River Hills landlord behind handful of problem properties in Milwaukee

James H. Herrick lives in a $1.1 million home on a 5-acre estate in River Hills — just 10 miles from an apartment complex in the 1300 block of W. Locust St. that was boarded up after city building inspectors declared it "unfit for human habitation."

Herrick's home is six miles from an apartment building on N. Hopkins St., where building inspectors in September ordered that bed bugs be exterminated and residents be provided with at least one window screen in each room. The violations are the latest of more than 70 written up at the building since 2014.

The neighborhoods have nothing in common. Except, that is, for Herrick, a high-ranking executive at Robert W. Baird & Co..

Herrick, 52, is an owner of a limited liability company that owned the Locust St. property until it was sold this year after a foreclosure suit was filed, according to records reviewed by the Milwaukee Journal Sentinel. A second Herrick-linked LLC owns two apartment buildings in the 4400 block of N. Hopkins St.

As a Baird managing director and co-head of global trading for the company's Institutional Equity Services group, Herrick is well-known in the securities industry. He has been quoted by The Washington Post, Bloomberg News, TheStreet.com and the Journal Sentinel, among others.

Landlords try to keep identities secret in cat-and-mouse game

But he is an unknown to the city Department of Neighborhood Services — which boarded up the Locust St. property — and other city agencies responsible for enforcing housing laws and collecting property taxes.

"He’s not on my radar," said Erica Lewandowski, manager of the department’s special enforcement section.

Mario Hernandez, the inspector who ordered that the Locust St. apartment building be boarded up and evacuated, said he did not know the building was linked to a River Hills address.

The 50-unit apartment building, which runs the length of a city block between N. 13th and N. 14th streets, was boarded up because of a variety of problems, including a decision by managers to lock fire doors in the basement, according to Hernandez. Managers indicated this was done to prevent drug dealers from running through the building.

"It was in pretty rough shape," Hernandez said. "There was a noticeable roach infestation. ... Sewage in some of the utility rooms" and some residents had to use their ovens to heat their apartments.

"It's not the worst that I've seen, but it was close," Hernandez said.

It took two months after the 2011 board-up for enough repairs to be made that the city issued a new occupancy permit. JHH Enterprises bought the building for $525,000 in 2003 and it was sold in September after it went through foreclosure and receivership.

In a statement issued through his attorney, Sean Sweeney, Herrick said: "While there are inevitably some challenges associated with investing in distressed real estate, I am encouraged by the progress we have made in improving these buildings."

Like many landlords and real estate investors, Herrick's identity has remained secret because the properties are owned by LLCs — corporate entities that allow owners to protect their personal assets from liabilities. Claims typically can be filed only against the assets of the individual LLC, in this case the properties or any cash the owners put into the company.

Records analyzed by the Journal Sentinel show that LLCs owe about $3 million in past-due municipal court fines for building code violations and at least $9 million in back property taxes.

While city officials say they are hamstrung when it comes to identifying who is behind the LLCs, a review by the Journal Sentinel was able to identify connections with scores of LLCs. Private attorneys say the city can do more to go after the owners of LLCs with problem properties.

Links clear in paperwork

With Herrick, there are several clues in public records that link him to the LLCs.

Records filed with the state Department of Financial Institutions list Herrick as owner, manager or organizer of JHH Enterprises LLC, which owned the Locust St. building; Lisbon-North LLC, owner of apartments and storefronts at Lisbon and North avenues;  and 4470-4475 North Hopkins LLCs, which owns the buildings at those addresses.

Each of those LLCs owns central-city properties that have been written up by inspectors for code violations. Herrick is also involved in numerous other LLCs involved in real estate or other businesses.

In addition, the city treasurer's office sometimes sends property tax bills for properties owned by the LLCs to Herrick's River Hills home.

The LLCs owed $156,353 in delinquent property taxes until November, when $138,301 was paid. The payments came just days after a reporter hand-delivered a letter to Herrick's home requesting an interview and stating the Journal Sentinel was working on a story about LLCs connected to him.

Two properties still have delinquent taxes totaling $18,052, which have been referred to the city's bill collector.

In addition to the taxes, four Herrick LLCs owe about $3,100 in past-due municipal court fines for building code violations dating to 2012.

"He doesn’t want his name on anything," said Anthony Williams, who worked for Herrick as a building manager for about 10 years and whose name has appeared on city and state paperwork as a registered agent for at least two LLCs linked to Herrick. Williams said he was fired by Herrick earlier this year.

"He offered to pay me to keep my name on the paperwork," Williams said, adding he declined.

Williams declined to comment further, saying that after he was interviewed by the Journal Sentinel he signed a confidentiality agreement with Herrick.

Williams' name has been replaced on state records as registered agent for two of the LLCs by Mario Dickens, a printer who rents storefront space from a Herrick LLC in the property at Lisbon and North avenues.

Dickens, however, said he did not know that state records show he is the registered agent for the LLCs.

"I don't know why he put me on the papers. I never authorized it," Dickens said. "I don't know what his reasons are, but I'm sure he's got one."

Dickens said he collects rent for Herrick and performs odd jobs at the buildings.

Sweeney, Herrick’s attorney, declined to comment on Williams' claim that Herrick offered to pay him to use his name on LLC paperwork or about problems at the Locust St. apartments and other buildings owned by Herrick's LLCs. He confirmed Herrick was owner of the LLCs, but declined to say whether he had partners in the businesses.

Herrick is "not particularly thrilled about being the subject of a story about his other business," Sweeney said.

Sweeney put some of the blame for the conditions of the Locust St. building on Eric James, a Shorewood man who had been a partner with Herrick and a manager of some of the properties until 2014.

"Mr. James was going to find and run the properties and (Herrick) was going to help fund" the purchases, Sweeney said. "In Mr. Herrick’s opinion, he wasn’t doing a good job and we moved Mr. James out."

In a later interview, Sweeney amended his comment, saying James left the operation after "a dispute regarding management of the properties." He declined to provide specifics.

James declined to comment.

Tenants describe problems

Williams and two other former employees recently took a Journal Sentinel reporter and photographer on a tour of some of the properties, including several located behind the storefronts at Lisbon and North avenues.

Rat traps were visible in the hallways, and one tenant, Sen Cross, complained that rats had invaded the apartment at 4709 W. Lisbon Ave. she shared with her fiancé and three young children.

Special section: Landlord Games

"One night I was coming into the kitchen for a glass of water and I stopped right in my tracks. This rat just ran across" the kitchen table, said Cross, who is Williams' sister. "I almost had a heart attack."

Cross has since moved out.

Sweeney said his client's LLCs have spent a lot of money dealing with problems at the various properties. Others close to Herrick note those problems include tenants who don't pay rent or damage their apartments. They said Herrick has been involved in real estate for years and has had properties with no issues.

In the statement, Herrick said he remains "positive about the future of these properties. I am happy with the property management team we have in place."

The majority of the tenants have no idea who owns the properties.

At a building in the 4400 block of N. Hopkins St., tenant Patricia Hicks pointed to her kitchen sink, which was filled with filthy, greasy and moldy water. The pipes under the sink were disconnected, making it impossible to drain it.

"I called and they said they would fix it," said Hicks, who has since moved. "It's been at least a month."

Some tenants and former employees put the blame on Herrick's operation, saying the LLCs do not promptly fix problems.

"Things weren't fixed until I held back" rent money, said Admira Phipps, a former tenant and live-in manager of the buildings in the 4400 block of N. Hopkins St. Phipps complained that his building "had no security whatsoever" because the building's entry was broken for several weeks.

Phipps was one of the people who, on the tour, pointed out problems at the properties, including kicked-in doors and blocked fire exits.

Less than a week after the tour, a lawsuit to evict Phipps was filed in Milwaukee County Circuit Court. The suit was dismissed and Phipps has moved out.

The suit charged Phipps had not paid $200 in late fees. Phipps argued that he withheld payment because repairs were needed, including to a damaged front door.

"I didn't have any heat," Phipps said. "I didn't have a door."

Read the investigation

To read the Milwaukee Journal Sentinel's "Landlord Games" investigation, which examines how Milwaukee landlords game the system amid inaction by city officials, go to jsonline.com/landlordgames.