GlobeSt.com EXCLUSIVE: Post Shareholder Amends Civil Suit; Company Refutes Challenge

The suit asks Federal Court Judge Jack T. Camp to appoint a receiver or examiner who would realign Post's financial and management structure to give shareholders a better return for their investments.

The suit also asks the judge to set punitive damages against Post; approve the suit as a class action complaint; and award Leventhal court costs and attorney's fees if he has to hire an attorney later to handle the class action complaint. Up to now, Leventhal, a non-lawyer who is president of Interfinancial Properties Inc., has been filing the suits himself on behalf of all Post shareholders.

Leventhal, who owns or controls through family interests a total 250 shares of Post common stock, alleges chairman Robert C. Goddard III provided a free apartment or an apartment at discounted rent at one of the company's properties to a female tenant "for his personal gain…with no benefit to Post" and "at the expense of Post…for an improper purpose." The suit identifies the tenant but GlobeSt.com is withholding the tenant's name at this time.

GlobeSt.com has obtained a copy of the 103-page complaint filed Nov. 19. Camp is hearing the case which cites 13 counts of alleged mismanagement, fraud, improper conversion of assets, false reporting, padded bills and racketeering under the Georgia Racketeering Influenced and Corrupt Organization Act by Post directors and upper management. The suit also alleges Goddard influenced Post management to pay his personal assistant about $100,000 annually "for work from which Post receives little or no commensurate benefits."

The suit further alleges Goddard obtained undisclosed expense reimbursements for his own airplane and used Post assets to fund membership fees "for non-business purposes" at East Lake Country Club in Fulton County for himself, former Post president John T. Glover, who is also a defendant in the suit, and other executives.

But it was on the metro area's biggest multifamily sale of the year in 2004 that the suit raises some of its strongest allegations against Goddard and his executive team. On June 28, Post sold five apartment communities in Atlanta and another in Orlando totaling 3,008 units. The buyer, JRC Acquisition Corp., a division of Chicago-based Jupiter Realty Corp., paid Post $197 million or an average $65,492 per unit, as GlobeSt.com previously reported.

The suit alleges the price was at least $10,000 per unit, or $30 million, under the current fair-market value of the properties. The price should have been about $227 million, the suit argues. The suit cites the recent comparable sale of Tanglewood, "a grossly inferior apartment property" near Interstate 285, for $55,208 per unit. Tanglewood is slated for demolition.

"The current cost to replace garden-style apartments of historic Post quality is at least $95,000 per unit or residence," the suit states. On Oct. 4, Post stated in a press release that Jupiter was rejecting one of the six properties in the tentative June deal, "but provided no valid reason for the termination by Jupiter," according to the suit.

"The real reason the sale to Jupiter was cancelled was that Jupiter had learned of the rent roll, discount factors, rental discounts and incentives, which were falsely inflating occupancy rates, and the maintenance deficiencies, which were falsely inflating revenue, in some or all of the 3,008 apartments," the suit alleges.

Besides Goddard and Glover, the other defendants listed in the suit are David P. Stockert, Thomas D. Senkbeil, Sherry W. Cohen, Christopher J. Papa, Thomas L. Wilkes and the Post Properties Inc. corporation.

Post's lawyers at locally based King & Spalding have moved to dismiss all of Leventhal's complaints on grounds that they are meritless and that directors and executives used good judgment on all of the company's transactions.

In a response to a special request from GlobeSt.com, Post management has issued a 250-word observation on the suit, noting "the company does not typically comment on pending litigation." The statement was issued through the company's corporate relations officer and was not signed by an individual Post officer.

The Post statement reads: "Mr. Leventhal became a Post shareholder on Dec. 17, 2003, when he purchased 100 shares. The very next day, Dec. 18, he began writing letters to management and the board of directors complaining about how the company was managed.

"Purporting to act on behalf of the company, Mr. Leventhal wrote a letter to the board of directors demanding that it investigate his allegations regarding Post management. In response, the board formed an independent committee of outside directors which investigated Mr. Leventhal's allegations; found them to be wholly without merit; and informed him of that conclusion.

"As a non-lawyer representing himself, Mr. Leventhal filed a lawsuit, anyway. Because Mr. Leventhal's allegations of wrongdoing had no merit, the company and the individual defendants moved for dismissal of the suit. In the face of those motions, Leventhal amended his complaint.

"The company has reviewed Mr. Leventhal's amended complaint and does not intend to comment on it, except to state that his amended allegations of wrongdoing are false and without merit and that the company will again move for dismissal of the suit.

"The company also notes that its stock price is up over 20% from the date less than one year ago that Mr. Leventhal first purchased Post stock. The company does not plan to engage in a public relations battle with Mr. Leventhal, but instead, plans to let the court decide the matter.

"The company does not intend to make further public comments about this litigation and invites Mr. Leventhal, who purports to act in the company's best interests, to do likewise."