As a complex legal battle plays out over the ownership of dozens of residential properties across Cincinnati once overseen by real estate investment group Vision & Beyond, tenants at one of them could face an order from the city to vacate their apartments.
Hamilton County Common Pleas Judge Christian Jenkins heard from city attorneys and a Cincinnati building inspector May 14 that a sewage issue at the 116-unit Kirby Apartments is dire.
The complex features three apartment buildings constructed in a low valley surrounded by hills. In order to reach city sewage infrastructure, waste from the buildings must be pumped up hill. But the equipment necessary to do that isn't functioning properly, Cincinnati Building Inspector Joe Mundy told Jenkins, causing sewage to flow into some of the complex's units.
'That's the first thing I smell'
On a recent visit to the complex, WVXU witnessed large puddles of standing water in lower-level hallways at two of the complex's buildings and the odor of sewage in some places.
Resident Ray Prophett says his kitchen and bathroom back up with foul-smelling water sometimes, but that some of his neighbors have bigger problems — possums and raccoons in the walls, ceilings caving in, and more.
"My apartment's not as bad as some of the other issues," he says. "But I hate to come home and that's the first thing I smell."
In another building, one resident has complained sewage backs up into her bathtub every time the toilet is flushed. She suffers from chronic illness and was too sick for an interview the day a reporter visited. But a caretaker showed the reporter the tub.
Other residents have reported similar backups. Some units were even worse. Water and sewage were pooled an inch high on the floor of an unoccupied apartment across the hall.
Organizers with the Cincinnati Tenants Union say residents at several buildings have formed their own tenant union to advocate for better conditions and more maintenance from current property manager Prodigy Properties. Thye say the tenants union has raised money to pay a plumber to come out and look at the unit with the sewage overflow in the tub sometime this week.
Mundy, the city inspector, told the court last week that at some point, an illegal connection between the complex's sewage system and the city's storm water drainage system was installed, piping sewage into rainwater runoff that drains into a nearby creek. That, Mundy said, presents a health hazard for homes that back up along the creek.
The city estimates it would cost about $200,000 and take between 10 and 11 weeks to fix the issues with sewage at the apartments. But it's not entirely clear how that fix will work.
“We don’t know exactly how these issues will be resolved,” Mundy told the court. “We’ve talked about digging another pit — providing a temporary pit in the ground so a waste haul truck could empty it every day — but we don’t have a cost estimate on that or if we could even do that.”
Mundy told Jenkins if the issue isn't fixed soon, it would be necessary to relocate residents.
“If we can’t get it resolved, we would have no other choice but to vacate the apartments,” he said.
Deeper legal battles
The city already has repaired a boiler system at Kirby and has emergency funding for at least some of the needed repairs. But larger issues remain across the portfolio of properties once overseen by Vision & Beyond.
Kirby is one of roughly 70 properties Vision & Beyond previously managed and co-owned with dozens of investors. Its founders Stas Grinberg and Peter Gizunterman are accused of abandoning the houses and apartment buildings late last year, leaving hundreds of tenants without property management and basic maintenance.
Federal authorities arrested Grinberg in March on mortgage fraud charges. He's currently held in Butler County Jail awaiting indictment. In civil suits, investors allege Grinberg and Gizunterman transferred properties out of LLCs owned by their investors into ones the two controlled exclusively, then took out roughly $37 million in mortgages on them. Court filings allege they left the country late last year.
Tenants began suffering. Furnaces went out in the middle of winter and weren't repaired. Leaks went unaddressed. It wasn't clear where to pay rent or whom to call for repairs.
Brandon Cole lives in a building in Avondale owned by Vision & Beyond. In a filing with the court asking for funding for repairs, he describes conditions there — lack of maintenance, a recent notice for water shut off due to unpaid bills.
"During this most recent winter season, I was without heat for almost four months," Cole wrote. "This was a serious hardship for me. To keep my apartment at a safe temperature, I bought a space heater, which increased my utility bill."
Around the same time furnaces were flickering out and ceilings were crumbling in, lenders began looking to foreclose on Vision & Beyond's unpaid mortgages.
That kicked off a massive and complex legal issue that has been snowballing ever since.
Who will pay?
When it became apparent Vision & Beyond was gone, the city and lenders asked Hamilton County Courts to appoint temporary property managers called receivers to fix conditions at the properties. Four judges and multiple receivers later, Prodigy Properties is overseeing property management at most of them.
But Prodigy says it can't get the necessary funds to repair many of the properties. Prodigy attorney Zack Prendergast says the company has devised a plan to borrow money to finance repairs, only to be rebuffed by groups of investors who want their own receivers.
Attorney James Papakirk represents some of those investors with interests in 25 former Vision & Beyond properties. He says his clients are in this situation through no fault of their own due to fraud perpetrated by Vision & Beyond. They have their own plan and want to fund fixes to their properties themselves.
"We've been waiting for funding solutions for weeks," Papakirk told the court. "Nothing is happening, and frankly, my clients will not fund the current receivers because there's mistrust. We came up with our own solution because we're the property owners."
But Prendergast says funding issues have come because of the battle over ownership, not because of Prodigy's actions, and that changing receivers will be disruptive and exacerbate an already chaotic situation.
"I don't see the need to switch receivership in this case," he said. "I don't see anything showing Prodigy Properties is doing a bad job."
A fight over control
All of the legal back-and-forth about funding fixes traces around the edges of the main looming legal battle — who will eventually control and own the properties and who stands to lose significant amounts of money from Vision & Beyond's alleged fraud.
Attorneys for many investors say their clients don't want to see the properties sold and the proceeds divided up, a suggestion lenders in the case have made and which Judge Jenkins has shown some interest in.
They say the issue is with the mortgage fraud Vision & Beyond is accused of, which hinges on forged title documents. They had no part in that and should own their buildings free and clear, attorneys argue.
But lenders say they did their due diligence on those mortgages and that a finding against them would shake the very core of how property lending works.
Deepak Desai is an attorney for SSCRE Court Vine Lender LLC, which was among the first to file for foreclosure on Vision & Beyond properties in downtown Cincinnati in October last year.
"If we're wrong, then the banking and finance industry is going to fall apart," he told the court last week.
Meanwhile, tenants like Prophett wait to see when repairs will be made — and if they'll be able to stay in their buildings.
"This is a piece of property that was forgotten," he says, gesturing toward the puddles in the hallway of one building at the Kirby Apartments. "And look at the results."
Read more: