Judge approves $206M sale of apartments involved in Utah fraud case
A federal judge in Salt Lake City on Monday approved the $206.7 million sale of 19 apartment complexes in various states as part of the winding down of operations of Management Solutions Inc., the Utah company at the center of fraud allegations.
An affiliate of Cortland Partners of Atlanta won the right to buy the properties and also hopes to buy an additional 10 complexes for a projected total sales price of $338.5 million for all 29.
Cortland owns and operates about 15,000 multifamily apartment units in Florida, Georgia, Louisiana, North Carolina and Texas. The Management Solutions properties are in eight states.
The Securities and Exchange Commission sued the Fountain Green company and owners Wendell and Allen Jacobson in 2011, alleging they operated the company fraudulently as a Ponzi scheme and failed to fully inform or lied to investors about the use of their money.
U.S. District Judge Bruce Jenkins since has ruled that while Management Solutions was not overall a Ponzi scheme, individual transactions may have been. The Jacobsons pooled investor monies and used some of the funds to pay other investors.
Jenkins on Monday expressed some frustration at the length of time it has taken for a court-appointed receiver to bring the Management Solutions properties to market. He set Aug. 1 as a target date to approve the sale of the 10 additional properties to Cortland Partners.
Gil Miller, recently appointed as receiver to succeed attorney John Beckstead, who resigned to serve a mission for the LDS Church, said he was pleased with Jenkins' decision on the sale and hoped to have a plan for distributing funds to investors ready for the judge's approval by Oct. 15.
Greg Hoole, an attorney who represents investors, said he believed the sales will mean investors will get back around 50 percent of their funds. Investors had tried to gain approval of a plan where they would take over and manage the properties while waiting for the market to improve but Jenkins declined to sign off.