A New Mexico real estate investment trust faces a lawsuit alleging fraud in connection with a housing venture. The El Paso times reports that Borderplex Realty Trust (“Borderplex”) was formed to acquire Downtown El Paso, Texas buildings for redevelopment. Borderplex later allegedly began offering $44 million in shares to potential investors to help fund a proposed venture with Encore Enterprises, a Dallas real estate investment and development company (“Encore”), that would initially spend approximately $234 million on developing multifamily properties. According to the El Paso Times, Dan Burrell, the founder and board chairman of the Burrell College of Osteopathic Medicine at New Mexico State University, allegedly agreed to purchase approximately $20 million in shares.
June 1, 2017
REAL ESTATE TRUST FACES FRAUD CLAIM IN CONNECTION WITH HOUSING VENTURE
The El Paso Times reports that Encore filed a lawsuit in a Dallas state court alleging “the board of directors for [Borderplex] defrauded the company as they were forming” the multi-million dollar venture. According to the El Paso Times, Encore alleges that Borderplex officials “hid Burrell’s involvement from the company” and that “Borderplex trust was not only getting Burrell's investment, but also getting him to raise more money for the venture, and promising him representation on its board proportionate to the capital he raised.” It is alleged that Borderplex “did not inform the company of such an agreement [with Burrell], adding that its officials would not have accepted the arrangement.” Encore is allegedly asking the court to award it more than $1 million in damages and other costs.
The El Paso Times reports that the allegations in Encore’s lawsuit are related to a separate federal lawsuit by Burrell that allegedly asserts Burrell “was duped by Borderplex trust officials when they allegedly misrepresented [Encore’s] ownership and compensation in the joint venture.”
For more information about the topic of this blog post, please contact Weber Law, P.A.’s Steven D. Weber at 305-377-8788 or firstname.lastname@example.org.