City Hall asks court to order notorious Milwaukee landlord out of rental business

Saying he exploits poverty-stricken and desperate tenants, the City of Milwaukee is urging a court to strip notorious central city landlord Elijah Mohammad Rashaed of his real estate empire and to ban him from owning or managing rental properties in Milwaukee County.  

Rashaed "occupies a niche in the residential rental market that exploits some of Milwaukee's most challenged neighborhoods for his personal gain," a lawsuit filed this week in Milwaukee County Circuit Court states.

The suit labels Rashaed's operation a public nuisance and asks the court to name a receiver to run his empire, arguing that Rashaed's "operations as a landlord negatively impact the city, his tenants, neighbors of his properties, and the Milwaukee community as a whole on a daily basis."

Rashaed, 48, or entities linked to him own 166 rental properties in Milwaukee that were purchased for $4.9 million, the suit states.

"He markets (the properties) to individuals who are desperate for or struggle to find housing because they have income limitations, criminal or eviction records or need to move quickly," the suit states.

The suit, which names Rashaed and 18 entities linked to him, comes just two weeks after Milwaukee County Circuit Judge Ellen Brostrom threw out a Rashaed lawsuit that sought to stop the city from filing a receivership action against him.

David Halbrooks, Rashaed's lawyer, saw the city action as a victory of sorts for his client. Halbrooks, a former assistant city attorney, argued that the city in March gave Rashaed a notice of its intent to seek a receivership unless the Rashaed group fixed a long list of code violations at its properties and took other steps that the city said were needed to avoid being labeled a public nuisance.

"The city gave us a list of ... tasks they demanded and we met or exceeded all of those tasks," Halbrooks said Friday. "Now they bring a lawsuit on a whole list of other matters" that were not in the March notice.

The city lawsuit said that in March there were 269 city orders pending against Raeshaed's operation demanding that it fix 1,007 building code violations.

"Since that time (the Rashaed group) corrected some violations"  the suit states, adding that "new orders to correct violations ... have been issued by the city."

All told, the city has cited Rashaed or his operations for 12,806 violations of the city building code, a figure that does not include "hundreds of orders to correct thousands of (code) violations ... at properties that have no residential units or that they no longer own," the suit states. 

LANDLORD GAMES:A Journal Sentinel watchdog report 

The suit lists a litany of charges — including allegations of criminal wrongdoing — against the Rashaed operation. Allegations voiced in the complaint range from bank fraud to renting out rat and roach-infested apartments and homes. 

Halbrooks declined to comment on the specific allegations because he was first served with the suit late Friday.

Criminal investigation

The Milwaukee County District Attorney's Office has been conducting a wide-ranging probe of Rashaed for at least a year, sources said. Kail Decker, the assistant city attorney who filed the suit against Rashaed, said he has turned over information to the DA, though he is unsure what the prosecutor's office has done with the information. 

Rashaed, who now lives in West Palm Beach, Fla., was one of the landlords featured in an ongoing Journal Sentinel investigation about how some landlords game the system to avoid making repairs and paying fines ordered by the Municipal Court. 

His operation was profiled in a story that showed how some landlords use limited liability companies to keep ownership secret and avoid personal liability for fines and other costs incurred by their companies. The Rashaed operation has more than 50 LLCs.

"For those tenants who do stand up to him, he has created a scheme by which he has insulated himself as much as possible from actually suffering the consequences of his actions," the city suit argues.

The suit contends Rashaed gives tenants incentives not to report substandard living conditions, a violation of state law. The suit noted that in March Rashaed's companies circulated a flyer — personally signed by the landlord — that offered "massive discounts and benefits" to tenants. In return, the flyer said, the tenant must pay rent on time and make "No calls or complaints to the city of Milwaukee."

Halbrooks said that flyer was withdrawn shortly after it was issued.

Rashaed is the second major Milwaukee slumlord to be hit with a receivership action by the City Attorney's Office in recent months.  Last year the city sued Mohammad Choudry and succeeded in having his 76 properties placed in receivership. In that case, the city sued Choudry for racketeering and is seeking $1.25 million in damages.

The Rashaed action goes a step further because it asks the court to order that all of the properties owned by Rashaed and the related entities be sold.

The city suit notes that Rashaed entities have been convicted of code violations 94 times. Fines totaling $68,961 are past due, the city said. 

The city suit acknowledges the steps being taken by Rashaed, though the suit appears to question his sincerity. Rashaed "has only done so because he anticipated the filing of this action and had to scramble to fix what he has let linger for years," the suit states.

Halbrooks' response: "It's strange for them to order abatement (of code violations) and then complain when we do the abatement."

Other allegations against Rashaed or companies linked to him in the suit include:

• Renting out homes with an array of serious problems, including lack of a working furnace or plumbing, serious flooding, faulty electricity, mold or infestations of rats and/or roaches.
• Failing to raze dilapidated properties despite receiving city orders to do so up to three years ago.
• Taking the first step toward filing an eviction against a tenant after the tenant reported building code violations. Then, the tenant was offered a new rent agreement with a $250 monthly increase "due to increase in taxes and additional maintenance."
• Repeated criminal violations of state rental laws, including failing to make repairs, offering rent discounts to tenants in exchange for living in substandard housing, and misrepresenting the amount of rent to be paid by the tenant.
• Transferring 78 properties from one entity he controls to a second "in order to disguise his ownership interest in said property and reduce municipal forfeiture amounts that escalate after the same owner is convicted multiple times."
• Just this month,  the suit charges, Rashaed or one of his LLCs removed the water heater, furnace and kitchen sink from an occupied unit days after the Rashaed entity had lost title to the property in a tax foreclosure. In a tax foreclosure, the city gets title to the property. 
• Pocketing earnest money paid by tenants instead of applying the cash to the rent or security deposit as required. "It seems like this was a regular business practice," said Decker, the assistant city attorney.
• Reiterated a claim of bank fraud, that was first voiced by the city in March when he was notified the city was planning to file for a receivership. 

The city claims that Rashaed offered to "convey a property located at 4548-94 N. Teutonia Ave. to Randolph T. Myricks" who was then the president of North Milwaukee State Bank, an institution that has since been closed by federal regulators.

The property was offered to Myricks, who has been a Rashaed partner on some ventures, "with intent to influence Myricks in July 2013 to authorize loans to Rashaed in the amount of $950,085 without sufficient collateral. The loans were granted even though the Rashaed enterprises only put up $124,000 in collateral, the suit states. 

Halbrooks said there was no wrongdoing in the transactions and that the city was  "drawing a conclusion from a partial set of facts." Myricks, through Halbrooks, declined to comment.

A hearing on whether to appoint a receiver to oversee Rashaed's properties is scheduled for Sept. 14 in Milwaukee County Circuit Court.