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Facing FBI probe, PSERS backtracks on disclosure that staffers were on both sides of real estate dealings

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This story has been updated.

By Angela Couloumbis of Spotlight PA and Craig R. McCoy and Joseph N. DiStefano of The Philadelphia Inquirer

HARRISBURG – Amid an FBI investigation, the mammoth PSERS retirement plan rejected as poorly worded an official disclosure form that said its top investment staff were also paid by a firm that was tasked with managing its Harrisburg real estate.

The fund said that in fact none of its employees received “additional compensation” even though the forms stated that they were paid employees of both the retirement plan and the real estate company. The $ 64 billion fund said it filed substitute reports with the IRS “to correct this mistake.”

The announcement of the plan came in response to questions from Spotlight PA and The Inquirer – and after federal prosecutors received information about the $ 1.6 million purchase of the former Harrisburg Patriot News building at 812 Market St Properties.

PSERS said it changed the required disclosure forms for the nonprofit 812 Market Inc., which was founded in 2017 to maintain ownership of the Harrisburg real estate. The forms continue to state that PSERS Chief Investment Officer James H. Grossman Jr. and two of his employees are on the board of 812 Market Inc., whose board members are top executives from PMI Property Management, Inc to the real estate.

While the original forms state in one section that Grossman and the others received no money from their board membership, it also states elsewhere that he and the others, Deputy Charles Spiller and Senior Real Estate Manager William Stalter, work for and from PMI get paid for it.

“The officers and directors of 812 of Market Street, Inc. are employees of PMI Property Management, Inc …”, the documents say in part. “PMI Property Management, Inc. pays the officers of 812 Market Street, Inc.”

Grossman is the highest paid employee in the state of Pennsylvania, making $ 485,421 a year. Spiller (and another surrogate Grossman) are the second highest, making $ 399,611. Spiller is the leading provider of real estate investments in the fund and informs its board of directors about such purchases. Stalter, who is also a real estate expert, will receive $ 241,801.

Attempts to contact the three PSERS officers have been unsuccessful. PMI executives Eric Kunkle and David Dyson declined to comment. For the management of the properties, PMI received $ 30,000 annually for the past fiscal year. No one has been charged with any crime in connection with the state investigation into PSERS.

PSERS is short for Pennsylvania School Employees’ Retirement System. As one of the largest retirement plans in the country, it sends more than $ 6 billion in checks annually to 265,000 former teachers and other retired public school workers. It is backed by its investments and payments from professional educators and taxpayers.

The fund, which has come under increasing criticism for its unremarkable investment returns, has tarnished since the federal investigation was announced in March. As previously reported by Spotlight PA and The Inquirer, federal prosecutors and the FBI are using a grand jury and subpoenas to investigate Harrisburg property purchases, as well as the board’s acceptance of a figure last year that falsely exaggerated its investment gains. The board later reversed course in April, saying that newer school employees would have to pay more for their retirement starting July 1.

State Senator Katie Muth, D., Montgomery, who became a member of the PSERS board this year, said Monday she asked fund management for information about the Harrisburg charities and real estate investments but never received any responses. The answer, she said, was, “We’re still checking.”

Late on Tuesday, Muth took the unusual step of suing PSERS in the Commonwealth Court to force the fund to hand over the records.

In the lawsuit, her attorney Terry Mutchler of Obermayer, Rebmann, Maxwell and Hippel, LLP in Philadelphia said that the fund interfered with the oversight of board members.

“Acting in blind obedience, especially given the mistakes that led to this investigation, would be just plain ruthless,” Mutchler wrote.

In its statement on Monday, the pension system said it had set up nonprofits to own real estate as a buffer against lawsuits “to limit legal risk.”

PSERS did not say when it submitted the revised forms. As previously reported by The Inquirer and Spotlight, prosecutors searched subpoenas dated March 24 for information about the Harrisburg property. At a board meeting closed to the public and media on the 5th of PSERS to contact the FBI investigation, inform the board of the disclosure forms and see if the staff were paid by the real estate company and if the board was at all knew the nonprofits were being formed, sources said.

The fund has set up about half a dozen nonprofits to hold titles in its roughly 15 real estate investments across the country, IRS records show. While Monday’s statement cites only one, 812 Market Inc.’s public records show that the same incorrect language was found in filings for two other nonprofit PSERs, one for their headquarters and another for a mall in San Antonio, Texas .

Before the board released its statement, reporters asked Charles Elson, a finance professor at the University of Delaware and a corporate governance expert, to review filings known as 990s, which are named for their official IRS form number. He said they were either “poorly worded” or had an obvious conflict of interest for PSERS.

“It puts these people on both sides of the deal,” said Elson. “You are an employee of the pension system, but why do you work with a company and get paid by a company that does business with the pension fund?”

While PSERs invested its billions mostly in non-public stocks, bonds, and private equity firms, it has also bought some real estate direct and bought $ 1.1 billion worth of real estate. Its holdings are eclectic – too much, critics say – ranging from a mall in Ft. Lauderdale to RV parks in Michigan to a pistachio orchard in California.

In 2017 PSERS started buying properties near the place of residence. The agency kept the purchases a secret and kept the plans a secret. Apart from the demolition of the Patriot News building, nothing visible was done on the property. At one point, fund managers advised the board that the plan could potentially work with Harrisburg University of Science and Technology on an office tower, but the university recently said it hadn’t come of that.

The first major purchase in Harrisburg was the $ 1.6 million purchase of the Patriot-News print shop and offices in late 2017. Over the next three years, the fund spent an additional $ 1.4 million to buy seven more properties, a mix of buildings and parking. According to the fund’s internal documents, an additional $ 7 million was spent on demolition and “site development” costs.

In another PSERS development, the fund released a separate statement on Monday regarding its decision to pay private lawyers for eight unnamed employees. It released the statement a day after The Inquirer published a story about how the agency will pay up to $ 40 million in legal fees each year for employees involved in an investigation. The fund will also pay employee defense lawyers until each lawsuit is completed.

The fund said it was “obviously unfair” to force its employees to pay for lawyers and said that this fund could get any money back if “an employee is later found guilty of a crime”.

WHILE YOU ARE HERE … If you learn anything from this story, keep paying and become a Spotlight PA member so that someone else can at Spotlightpa.org/donate in the future. Spotlight PA is funded by foundations and readers like you who advocate accountable journalism that gets results.

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The teachers’ union is calling for a change in leadership at the contested PSERS pension fund

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Crow Holdings Announces Closing of Ninth U.S. Diversified Value-Add Real Estate Fund with Approximately $2.6 Billion of Investable Capital

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DALLAS – (BUSINESS WIRE) – Crow Holdings, a leading national real estate investment and development firm, today announced the definitive closing of Crow Holdings Realty Partners IX, LP (“Fund IX” or the “Fund”). Managed by Crow Holdings Capital, Crow Holdings’ investment management company, the fund invests in value-adding real estate investments in the United States, primarily in industrial and multi-family homes and specialty sector opportunities.

Fund IX was oversubscribed with approximately $ 2.3 billion in commitments, above its original ceiling of $ 2.0 billion, and received strong support from existing investors and significant participation from new investors, including global banks and Insurance companies, pension plans, family offices and high net worth individuals. The fund has also co-invested a total of $ 265 million in equity, resulting in total investable equity of approximately $ 2.6 billion for the strategy. Fund IX marks the company’s largest fundraiser to date and is a significant increase over the $ 1.3 billion pledges raised for the previous fund.

The fund focuses on diversified value-add investment and development opportunities in multiple property types in major US markets. Today these possibilities exist mainly in industrial and multi-family houses as well as in special sectors such as prefabricated houses, comfort and gas, self-storage and student dormitories. The fund was fully launched during the Covid-19 pandemic and began investing during this challenging time as well. To date, more than 63% of the fund’s capital has been invested in 62 investments, primarily in the high-growth regions of the Southwest, Southeast and Mountains of the United States

“We appreciate the trust our investment partners have in the continued ability of our team to deliver results to them,” said Michael Levy, CEO of Crow Holdings. “This successful degree shows recognition for our company’s long-standing track record, real estate expertise and, in particular, for our early recognition of the considerable tailwind behind the demand for logistics and e-commerce, the changing population demographics and changing housing preferences as an integral part of our differentiated investment strategy . ”

“With more than 63% of the capital employed in Fund IX, we are already achieving strong investment results, including the repatriation of capital at the beginning of the fund’s life cycle through rapid realizations. This achievement is recognition of the team who have worked hard during this unprecedented and challenging time to continue fulfilling our commitment to all partners, ”said Bob McClain, CEO of Crow Holdings Capital. “We believe that our pipeline – particularly in the industrial, multi-family and specialty sectors – will continue to offer attractive opportunities to grow results throughout the life of the fund.”

Hodes Weill Securities, LLC acted as placement agent for Fund IX.

About Crow Holdings

Crow Holdings is a leading national real estate investment and development company with 70 years of operations and $ 21 billion in assets under management. With a strong track record across property types and market cycles, Crow Holdings pursues unique investment opportunities through a range of strategies and risk-return profiles, creating value for its investors, partners and communities. Operating out of 17 offices in the United States, Crow Holdings has extensive industry reach with expertise in multi-family, industrial, office and specialty sectors and has developed or acquired more than 225 million square feet. Our core principles of partnership, collaboration and reconciliation of interests remain central to Crow Holdings today. More information is available at www.crowholdings.com.

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Black real estate developer breaks ground on new housing project in his Southcrest neighborhood

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Developer DaSean Cunningham broke ground for his first residential project in the neighborhood he grew up in. Seven new houses are to be built in Newton Gardens.

SAN DIEGO – Real estate developer DaSean Cunningham is thrilled to have broken ground for the Newton Gardens residential project in the Southcrest neighborhood where he grew up.

“Yes, we’re African-American men, but we do it. I’m good at real estate because I’ve seen someone who looks like me,” said Cunningham of Paradigm Commercial Group.

The search for a builder led to a chance meeting of Joseph Lewis with Cunningham’s mother.

“I met her at Home Depot when she asked my opinion on a color and I gave her a card and she said, ‘I think you could help my son,'” said Lewis, owner of Llewellyn Group, LLC . a real estate development company.

Lewis will oversee the entire construction of Newton Gardens at 4066 Newton Avenue.

Black property developer DaSean Cunningham from Paradigm Commercial Group is excited to break ground for a new 7-unit residential project in the neighborhood where he grew up in Southcrest #SanDiego Congrats @ CBS8 @DeskEight 🏡https: //t.co/gwfvMtrazO pic .twitter.com / 8bfQ88Oa58

– Heather HOPE (@ HopeNEWS8) September 22, 2021

“I have this equipment behind me, so tomorrow I’ll flatten this land and then we’ll dig the foundations the next day,” said Lewis.

Lewis led six other projects in the same southeastern area of ​​San Diego’s 9th Ward, and said getting from the planning stage to getting funding and construction can often be a struggle.

“I had never built a house before 2017, but I had to figure out how to make plans, how to get the money, and how to get around town because that is really a trip around town. I can’t be the only one going through this drama and then DaSean came into my life and I’m determined to get him through this project ahead of time, ”said Lewis.

The all-African American group takes to the ground while breaking barriers. The residential project plans consist of seven units including three bedroom / three bathroom villas. Cunningham invested $ 200,000 of his own money, received a $ 400,000 loan for construction, and has to pay for city fees, water and sewer permits, and school and architecture fees totaling about $ 800,000.

“The main source of wealth in the United States is real estate. He’s black like me and we need to support each other in this area as we represent 0.25% of the industry, ”said Demetre Booker Jr., managing partner for Elevate Commercial, a minority owned commercial real estate company.

Booker Jr. said Cunningham’s project stands out in a community where black real estate owners are severely underrepresented.

“This is already a success for him. The average net worth of African Americans is $ 17,000, compared with Hispanics at $ 23,000 and Caucasians at $ 170,000. The majority of affordable housing developers don’t look like they live in the communities where they help or where they do business.

Newton Gardens is just a filthy place now, but Cunningham said the project embodies a lot more.

“I love what that symbolizes. Like these African American men in San Diego who are driving developments and models for what is possible in the communities they live in, ”said Cunningham.

The Newton Gardens development is expected to be completed by autumn 2022.

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Brad Pitt and Angelina Jolie vie for $ 164 million French real estate

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Angelina Jolie and Brad Pitt’s divorce ended in 2019, but the former couple are still fighting over luxury real estate in France, according to Fox News court records. Increase.

A complaint filed in Luxembourg on Tuesday did not allow the “Maleficent” star (46) to capture a 50% stake (57) of the 1,000 hectare, $ 164 million Chateau Miraval in Corin, France. He accuses him of trying to dump. The first option to buy them.

The huge property is owned by separate limited liability companies managed by both parties, according to court documents stating that Mirabal was owned by Kimikam-Pitt, originally 60% owned by his company Mondobongo. I owned a share. Jolly now held 40% through her company Nouvel.

“Nouvelle has been worth mentioning for four years. [Jolie’s company] Due to the systematic delay in the approval of the annual financial statements and the appointment of new executives, we have not acted in the best interests of Quimicum, ”it said in the proceedings.

Angelina Jolie says she did not divorce Brad Pitt “lightly”: “There is not much I can say.”

An aerial photo taken in Leval, southeastern France on May 31, 2008, shows Chateau Miraval, a vineyard mansion owned by Brad Pitt and Angelina Jolie.
(Michel Gangne ​​/ AFP via Getty Images)

“I understand the real purpose of Nouvel and its shareholders behind this systematic obstruction. [Jolie] The shares of Château Miraval SA were sold by circumventing Mondobongo’s first veto (as described in the Kimikam Authorization Article), which resulted in capital gains thanks to Mondobongo’s investment and no Nouvelle contribution. “

Pitt and Jolly married in a luxury apartment in 2014 in a top-secret ritual that only had six children in attendance. According to the document, three years before they rolled the ball in a long divorce lawsuit, Pitt transferred 10% of his stake in Jolly, making both 50/50 co-owners with nine-figure landmarks. Bottom.

Court disqualifies Angelina Jolie’s judge, Brad Pitt’s divorce case

According to sources reporting Fox News Tuesday, Jolly had allegedly been involved in real estate when the actress tried to move the goal post and evade her duty to box. They wanted to get out of business.

Meanwhile, Jolly’s camp points to Pitt, who allegedly used his celebrity to sympathize with the ongoing Exe custody battle.

Brad Pitt filed a lawsuit in court alleging Angelina Jolie attempted to sell her stake in Château Miraval’s estate without giving her the first option to buy it in full.
(Michel Gangne ​​/ AFP via Getty Images)

“This type of gamemanship is the final attempt by a prominent party seeking special treatment, not the purpose of the court’s limited review resources,” Jolly’s attorney told Page Six on Tuesday. ..

“There is nothing to see or to evaluate here. It’s okay to meet this court’s strict standards for review or review, ”she added.

Brad Pitt requests review of Angelina Jolie’s custody battle after private judge’s disqualification

Jolly filed for divorce in August 2016 because of “irreconcilable differences” in five of her six children (Pax 17 years old, Zahara 16 years old, Shiro 15 years old, twins Vivienne and Knox 13 years old). Custody requested. ..

Earlier this month, Pitt moved to re-examine her custody battle after Jolly won the disqualification of the private judge overseeing her case.

Angelina Jolie and Brad Pitt were married for two years before the actress filed for divorce.

Angelina Jolie and Brad Pitt were married for two years before the actress filed for divorce.
(Getty)

In a statement to Fox News, Pitt’s attorney Theodore J. Boutros Jr said: After lengthy trials by multiple witnesses and experts, he was disqualified after presenting detailed fact-based custody decisions.

“The judgment of the inferior court rewards the party who loses the custody case and allows them to await possible instructions on the case before moving to petition for the disqualification of the judge, their gambling art. Enables this type of strategy to be used. The “wait and see” objection to disqualification is involved in this case by unnecessarily prolonging the settlement of these disputes in an already overloaded judicial system. It does irreparable harm to both the child and the family, and in other cases, other families. The strategy will take away irreplaceable time with their children for parents as judges who allow such wise action will be disqualified for minor reasons during the trial.

Brad Pitt receives joint custody of children in Angelina Jolie’s divorce case

“The lower court ruling is bad for children and for California’s obese judicial system,” said Boutrous Jr. of Gibson, Dunn & Clutcher LLP. Closed.

Jolly’s attorney did not immediately respond to Fox News’ request for comment, but in a statement at the time, actress Robert A. Olson’s attorney told Entertainment Tonight: When the judge heard the question of imprisonment, he overturned the order of the Richter correctly.

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“Mr. Pitt’s attorney’s petition to the California Supreme Court reveals their hold on to this private judge who has shown prejudice and denied legally necessary evidence. In a financial relationship, Mr. Pitt’s attorney attempted to revive a private judge.

“Jolly wants Pitt to be with her instead of focusing on the children’s needs, voice, and healing,” the statement concludes.

Jolie representatives did not immediately respond to Fox News’ requests for comment.

Melissa Roberto of Fox News contributed to this report.

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