Posted: May 13, 2010 8:01 AM by Sharlee Jacobs
NEW ORLEANS (AP) - A Metairie man who built his real estate
business into a major apartment landlord has been charged with mail
fraud in connection of an alleged scheme that cost investors at
least $3.5 million.
Federal prosecutors alleged Wednesday that Michael Smuck, 61,
sold a Houston apartment complex in 2007, then misappropriated the
money to pay other debts rather than share the proceeds with
Defense attorney Ralph Capitelli had no comment on the charge
Smuck owned and operated the Metairie-based MBS Companies, which
filed bankruptcy in the fall of 2007, leaving most of the company's
assets seized by banks or liquidated.
The charge said Smuck sold the Briar Meadows apartments behind
his investors' backs and "continued to send documentation to
investors in Briar Meadows in order to give the fictitious
appearance that the investment property was still active,"
according to a statement by U.S. Attorney Jim Letten's office
The Times-Picayune reported that investors expect their losses
to be much higher than the figure contained in the charge. Scores
of investors have sued over their losses, accusing Smuck's company
of keeping multiple sets of books and allowing its apartment
complexes to deteriorate.
John and Sharon Kochera, of Kenner, said that their six-figure
investment in the complexes managed by MBS is gone. The couple had
successfully invested for years with MBS until August 2007, when
their quarterly distributions stopped.
"It's an absolute sheer theft," John Kochera told the
Capitelli said earlier that the company got into trouble after
Hurricane Katrina when his Smuck's insurers failed to pay
MBS' bankruptcy filing marked the second time that Smuck had
built a major real estate business and then lost it.
In the 1980s, Smuck acquired about 20 apartment complexes in
Texas and Louisiana, but his firm, the Equity Group, fell apart
after federal tax law was changed in 1986. He founded MBS the next
year and started to rebuild. By 2007, the company had a $1 billion
portfolio of about 60 apartment complexes, most of them in Texas.