A U.S. District Court jury has found a property management company guilty of a breach of contract with the limited partners who invested in the 608-unit Eastland Apartments complex in Harper Woods, MI, according to attorney Lawrence Charfoos of Detroit. The jury ordered Village Green Management Co. to pay $250,000 to the plaintiffs, the investors in Eastland Partners Limited Partnership and Eastland Properties Limited Partnership. Interest payments will bring the judgment to more than $500,000. U.S. District Court Judge Bernard Friedman presided over the trial in Detroit.

In the late 1980s, real estate investors Anthony S. Brown and Eric Y. Lutz organized a group of 35 investors to buy real estate in the Detroit area. As the general partners, Brown and Lutz engineered the purchase of the Eastland Apartments complex and turned over the management of the property to Village Green.

In 1993 and 1994, Brown had Village Green officials transfer $778,000 to him from the Eastland Apartments account, Charfoos says. The transaction didn’t show up on the general financial statements and Lutz was unaware that the partnership’s financial position had changed, according to testimony during the trial, says the attorney.

As a result of the $778,000 withdrawal, property taxes were not paid on time and the mortgage holder, Prudential, foreclosed on the property. The 35 limited partners lost all money invested in the partnership. The building remains tied up in bankruptcy proceedings.

Subsequently, both Brown and Lutz went through bankruptcy. The jury found that Brown was not personally liable for any of the damages suffered by the limited partners. Charfoos is the plaintiffs’ lead attorney.

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