the lawsuit, but defended his integrity.

“I have never done anything unethically, and I will defend this vigorously,” Baydoun told me.

The international buyers sank most of their retirement savings into dilapidated houses that ended up needing thousands of dollars in repairs. Homes had sewer backups, leaking ceilings, decaying roofs and rotting pipes.

Since 2010, Metro Property bought more than 1,600 homes.

Its attorney, David Fink, said the lawsuit is riddled “blatant misrepresentations and omissions.”

Metro Property made headlines over its cold response to a woman who lost her house of 36 years to the company when it bought the property, which was accidentally sold at the Wayne County auction.

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Big Detroit property firm accused of global Ponzi scheme added by Steve Neavling on September 27, 2013
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Steve Neavling

Steve Neavling lives and works in Detroit as an investigative journalist. His stories have uncovered corruption, led to arrests and reforms and prompted FBI investigations.