Oh No, A Pamiko Rail In The Garbage. What Has The World Come To?

Photo and blog post by John Hoff

Some days ago, I was hanging around in the Jordan Neighborhood when somebody noted the infamous and crappily distinctive "Pamiko rail" in front of a slummy Paul Koenig property had been damaged, completely knocked off its base. Given how cheap the rail was in the first place, this could have happened by, for example, a small child running into it with a tricycle. (Joke font)

There wasn't much which could be done except to pick up the trashy remnants of the rail and toss it in the garbage, rather than leaving it there on the sidewalk.

On a related but much wider topic...


JNS blog wonders aloud when and if some kind of legal action will be taken in regard to Paul Koenig, the "one man housing crisis." Consider, if you will, Minnwest Bank. Did Minnwest Bank lose money here? Are they a victim of this failed scheme? Or is Minnwest Bank deserving of a long, sustained bloggy criticism for their association with Paul Koenig and NOT DOING ANYTHING ABOUT THIS BAD ACTOR?

All I know is that Koenig shouldn't be allowed to get away with the path of destruction he left in North Minneapolis, but I have yet to hear about any sort of legal action moving forward.

2402 4th Avenue South got Pami-KO'd

Post and photo by the Hawthorne Hawkman

When I was in college, one history professor who taught a class on eastern European and central Asian history was particularly troublesome for me. I remember probing for clues about the final exam and asking, "What particular topics should we know well in preparation for the final?" He responded dryly: "Well, everything." And he wasn't joking. I didn't do too well on that final, busting my tail for a B-minus and considering myself lucky.

But I think of that professor's attitude in relation to the housing mess that Paul Koenig (pronounced Kay-neg) has inflicted upon north Minneapolis. Koenig should be in jail or at least face civil charges so steep that they'll bankrupt him. If neither of those things happen, then we on JNS are dedicated to examining every last detail of his cluster bomb of foreclosures so that this does not happen again by Koenig or anyone else. What's most important in that regard? Well, everything.

So when I have the chance I've been stopping by the Hennepin County Government Center to research Koenig/Pamiko/Marklee properties. Eventually I'll do a comprehensive post of what I've found, but as I come across particularly interesting histories that are extensive enough to merit their own post, those will be published. One such scenario presented itself at...

...2402 4th Avenue South. This is a multi-unit structure that has been part of a Koenig mess since at least 2004.

On July 23, 2002, David Kohlenberger, the other half of the Dream Homes Development LLC and DPK Properties LLC (David, Paul, Kohlenberger/Koenig. These guys are real creative with their LLC names) purchased it with a $465,200 mortgage from American Summit Mortgage Corp. I thought for sure American Summit would have imploded, but I guess not.

On July 21, 2004, Kohlenberger/Dream Homes Development LLC took out a mortgage from Guyer's Superior Walls in the amount of $147,393.84. Koenig and his buddy must not have made a single payment, at least initially, because on October 20, 2004, GSW filed an intent to foreclose.

On December 15 2004, A $75,000 lien was filed against the property by Morrison, Fenske, and Sund. Eighteen parcels were listed, but only legal descriptions were given. This was likely a part of the court case regarding fraudulently inflated incomes of many DHD/DPK properties.

On February 16 2005, MERS (trust me, you don't want me to try and explain what MERS is right now) filed an intent to foreclose on the property, listing David Kohlenberger as the owner.

Despite the ever-changing list of owner entities (Kohlenberger to DHD to DPK), I did not see a formal transfer of ownership until February 17 2005, when DPK filed a quitclaim transferring ownership to Marklee Construction, another known Koenig LLC. On March 1 2005, there was a Sheriff's levy filed against this property. I had never seen such a document before, and neither had the helpful employees at the desks. But as far as I can tell, this essentially says, "Gee whiz, there seems to be a lot of fishy title transfers happening here at the same time as a court case that alleges fraud. So how's about we just tell you all to keep DPK LLC as the owner for now?"

On April 12 2005, Franklin Bank did a $750,000 loan to Marklee Construction for the following properties, including 2402 4th Ave S:

3434 6th Street N
1418 11th Avenue North
1612 25th Avenue North
2101 Bryant Avenue North
2714 Bryant Avenue North
2722 Bryant Avenue North
2938 Bryant Avenue North
2616 Cedar Avenue South
2822 Colfax Avenue North
611 Edmund Avenue, St. Paul
3009 Emerson Avenue North
4858 Emerson Avenue North
2003 James Avenue North
1028 Knox Avenue North
1030 Knox Avenue North
1032 Knox Avenue North
1034 Knox Avenue North
1317 Knox Avenue North
2407 Lyndale Avenue North
3008 Lyndale Avenue North
1012 Morgan Avenue North
1312 Morgan Avenue North
625 Newton Avenue North
2324 Queen Avenue North
1717 Thomas Avenue North

On June 8 2005, the Franklin Bank mortgage was recorded as satisfied, although it is unclear if that referred to the $750,000 as a whole or simply the portion that applied to 2402 4th Avenue S.

On June 17 2005 the sheriff's levy was discharged.

On November 11 2005, Chicago Title Insurance Company filed a release of the $75,000 mortgage from Morrison, Fenske, and Sund to DPK LLC. The lawyers must not have been too happy about that, because on December 28 2005 they filed a request to be included as lien holders in any foreclosure proceedings.

On February 8 2006, Guyer Superior Walls' intent to foreclose was discharged.

Now if you're still reading and you're not confused YET, this should help get you there. A court order from a filing made by MERS says essentially this: "Hey, remember, ah, 'member how last year, we foreclosed on David Kohlenberger? Remember that? Well, none of those crazy title transfers really matter. We kind of, you know, still OWN this property. And we want it back."

So then Pamiko Properties LLC picked up the property from MERS and New Falls Corporation (the entity MERS was representing) on a quitclaim deed for $450,000. This happened on February 26 2006, and on March 3, a mortgage from US Federal Credit Union was taken out against the property in the amount of $602,250.

Then on September 19 2008, Aspen Funding LLC placed this property in a bundle of properties with their $500,000 loan that they made to Pamiko. And Pamiko must have really needed that half-mil because on November 5 2008 US Federal Credit Union filed an intent to foreclose.

The sheriff's sale occurred on February 6 2009, but Aspen must have missed SOMETHING, because they modified the loan on May 20 2009. They were also late to the game, filing their own intent to foreclose on October 26 2009. Sorry guys, Pamiko's all out of money.

On February 4 2010, a court order mandated the ownership of this property be transferred to US Federal Credit Union.

From the documents available, it's not entirely clear what happened to the money that was paid out on loan transactions that were later reversed. It's not known at this time if Guyer's Superior Walls or Morrison, Fenske, and Sund were paid for their interest in the property. And why did Pamiko pick up the property for $450,000 and then a week later get a loan for $150,000 more?

What is clear is that this blog will not rest until Paul Koenig is held accountable for the extensive, almost incomprehensible harm he has inflicted upon north Minneapolis.

Pamiko-Induced Foreclosure Crisis Gets Even Bigger

Post and photo by the Hawthorne Hawkman

I've been stopping at the Hennepin County Government Center on occasion when I've had other business to do downtown recently. In what little spare time I've got, I researched more about various slumlords and the mortgages behind them. I found out something new on the property above, 3053 15th Ave S.

On 5/23/05, a $575,000 mortgage to Marklee Construction, a company known to be operated by Paul Koenig, was filed against this property by US Federal Credit Union. But the dollar amount wasn't the only thing that was strange about the loan. There was also...

...a satisfaction of the mortgage filed on 2/23/06. US Federal Credit Union signed off on the satisfaction, but it was a senior mortgage loan officer, Pete Olson, who did the deed. Fellow mortgage geeks will recognize how rare it is for a mortgage originator to be involved in signing satisfactions in any way whatsoever.

But little quirky things like this wouldn't merit a blog post all by their lonesome. On 11/5/08, US Federal Credit Union filed an intent to foreclose on 3053 15th Ave S AGAINST PAMIKO, not Marklee Construction.

But wait, there's more! The original mortgage to Marklee Construction included a total of ten OTHER properties as collateral. The first seven are currently owned by private individuals, so it's possible that Koenig sold them properly. Those seven properties are:

1418 11th Ave N
625 Newton Ave N
1032 Knox Ave N
1034 Knox Ave N
3434 6th St N
2822 Colfax Ave N
1317 Knox Ave N

There were three properties besides 3053 15th Ave S that are currently listed on the Hennepin County website as owned by US Federal Credit Union. I believe it is reasonable to assume that US Federal foreclosed upon these properties while Koenig or one of his LLC's was the owner.

2200 Irving Ave N, which is boarded and vacant.
3128 5th Ave S
2324 Queen Ave N

None of these properties is on the Unabridged Pamiko list.

The more one digs into the Pamiko problem, the worse it appears. When will charges be filed against Koenig? That seems inevitable at this point.

Minnwest Bank is Being Watched...

Post and photo by the Hawthorne Hawkman

Two mortgage-geeky things happened today. First, I received the postcard above from John as he was on the road. The caption reads "Tennessee Mortgage Lifters," and I for one don't get the joke or point. But it's the first time I've seen mortgages referenced on a postcard.

John noticed the same thing and had to send this one my way. He also pointed out, "Don't get used to it, I save my postcards for the chicks."

The other mortgage item relates to Minnwest Bank, the lender behind most of Paul Koenig's (pronounced Kay-neg) Pamiko loans. It turns out that Minnwest...

...has been cited by the FDIC for "unsafe or unsound banking practices." The link to the FDIC's order can be found here. (WARNING: DO NOT COMBINE THIS DOCUMENT WITH ALCOHOL, AMBIEN, OR ANY OTHER DEPRESSANT. DO NOT OPERATE HEAVY MACHINERY WHILE READING THIS DOCUMENT. DO NOT ATTEMPT TO OPERATE A MOVING VEHICLE WITHIN FOUR HOURS OF READING THIS DOCUMENT. IF YOU ACTUALLY FIND THIS DOCUMENT INTERESTING, SEE A DOCTOR IMMEDIATELY. YOU NEED HELP.)

Minnwest has been ordered, among other things, to analyze the value of its collateral (such as foreclosed Pamiko properties) and to not extend further credit to "adversely classified borrowers." One thing that is missing is any way to force Minnwest to be part of cleaning up the colossal damages done to NoMi as a result of their loans to Koenig. Admittedly, I would not expect the FDIC to impose such a burden. But our State Commerce Department should press for this.

For the sake of Minnwest employees and shareholders, I do hope they emerge from this as a solvent and profitable financial institution. But the heat on Koenig should only intensify.

Has Paul Koenig Ever Paid ANYONE? (part 2)

Post and photo by the Hawthorne Hawkman

I happened to be in downtown Minneapolis today doing a bit of research, and decided to look into our friend Paul Koenig (pronounced Kay-neg) a bit more deeply. Specifically, I wanted to see what I would find out about 621 26th Ave N, which has a demolition order on it and a long list of unpaid contractors.

Several months ago, I documented how some Dream Homes had unpaid mechanics' liens, went through foreclosure, and then were repurchased by Koenig. Presumably the workers were never paid. So when it came to the contractors at 621 26th...

...I wasn't surprised at all to find even more unpaid mechanics' liens.

KB Mechanical filed a lien for unpaid work in the amount of $7,470. Wallboard Inc. filed their own lien against this property for $4,833.25. These were for unpaid work, materials, and/or use of equipment.

Then KB filed a lis pendens (basically an intent to foreclose) on the property for unpaid work at this address as well as several others: 1812 16th Ave S, 2119 4th St N, and 2316 Fremont Ave N. I checked, and all of these were already on the unabridged Pamiko list.

The intent to foreclose was for "rough-in, duct work, two new furnaces per property, gas line and furnace installation, and related work" and totaled $29,880. Also, it's quite possible that this intent to foreclose was the tipping point that caused the rate increases described in this article, which would have then led to the collapse of Koenig's entire empire. Exactly how this might have happened would bore most readers to tears, but 621 26th Ave N could very well be the Pamiko Properties' equivalent of the Piltdown Man.

Then, a few months AFTER THAT, Creative Home Construction filed a $17,102.40 lien for "home demolition and remodel labor."

And now this property has gone through foreclosure, meaning that in all likelihood the people who did this work will never be paid. I should note that in merely scratching the surface of two properties - 2321 Lyndale Ave N and 621 26th Ave N - a total of over $93,000 in unpaid mechanics' liens filed against these and ten other properties has been found. I strongly suspect that a thorough investigation of all such unpaid work would show a systematic refusal to pay contractors. I believe that the total amount of unpaid mechanics' liens against Paul Koenig's properties is well over one million dollars.

How many people had trouble staying in business after being ripped off by Koenig? The ripples of his financial misdeeds continue to be discovered.

Best Blog! Twin Cities! Uh huh! (Making Dancing Motions)

Photo and blog post by John Hoff

Before I say anything else, let me just highlight two of the coming stories here on Johnny Northside Dot Com which you will see, hopefully, in the next few days.

1.) Remaro C. Smith got into ANOTHER high speed car chase a few days ago. June Leikas, the mother of murder victim Annshalike Hamilton, (she suspects Remaro killed her daughter) is in a perpetual state of disbelief these days. That story is on its way to readers.

2.) Peter "Pete the Pedophile's" lawsuit against the Jordan Neighborhood Association and Johnny Northside blog (though he never managed to serve me) went really badly for Pete at the April 20 hearing. Details to follow, but here's a quote from the Honorable Judge: "Explain to me why I should not give you sanctions?"

Now, about being named the Twin Cities' best blog in City Pages, click here for article...

I only want to say the whole reason behind this blog is pictured in this post, and he wants to go to MIT and study robots. He wants to make robots to help the world, to become the Bill Gates of robots. When you support or help Johnny Northside Dot Com with financial contributions, (PayPal button, please note) with juicy information (we are SO far behind, apologies) or even writing directly for the blog like Hawthorne Hawkman, (nice City Pages cover story on Pamiko-gate, thanks Hawkman) you support the support system of this cool young man, pictured above.

Oops, gotta go. The cargo won't load ITSELF.

(Blogging from Lapeneer, Michigan)

Pamiko House Set for Demolition

Post and photos by the Hawthorne Hawkman

I dedicated the day today to a Hawthorne Hawkman patrol, where I went through (mostly) Hawthorne, took pictures of properties, called 311, and removed plenty of sign spam. In my travels, I came across a demolition/raze order posted at 621 26th Ave N.

I already knew this property was a Pamiko house and that Paul Koenig (pronounced Kay-neg) was largely responsible for driving this house into the ground. The property has been vacant for three years and is bordered by 623 26th Ave N, where slumlord Bashir Moghul was reportedly shot, and 619 26th Ave N, one of the worst-managed rental properties in Hawthorne.

But what I found REALLY interesting was...

...the list of names on the Director's Order. It's my understanding that everyone with a financial interest in the property is a recipient of such an order. We have:

Pamiko Properties (ok, that's only a surprise to the extent that Pamiko still has ownership in ANY property)
Angela Larson, Keller Williams Integrity Realty (I want to know what HER involvement is)
Aspen Funding LLC
KB Mechanical Inc
Wallboard Inc
Creative Home Construction Inc
Floor Technologies Inc
Lien Guaranty Inc

If I had to guess, I'd say that everyone from KB through Lien Guaranty is an entity that did work on the property and never got paid. Then I speculate further: were these companies just innocent victims, or have they done other work on slummy properties in my neighborhood? After all, this house has all the trappings of a slumlord in terms of horrid windows, a converted porch, and virtually no curb appeal.

JNS readers are encouraged to share what they know about these companies.

Paul Koenig to be Barred on Seven Properties!

Post and photo by the Hawthorne Hawkman. Image from an online gambling site that I'm hesitant to provide a live link to.

I have information from a reliable source that Paul Koenig will lose his rental licenses on seven properties in the city of Minneapolis. This is very significant because if a person loses two rental licenses in the span of one year, they lose all rental licenses in the city of Minneapolis for a period of five years. If I'm not mistaken, that restriction applies to all LLC's that Koenig is or may be a principal of. It would be nice if there were harsher penalties for SEVEN properties instead of just two. Just sayin'. I must point out that this information has not been independently confirmed, but I do consider it reliable enough to publish.

Also, last week I was able to speak with a representative from Management Resolutions, the company appointed to manage Pamiko properties after Paul Koenig's second 80-property foreclosure cluster bomb was dropped on NoMi.

Pictured above is 2013 Hillside Ave N, one of the nicer-looking Pamiko properties. I used this photo because the house looks pretty good, it's being managed by Management Resolutions, and my dialogue with the receiver was fairly positive. Chris Deuth, who works for the company, said he actually WANTS people to contact him at...

chrisd@managementresolutions.com if there are any problems with properties they are managing. It appears that they have addressed the sewer pipe afflicting Rosie Lee and her children, so that's a big step. I also explained that many residents in the community made the mistake of contacting Paul Koenig about concerns with his properties, but NOT calling 311 or otherwise filing reports. Then, when things finally reached a boiling point, they started calling the city. The problem with that approach was that the issues with Pamiko Properties had been ongoing for quite some time, but the city wasn't officially aware of it until things had already gone from bad to worse.

"So we want to work with you, but you're on a tight leash," I said. Deuth understands that because this kind of work is exactly what Management Resolutions does. JNS readers, you are encouraged to email Mr. Deuth with any concerns regarding the properties managed by Management Resolutions. When you do that, please email me as well, at jskrenes@hawthorneneighborhoodcouncil.org. And if problems are not resolved quickly or if there are serious issues, don't hesitate to include 311 in the conversation.

Click here for a pdf of the receiver documents, which include a list of Pamiko properties now being managed by Management Resolutions. You can also click here for the full JNS pdf support documents about Paul Koenig's legal woes, which include accusations of fraud surrounding Dream Homes and a personal bankruptcy.

In case anyone wants to know which properties are being managed by this firm, a full list is below. Adding hyperlinks is cumbersome, so if anyone wants to know the most recently available information about these properties, open up the unabridged Pamiko list in a separate window. The hyperlinks on that post should take you to the property info as it stands today.

After these properties, I will also list the seven properties where Koenig is expected to lose his rental licenses. I will provide live links to those properties so that readers can check to see if and when this information becomes available on the city website. First, the receiver properties:

817 Penn Ave N
1812 16th Ave S
4652 Aldrich Ave N
2943 Morgan Ave N
3015 Oliver Ave N
3101 Dupont Ave N
2701 Aldrich Ave N
1417 Logan Ave N
2918 Colfax Ave N
2727 Girard Ave N
1622 Girard Ave N
1608 Hillside Ave N
3242 6th Ave N (sic), the address on the receiver document is listed this way, but is most likely 3242 6th STREET N, a known Pamiko property.
1100 24th Ave N
1229 Oliver Ave N
907 Penn Ave N
3223 Fremont Ave N
2211 6th St N
3531 Emerson Ave N
2013 Hillside Ave N
2420 Bryant Ave N
3025 Clinton Ave
2708 Bryant Ave N
2435 Portland Ave S
1507 Newton Ave N
2905 Colfax Ave N
1611 Hillside Ave N
2710 Girard Ave N
726 Morgan Ave N
1318 18th Ave N
3119 Queen Ave N
1414 16th Ave N
1016 Newton Ave N
1605 Girard Ave N
24 4th St E, St. Paul

And here are the seven properties where Koenig is expected to lose or perhaps already has lost his rental licenses:

2119 4th St N, which has $4,156.26 plus prior year(s) of delinquent property taxes.
2736 16th Ave S, which has $3,680.44 plus prior year(s) of delinquent property taxes.
1317 Emerson Ave N, which has $8,961.90 plus prior year(s) of delinquent property taxes.
2827 Emerson Ave N, which has $4,353 of delinquent property taxes.
2316 Fremont Ave N, which has $3,631.02 plus prior year(s) of delinquent property taxes.
2400 Lyndale Ave N, which has $2,314 of delinquent property taxes.
2314 Sheridan Ave N, which has $1,096 of delinquent property taxes.

This blog will continue to monitor Koenig's rental license eligibility, and asks that readers provide information on the topic as well.

A Banker Sheds Some Light on Commercial Real Estate Loans

Post by the Hawthorne Hawkman, bank deposit image from the wiki Runescape page.

After Paul Koenig's James Michener impersonation yesterday, and my response, I thought I would check with one other commercial banker to glean more understanding on these Commercial Real Estate lines of credit (CRE). I have maintained from day one that the cross-collateralization of these loans looks extraordinarily fishy to me. Koenig, on the other hand, claims that doing so is standard practice in these types of loans.

This banker helped me get a much better handle on CRE's, and I'll try to pass that on to faithful JNS readers. Admittedly, this is much more enjoyable when using recently emptied glasses of beer and bloody Marys, but we'll have to make do.

The first question I asked this banker was...

"Is there a legitimate reason for individual properties to be on multiple lines of credit?"

Yes, there is, actually.

Explaining why would be far easier with the aforementioned glasses as a visual prop. But let's take five properties and group them together. In the spirit of Olympic hockey, we'll call this "Group A."

2420 Bryant Ave N
2400 Lyndale Ave N
1547 Hillside Ave N
2706 Colfax Ave N
2727 Girard Ave N

Group A has a collective loan-to-value (simple, hypothetical numbers: the cumulative value of these properties is, say, $500,000) AND a collective revenue stream ($1,500 per month from each property means $7,500 in income, minus whatever monthly maintenance costs are. For Koenig, those costs are quite minimal since he either doesn't maintain properties or doesn't pay the people who do).

A commercial banker might want to group such properties together because "rental properties are either 100% occupied or 100% vacant." This is not entirely true with Pamiko. Dream Homes aside, Koenig almost exclusively bought duplexes or multi-unit housing.

Now, let's say Koenig gets another few properties, we'll call them Group B:

2013 Hillside Ave N
1414 16th Ave N
4652 Aldrich Ave N
2321 Lyndale Ave N
2420 Bryant Ave N
2706 Colfax Ave N

Wait a minute...there are two properties in Group B that were also in the Group A loan. Why?

This hinges on the supposed strength of collective revenue streams, knowing that a vacant property produces no revenue or negative revenue (losses). So let's say that all of the properties in Group A are occupied, well-maintained, and have good tenants paying on time. (I know, we're suspending our disbelief even more than during a Michael Bay movie, but this is hypothetical.) But the first four properties in Group B are either unoccupied (negative revenue) or partially occupied or in need of some rehab (resulting in little to no revenue).

In this case, the successful performance of the Group A properties lends some revenue to the Group B loan. In that way, cross-collaterilaztion could make each loan stronger than it would be on its own. Doesn't that also increase the risk of fraud? Yes, the banker said, but that's why it's important to have a global view of your borrower's entire financial picture. Like, oh, did he declare bankruptcy or have other failed property ventures under different LLC's?

The other question I asked was about Koenig's claim that the bank just arbitrarily raised the interest rate ten percent. We've all heard horror stories of credit card companies doing this to their customers, so Koenig is definitely trying to play the common-man sympathy card here. But does this sort of thing happen on Commercial Real Estate loans?

No.

Even small increases have to be triggered by SOMETHING. That "something" could be rate resets built into an adjustable loan, but that wouldn't account for such a huge increase. Even though Minnwest Bank was getting hit with significant CRE losses, she said it would be highly unlikely that their apprehension about the market in general would or even could allow them to adjust the rate.

A hike that large was probably a "default rate." In other words, a punitive measure taken because something significant was triggered to make the lender believe the loans were no longer viable. Those "triggers" are also written into CRE loans, and include things like not making timely payments, fraud, not maintaining the properties, failing to pay taxes, or adding a second loan to the collateral without authorization. How many of these things sound like things Pamiko did?

So it turns out that perhaps part of what Koenig said was maybe half right. That still makes him all the way wrong for our neighborhood.

Long-Awaited Pamiko Investigation May Be A Reality...

Stock photo and blog post by John Hoff

According to a highly-placed, creditable government source, there is a serious investigation going on regarding Mr. Paul Koenig of Pamiko Properties, LLC, the slumlord entrepreneur whose story of mismanagement, greed and high roller lifestyle choices managed to kill a forest of newsprint today in both City Pages and the Star Tribune.

My source says the bank involved in the funding of many of his properties has been cooperative and has notified the proper regulatory authorities regarding his activities. The bank has turned over records pursuant to subpoena.

I do not have further details at this time--including whether this subpoena was in a state or federal court--but I can tell you both the Star Tribune and City Pages are chasing the story.

In a matter which may be closely related to the investigation--or may, in fact, be completely peripheral--the same source tells me there is a court appointed receiver, (possibly) pursuant to an order issued by Judge McShane in Hennepin County District Court and that receiver has a budget and is committed to addressing health, safety and other living conditions in the properties under its control.


(Do not click "Read More")

"Agitated Hawk" Response to Koenig's Email

Post by the Hawthorne Hawkman, image from www.stoneridgeeventing.com

The horse in the above picture goes by the moniker "Agitated Hawk," which is a rather appropriate, if understated, description of my reaction to Paul Koenig's letter defending his practices.

I started to write a response in the comment section of that post, but realized it would be very long and would fit better as its own post instead. So here are at least some of my grievances regarding Koenig's email...

Koenig's description of how great the neighborhood was, but the banks didn't like it, and then something bad would happen that would prove the banks right...well that just doesn't have any logic to it whatsoever.

Koenig's claims that his second coming in north Minneapolis was because he would be the lead paint savior are complete b.s. Lead paint is NOT that big of a risk. Yes, most houses in NoMi had or have lead paint. But that's only a safety issue if it's chipping or peeling, and THEN it only becomes hazardous if it's ingested, AND EVEN THEN it's primarily a safety risk to small children and fetuses.

So this false notion that there is some MASSIVE lead paint threat, and we ought to get down on our knees and thank baby Jesus for sending us Paul Koenig and Pamiko Properties, well, that's one of the few things Koenig possesses that's actually worth LESS than a Dream Home.

I also don't buy his excuse for what happened with the interest rate. There had to be SOME trigger that made Minnwest decide to raise the rate as much as Koenig claims. What was it? Late payments? The sudden realization that with cross-collateralized properties they were going to get hosed? Even if it was that the market forces that may have nothing to do with Koenig's loans meant everything was a greater risk, Koenig had a responsibility to KNOW that before he SIGNED ANYTHING. I can forgive an average person for missing the fine print on an adjustable rate loan. But Koenig is (ok, WAS) a seasoned property investor. When taking out a loan of this nature, there's no excuse for someone like Koenig to be unaware of the worst-case scenario.

Finally (for now), the hardest pill to swallow is this notion that having more than one property on multiple lines of credit is "standard" for commercial real estate loans. Granted, I have little direct experience with such products as I did personal mortgage loans myself. But EVERY SINGLE PERSON I've talked to who HAS had such experience has said that this type of activity is a MAJOR indicator that fraud took place. Sorry Paul, but like most of your letter, I'm not buyin' it.

JNS BLOG SUPER EXCLUSIVE: Detailed Statement Of Paul Koenig In Regard To Pamiko Properties...

Stock photo by John Hoff, words are those of Paul Koenig

(Paragraph breaks added)

Paul Koenig sent an email to a third party, which was forwarded to me, and said as follows...


(Name Withheld from salutation)

I guess this would go far above and beyond simply responding to the questions.

1. Pamiko's business plan was to purchase undervalued/appreciated properties and turn them into lead safe affordable efficient housing in the metro area. A model/plan was identified whereas there was a rental demand for renters that tired of inefficient and unsafe housing. In talking with many people in different neighborhoods over the years it became evident that people in the community are tired of looking at properties that are sitting idle and detracting rather than contributing to the city. It was certainly frustrating to hear story after story of Tenants citing high utility bills in the hundreds of dollars each month due to inefficient weatherization issues with their current or former housing. I found that in talking with many homeowners in the same areas the similar issues held true as well. Over the years I have heard of and seen multiple issues related to children getting lead poisoning in homes. I believe this is a very serious issue.

The goal was to create affordable, lead safe, energy efficient housing for families. From ceiling to floor the home typically received complete makeovers. New sheetrock, windows, tile floors, new bathrooms, kitchens, doors, sub-floors, energy efficient forced air furnaces, water heaters, wiring, plumbing, and in most cases siding and roofing. Most of the properties we acquired required a complete code compliance inspection form the city. Most of the time we would have no less than 5 different inspectors form the city to inspect and sign off on the work. We typically did the same improvements to all homes whether they were a code compliance home or not. Our inspections of most of the properties showed structural integrity was incredibly solid, yet the property had years of neglect into them.

At times there were properties that were absolutely incredible and could fit into the program very well, but after talking with people in the neighborhood and understanding criminal activity avenues we passed on many. One of these properties that we had a purchase agreement on and ultimately passed on was 2020 Penn Ave N. The bank and the city were at odds with each other. I must add that it was at the bank own doing and not the fault at all of the City. From what I understand the City bent over backwards to work with them and received little help on the other end. We eventually canceled our Purchase Agreement and walked away, the property was demolished and it is a vacant lot now. The property itself was a great looking Spanish style house that was great, it was just the location and/or management of the home that must have spelled its demise. I did not take the time to do a historical analysis together on the property.

Whatever the situation, however, I believe that it was better off not getting into that property and ultimately decided to vote with our feet and walk away from that property. Pamiko walked away from many properties and many properties were demolished yet many are still around. Many many of these properties had rehabbers buy them and put $10-20k or even $30-40k into them and, in my opinion, are substandard. Many of these rehabbers put most all of the monies into cosmetics and really do not do the needed improvements to the properties. I have heard of and witnessed rehabbers talking about tiling the entire properties so they don't have to replace carpet. It is certainly disappointing to hear that. What type of home environment does that does that promote? What type of tenant does that attract?

Pamiko met or exceeded all city requirements for improvements and bringing properties up to code. Any statements to the contrary would be saying that the City inspections department is incompetent. We have found the inspectors to be very competent. On any given project there were multiple inspections by no less than 4 or 5 separate certified city inspectors. The Inspections department does not have an easy job. They have a responsibility to promote housing stock to increase the tax base while also being responsible for carrying out the order to demolish properties as well. Vacant lots do not pay for schools, police, roads and many other things. Fully functional properties do add to the tax base.

It was Pamiko's intention to put some supply/demand pressures on other landlords by offering a property that tested as lead safe with high efficiency HVAC and a complete rehab down to the bone. Tenants would easily migrate to our properties. Many of the tenants also worked with long standing social-working pillars of the community that are well respected. Pamiko and the social service agencies had the same goals. Screw up this nice place and you are out of the program. Some did screw up, but most succeeded.

Pamiko also participated in the Minneapolis police "Action Alerts" program. These reports are great, we are notified within a few hours and have talks or discussions with the tenants within a few hours after an incident occurs. Several of the notifications lead to tenants moving out through a series of productive and cordial discussions. Other reports neither the tenant or landlord could really do anything about, as it was outside unrelated individuals. On a couple of occasions we would get a report of marijuana smell at a property.

I have learned over time that there is not much one can do over a small amount of Marijuana. I really don't get the tolerance of this, but that is the law whether I like it or not. That is not to say that I cannot have a good conversation about doing this around children or neighbors and is this how one wants to represent their selves. The conversation usually ends with an agreement that they will refrain from doing it at the property and they understand what I am saying. Most of the time, it is a precursor to the end of the tenancy because the need to smoke if far greater than the agreed upon point talked about in the conversation. There are victories here and there, but like anything else in life, the lost battles sure seem to have that bad taste in your mouth when you think of it.

After a period of time Pamiko had completed around 3 dozen projects. Pamiko looked to do one more pool as others in the business were starting to bid up the properties to what was we believed to no longer be an undervalued price point. Pamiko was talking with its lead bank on a weekly basis if not 2 times per week. We had just received the go ahead from the lead bank to move forward on a final pool of properties. The bank sent out their appraiser and we were set to move forward as usual. I was constantly assured that the closing was the following week and that we were good to go. It appeared that the banking crises came down across the entire lending industry just about the time the ink dried on the last purchase in the final pool. The bank told us the appraisers came in where they had approximated and we where all good to go. I was not worried. I had a large capable bank that had just completed 35 deals in the identical fashion.

This went on week after week and then month after month. Then I saw in some publications that the bank had some large losses in a southwest affluent suburb and the bank officer shared a few other issues of loss as well as a very large loss in a far northern suburb. Shortly thereafter I saw they had a large commercial building loss in downtown Minneapolis. Losses were affecting the votes for approvals on all projects I heard. I was still constantly reassured we should be good to go shortly because the owner of the bank likes our projects. The bank continued to string me along. I did seek out other banks that did 3 of the projects in the final pool over the next year. I had come to find out that nearly every bank in town shut down their lending. Pamiko had several other sources that assured them of financing for the properties, but when it came time for approval, North Minneapolis suddenly became "out of their lending area".

By this time Pamiko had already made commitments on many fronts and was already neck deep into the process. It is not like you can "un-purchase" or return property. Pamiko had in hand a financing letter in hand that was even provided to the City specifically referencing property within the last unfinished pool from this lead bank. It appeared that banks were intentionally stringing us along only to find out they were being closed. Bank after bank would tell me "off the record" that they will not lend in North Minneapolis. I have heard this before, but now I was hearing it consistently. It really made me upset and offended. I had met so many good people in North Minneapolis. I would and sit and boil about it, then there would be a robbery or shooting or even infighting between decent people in the news only confirming what the bankers would throw in my face about the neighborhood.

I just decided to keep doing what I do and concentrate on the good rather than the bad. I continued to try to finish the remaining properties and seek the required financing. All the time while things slowed down my equipment was stolen, windows broken, copper stolen, supplies stolen from inside locked properties, houses trashed by kids, even a property burned down (for a second time at different addresses). I have around 20 dumpsters filled with neighborhood trash. It is interesting how a completely vacant house would end up with a dumpster with 20 tires and 5 refrigerators in the dumpster (this happened at two different addresses 1608 and 1611 hillside avenue as well as other addresses.

There is a property in South Minneapolis that had 11 refrigerators in the alley overnight. Where do these things come from. Yet I kept the faith because I really respected a lot of the people that I have in North. I understood their reasoning for moving to north from other neighborhoods. Core urbanization rational for living space location appeared to be the rational for both owners and tenants. Being in close proximity to those who are like minded is obviously an inner draw. Unfortunately, the true center of the urban areas will many draw polar opposites and the polarization becomes so intense that it is hard to exist amongst each other. I have been aware of many of the nuances of the polarization and saw the recent wave of foreclosures as an opportunity to raise the standards by putting out a higher quality product and attracting more desirable neighbor. Although I am very conservative in most of my views, I tend to believe that people inherently desire to be good. If a person is put in a good situation they will be far more likely to succeed.

Over time Pamiko had an extreme amount of success with most of their tenants. Sure there area few bad eggs here and there. Those that failed, ultimately failed their selves out of their social services aid as well. It was not uncommon to see an individual that violated our lease to also ultimately lose their social assistance as well. It required a lot of follow through after we terminated their tenancy but it ultimately would open up a funding spot for some unknown and better deserving family somewhere out there. Other homeowners told me they moved here for the incentives and because it was cheap. I can respect that as well.

After one year of being strung along by our lead bank, Pamiko started to pressure the bank by writing emails and letters to the bank president referencing the promises that were made. The bank responds by putting pressure on Pamiko by increasing the interest rate nearly 3 times higher than the contractual amount. The lead bank charged this high rate of interest for a long period of time. In nearly 4 months of 2009 I paid more interest that I had for all of 2008. Ultimately a short term deal was executed while we worked on a global deal addressing my concerns. The bank once again promised they would make a strong move toward the promised financing for the final pool of properties. A short time passed and I met with the owner of the bank he looked me in the eye, shook my hand and told me that I could consider the deal done. A few more months passed by and the promise of financing continued to be brushed off.

Upon advice of my lawyer we decided to make a stand by asking for a face to face meeting with the owner of the bank. We had properties that have been sitting idle for far too long and the only one benefitting from this situation was the bank. They had a hay day from the recent interest increase rate income windfall they created in their favor. The bank responded by immediately accelerating notes and making them immediately due in full. It was my position, armed with documented agreements and account statement that I was over charged nearly $100,000 in interest charges. I wanted my credit balance addressed as well. Over the last year I exhausted almost every resource I had to go as far as I could on the properties in the last pool and continue to make upgrades and repairs as necessary on the existing properties. I liquidated all of the valuable assets from another successful business I had as well.

My lawyer started the meeting by stating that we were looking for a long term deal. We stated that if the bank hired an outside management company the properties would soon spiral downwards because they are unfamiliar with the area, neighborhoods, and the tenants among other things. The ultimate and quick response was that it was the banks intention to take the properties back and just clip their coupons and that they would rather that be the only option. In all of just a few minutes of all the hard work I done and invested I was suddenly being given an ultimatum to chock down the only option available. If they don't want the properties then there are a world of options. Even though there was now an understood deal in place the bank continued to forge forward to place added pressures on me to ensure that I sign the deal. The bank swiftly moved to appoint a receiver.

Pamiko objected to the particular receiver because we had seen how this particular company has let properties deteriorate. Nonetheless, the receiver was appointed. The bank additionally proceeded with a foreclosure action/summons. All this is done while while there is an understood agreement already in place for the bank to take over ownership of the properties. I had no intention of wanting to give up the properties, but it was the only viable option short of litigation. The banking officer that made all those promises and wrote finance letters was abruptly fired at the start of my hard stand.

In talking with outside bankers and lawyers the first thing they ask me is show me a document or something in writing from this lead bank. All I could do is say, well, I was told or promised it was a done deal and I have some minimal documentation. As silly as it sounds, the commercial world is far different than the consumer world. Banks can say anything they want and it does not matter unless it is in writing, the right kind of writing too it appears. How can you force a bank to do a commercial loan if they ultimately do not want to? Most all banks have what insiders commonly refer to as "get nervous clause". That is, they can raise the interest rate if they simply feel uncomfortable with anything, even if it is just the market itself. The bankers from other lending institutions tell me that it is unfair, but welcome to commercial banking they say. All back up plans appear to follow rapidly follow the identical process.

Apparently regulators were shutting down commercial lending across the board and penalization banks that did new lending while we ad Obama encouraging bank to lend. One banker was so upset that he showed me a document that specifically stated no commercial real estate lending others. Other banks would show me articles showing what the regulators were doing and how it was crushing the country. Coincidentally both bankers in those examples I referenced where with banks that have been seized by the FDIC. It was amazing that I had a stack of 30 or so business cards from only 2 years prior and only 4 of them were still at the same jobs. As time goes on, many of these back up plans are banks that eventually went under and had no shot at lending money during the time I was talking with them. Unfortunately, banks with cease and desist letters or "agreements to stop lending practices" are not readily available to customers or the public.

Over the course of time It was not Pamiko's worry so much about the valuation of the properties over the short term because we had absolutely no intention of selling for a long times if ever. We stripped the properties down and rebuilt the cores so these were solid properties for the long haul. So a piece of siding may come loose in a wind storm or carpet and paint is needed....big deal, those are only fractional costs in the long term plan. Pamiko understood that the properties over time would be a great investment in the community and the properties were properly leveraged for the long haul (65% LTV). Pamiko would typically purchase a property and put up to $150k additional into a duplex. This would be far superior to what any so called rehabbers were doing to rental properties.

Many of the single family homes for sale to homeowners were not doing these type of improvements either. I had no problem putting as much as I could into the properties, because I intended on holding onto them for a long time so I needed the nuts and bolts of the property to be very sound. I never could have imagined the property value of these properties dropping to have of what the loans I had on them. I went from 65% LTV to over leveraged in a matter of months it seamed. Every month that went by, the chances of financing grew worse and worse. IT soon became evident that for every $1 I put into the property, it instantly became worth less than 50 cents on the dollar.

Eventually I had no other choice but to sell assets from other business and stop paying myself as the unfinished pool was killing us. I was only taking a salary from Pamiko of $3k/mo and ceased paying myself for many months prior. Employees voluntarily took a wage cut. Every corner was cut that could be without sacrificing quality. In 2009 the market dipped to a point that properties could be purchased in North Minneapolis in a similar condition for half of what it would cost for me to completely rehab it. I still contend that these "so-called" market comparable properties are not lead safe and don't have all the internal upgrades. They still looked nice and brought in the same rents as I charged. Although the cash flow supported to amount of planned rehabs I wanted, the comps in the neighborhood would not support anywhere near the amount of funds needed to do the deals. Why not do the deal at the smaller amount? We did with the 3 from the last pool with alternative banks.

But even then, by that time, the other banks were willing so long as the lead bank would make a more of a stable commitment. Other banks would tell me that my lead bank has some serious troubles and that I should be careful. As time went on, I realized that the bank most likely had it hands tied behind the scenes. I an not sure why they persued the acquisition so aggressively and swiftly. As time wears on, It is quite apparent that they are in way over their heads and it is not as easy as "clipping coupons." There are countless phone calls for unresponsiveness to tenant issues. I still receive the action alerts on the properties and the police calls have gone from here and there to multiple happenings per week. Unfortunately, many of the tenants have moved out of the properties and there are new ones in there. Turn over is one way the management company makes money. I recently discovered that management company has spent $4000 on repairs and maintenance from September through December 2009. In that same time period they made a fee of nearly $40k. That seems to be a lot of money for a full voice mail and unanswered tenant calls. Perhaps being unresponsive is one way to keep the repair costs down.

The recent events surely show how a property or group of properties that is poorly managed can rapidly spiral downwards. Fortunately, the properties are internally sound and the wear and tear done by a few of the new tenants here and there are easily corrected with a little effort. In September of 2009 it was the new management companies responsibility to run the properties in their entirety. The properties appeared to run fine for a while and then I was besieged with former tenant phone calls complaining of not being able to get a hold of anyone for very routine maintenance calls. Multiple phone calls and emails garners little if no response as well. This was echoed by neighbors who were calling the management company as well. Eventually the seriousness of the repair issues increased here and there.

At 2420 Bryant Ave N there was a report of a kids messing around in the basement knocking off a sewer pipe for the kitchen in the first floor unit. When I received the message I left a message for the management company. I not only had keys any longer to the property, but I was court ordered let the receiver handle any and all repair issues. Just the other day, the tenant commenced a emergency relief action, of which, I was promptly dismissed at the hearing. I stuck around during the hearing and offered assistance in resolving the matter to both sides. The Legal Aid society graciously accepted my help/suggestions while the new management company refused to budge on their position. The hearing date was set out for 30 days pending a settlement agreement between them. I encouraged the tenant to make all requests in writing in the future so she has some sort of documentation or proof with the management company. The lease calls for repair requests to be in writing. In the conversations with the tenant and their attorney she told me that we always responded to her calls immediately and had no issues with Pamiko.

2. At the banks request on commercial loans, it is their preference to cross collateralize properties amongst each other. All properties I did were funded initially out of pocket or via individual loans. Most of the time they were rolled into one bulk approval and grouped accordingly.

3. I was ready and willing to refi (as well as promised) well in advance, however the bank raised my interest rate from 6.25% interest only to 16.5% across the board on all of my loans. This was slow played out and the fees continued to run up ($7,000,000 at an additional 10%, plus legal fees for several months). In the closing the property taxes were to be taken care of in their entirety. Not a penny went into Pamiko's pocket in this closing. Or better stated, other than taxes and their lawyer, the bank made points, fees and amped up interest. As an end result, my payments went up tremendously further worsening the situation overall situation.


Pamiko did everything by the city guidelines put in place to provide lead safe affordable and energy efficient housing. There are not that many housing options out there in the neighborhood that are energy efficient and lead safe or lead free.

Pamiko still feels that having the following are important to families:

Lead safe housing for children
Affordable housing
Energy efficient homes
Updated wiring
Updated plumbing
New appliances
Unlimited laundry that was not coin operated at each duplex
New energy efficient windows
Even bath fans were installed (it is amazing how many 1-4 unit homes do not even have bath fans).

Ultimately I feel that having a lead safe home is right at the top of the list. Apparently the City of Minneapolis does as well. I receive many many lead safe fliers from their mailings. I would like to put a friendly challenge out there for detractors and supporters alike to have their homes lead tested. I am somewhat aware of a few detractors in the neighborhood and understand some of their frustration. I have offered to speak to them off the record in an effort more intimately discuss any genuine issues that they may have regarding the neighborhood. That offer was "not worth their time."

I was perplexed that if someone was attempting to be a good steward of the neighborhood that they would accept the offer, at least, as a starting point. There are countless individuals in the neighborhood that have supported Pamiko's position and kept the lines of communication open to ask and answer any questions that they may have. I would like to thank them for their sincere care for the situation and the community. It is refreshing to experience that with people that genuinely care about the good of the neighborhood. One of them told me that it is easy to cast stones. They told me that it is unfortunate that you took the stone, put it back together, scrubbed it up and polished it into a gem. Shortly thereafter the next guy comes along and turns it back into a stone and people start throwing it around. When the conversation ended and I walked away I thought that he certainly put a lot of thought into that analogy.

I can say that if the lending institution simply fulfilled their obligations to me, then there would be a lot of gems out there rather than gems turned stones. There are a lot of people that are familiar obtaining a full code compliance certificate as well as a successful lead safe clearance. To those that are not, you can rest assured that it is not an easy thing to secure. Pamiko obtained these on a very routine basis. It was not easy, we did not expect it nor want it to be easy either.

The bank owns the properties now. They were deeded the properties many months ago. I have long been away from the properties. I would hope the management company picks up the pace a bit, they certainly able to be well funded and capable of running the properties at an acceptable level if they are motivated to do so. A $4000 figure on repairs and maintenance for 2009 was listed in their report supplied to the court. $4000 for around 80 units is not very much in my experience.

(End of email)

JNS Blog Declares "Pamiko Comeuppance Day!"

Post by the Hawthorne Hawkman, photos by Johnny Northside

In the spirit of Mayor RT Rybak's declaration of "Get to NoMi Day," the two contributors to the Johnny Northside blog met last night at an emergency meeting to formally declare Wednesday, February 24, 2010 "Pamiko Comeuppance Day." Pictured above, I am drinking from a special cup purchased to commemorate just this occasion.

The declaration of "Pamiko Comeuppance Day" reads as follows...

WHEREAS Dream Home Development LLC and DPK Investments LLC were two limited liability corporations owned in part by Paul Koenig and operating primarily in the Hawthorne, Jordan, Near North, and Willard-Hay neighborhoods of north Minneapolis;

And WHEREAS homes constructed by Dream Home Development and DPK Investments LLC were built in a manner that did not support healthy communities, nor did they provide quality housing to their tenants;

And WHEREAS many contractors had to file liens or sue in order to get paid for their work (if they were paid at all);

And WHEREAS neighbors living around and near Dream Home properties often complained of problem tenants;

And WHEREAS fraudulently inflated rental incomes led to a first wave of scores of foreclosures attributed to Paul Koenig’s business practices;

And WHEREAS Pamiko Properties LLC, Marklee Construction LLC, and MCK Investments LLC are three other such corporations owned and operated by Paul and Michelle Koenig;

And WHEREAS Pamiko Properties and its associated LLC’s continued the practice of poorly-done repairs, failure to pay contractors, and renting to tenants who caused problems in primarily the same four neighborhoods listed above;

And WHEREAS three multi-million dollar sheriff’s sale bids were placed at 2420 Bryant Ave N ($2.5 million), 4652 Aldrich Ave N ($1.3 million), and 1417 Logan Ave N ($1.9 million), with an additional $1 million foreclosure in St. Paul;

And WHEREAS publicly available documents give strong indications that Paul Koenig, Michelle Koenig, Pamiko Properties, Marklee Construction, and MCK Investments may have benefitted from fraudulent or otherwise criminal activities in their business practices;

And WHEREAS said business practices directly contributed to a second wave of Koenig-related foreclosures in less than ten years;

And WHEREAS Paul and Michelle Koenig were able to sustain a lavish lifestyle including thoroughbred racehorses, a million-dollar farm home, an RV, and four washing machines, while their properties, tenants, and surrounding neighborhoods suffered from poor or fraudulent business practices;

And WHEREAS the Johnny Northside blog has extensively documented said events, beginning with the post titled, “Does this House Look Like it’s Worth $2.5 Million?” and most recently, “City Pages Makes Paul ‘Pamiko-gate’ Koenig a Slumlord ‘Supastah;’”

And WHEREAS today’s cover story of the City Pages is titled, “The One-Man Housing Crisis,” in reference to Paul Koenig and his various LLC’s;

And WHEREAS the front page of today’s Star Tribune article, titled “Who’s Responsible for this Mess?” also tells the story of extreme disrepair at 2420 Bryant Ave N that put the lives of Rosie Lee and her children at risk;

And WHEREAS the good citizens of north Minneapolis, the Johnny Northside blog, and our elected officials are committed to holding the appropriate parties responsible for these events;

THEREFORE BE IT RESOLVED THAT the Johnny Northside blog declares Wednesday, February 24, 2010 to be “Pamiko Comeuppance Day” throughout all of Minneapolis.

City Pages Makes Paul "Pamiko-Gate" Koenig A Slumlord "Supastah"

City Pages cover image, blog post by John Hoff

As this blog promised on February 11, the sinking of the property pirate vessel Paul Koenig has begun. A front page City Pages story hit the internet this afternoon, click here, and will soon be spreading the flesh of dead trees all over news stands. This will be the "cover debut" for Andy Mannix, a top notch reporter who worked for the Minnesota Daily at the same time I did. If this guy doesn't get a Pulitzer before he dies, it will most likely be from catching a bullet in the too-close-pursuit of a story about some armed conflict in a dusty foreign land. Mark my words, Mannix is bound for great things in the world of journalism...

A Star Tribune story is expected soon. Major local television stations would be well-advised to plan accordingly and--as they so often do--go chase some images and sound bites about "Pamiko-gate" in the wake of more detailed print media coverage. That's not a criticism of television stations, except maybe KSTP. Not everybody can read the whole story on a hunk of dead tree. Some people need the 30-second version.

But imagine how Paul Koenig must feel right now, somewhere in his Afton mansion with FOUR WASHING MACHINES IN THE BASEMENT. Today, Jordan Neighborhood super citizen Megan Goodmundson exchanged text messages with Paul Koenig--as she put it--"ala Remaro." (Click here for an explanation of that phrase)

Here's how the conversation went...

Megan: You're a star on citypages.com. Congrats! Baby Jesus would be proud.

Paul Koenig: Who is this?

Megan: I'm a pissed off northsider. Sitting here with johnny northside. Reading. Laughing.

Paul Koenig: Ah another man behind the curtain. Interesting how n. Mpls problem issues have increased since my departure. Obviouly (sic) I was doing something right at the time

Megan: DREAM ON DREAM HOMES! Wait til the attack dogs from the Star Trib that we sic'd on you draw blood this weekend. Baby Jesus knows the truth.

(No reply)

Has Paul Koenig Ever Paid ANYONE?

Post and photos by the Hawthorne Hawkman

...Other than himself, of course.

Recently I came across MLS listings for Koenig/Pamiko/Marklee properties for sale. These were interesting because they listed the last sale date and purchase price. Most of the purchase prices were in the $30-50,000 range, but two jumped out at me: 1403 21st Ave N and 2321 Lyndale Ave N. (pictured above. Which one is which? They're Dream Homes, so that doesn't really matter.) The last sale date on these two properties is 6/24/05, they were purchased via Contract for Deed, and the sale price was $1,360,000. On each of them.

Naturally I was suspicious, so I went down to the Hennepin County Government Center to research these documents, similar to the multimillion-dollar foreclosures. This is what I found...

At 2321 Lyndale Ave N, DPK Properties was the owner. DPK was a limited liability corporation run by David Kohlenberger and Paul Koenig as its principals. DPK was one of several entities responsible for the Dream Homes fiasco.

(My notes prior to Pamiko taking ownership of this property aren't as detailed as they are in the next round. It was getting close to 4:30 and I had to hurry to get as much info as possible.)

On 6/25/04, Truck Crane Services Company filed a mechanics' lien for unpaid work, in the amount of $4,500. On 12/17/04, the property went into a voluntary foreclosure with Franklin Bank, and the amount bid at the sheriff's sale was roughly $190,000. No satisfaction of Truck Crane's lien is recorded, but on 3/15/05, a second mechanics' lien for $9,800 was filed for unpaid excavation work. No satisfaction of that lien is recorded either.

On 1/27/06, a $240,000 mortgage from US Federal Credit Union to Pamiko was taken out. On 7/26/06, a limited warranty deed from Franklin Bank to Marklee Construction was recorded. It stated, "The total consideration for this transfer of property is $500 or less." This is believed to be the most accurate assessment of Dream Home real estate value ever recorded. (mortgage geek sarcasm font) We'll get to an explanation of how Marklee Construction entered the picture with the next property. On the same day, Marklee transferred its ownership to Pamiko via quitclaim deed.

On 9/19/08, Aspen Funding LLC had a $500,000 line of credit attached to this property. The same list of Aspen Funding properties as mentioned in previous JNS posts about Pamiko was filed here. For some reason, this document was not filed with the county until 1/16/09. In the interim, US Federal Credit Union filed an intent to foreclose on 11/5/08. The sheriff's sale occurred on 2/6/09 and the amount bid was $241,551.82. Somehow the foreclosure from US Federal was avoided.

On 4/9/09, the Aspen loan was modified and the maturity date was changed to 10/1/09 I did not find a maturity date on the initial Aspen loan, but wasn't looking for one until I saw this. I'm also not clear on why Aspen would give $500,000 to an LLC that had a history of not paying its own workers AND was behind on mortgages. Oh, and it would be repaid in a year? Well, no. Aspen filed an intent to foreclose on 10/26/09, but by that time Minnwest Bank had already been moving in on Pamiko with sheriff's sales on 10/15/09.

Interestingly enough, the $1.36 million-dollar contract referenced in the MLS listing is not recorded against this property.

We get more insight about what happened here from 1403 21st Ave N. On 7/1/04, Urban Initiative/Believers in Action deeded the property to DPK/Dream Homes. No value is indicated, and David E. Whiteford is listed as the vice chair and signatory for Urban Initiative/Believers in Action. On the same day, Franklin Bank gave DPK a $185,000 construction mortgage.

On 11/17/04, a mechanics' lien was filed against the property by Reliant Electric, Inc. in the amount of $3,000. Exactly one month later, Franklin Bank filed an intent to foreclose. On 2/1/05, a voluntary foreclosure agreement was signed, and on 3/1/05 the sheriff's sale occurred with a $197,000 bid. But wait! Franklin Bank came back and offered Marklee Construction the previously referenced $1.36 million contract for deed. This was subject to TWO mechanics' liens: Reliant Energy (now $6,000) and Vern Craven Concrete for $10,500. Once again, it's not clear if these workers ever received a dime.

This agreement listed eight properties:
2321 Lyndale Ave N, currently owned by US Federal Credit Union
2122 Penn Ave N, owned by a private individual, not homesteaded.
2515 Irving Ave N, owned by Paul Koenig, but listed as boarded/vacant since 12/22/09.
621 Penn Ave N, owned and homesteaded by a private individual.
1234 Knox Ave N, owned and homesteaded by a private individual.
2130 Bryant Ave N, owned and homesteaded by a private individual.
2400 13th Ave S, owned and homesteaded by a private individual.
1403 21st Ave N, owned by US Federal Credit Union, with Marklee Construction as the previous owner.

A stipulation in this agreement was that in order to remove a property from the contract, Marklee needed to pay Franklin Bank $170,000 (170,000 x 8 = 1,360,000). This is rather interesting in and of itself because on 1/27/06, US Federal Credit Union gave a loan to Pamiko on this property in the amount of $240,000. On the same day, Franklin Bank transferred the property to Marklee and then Marklee handed it over to Pamiko. This series of transfers, although potentially confusing, would have happened even if the deal were legitimate. But if only $170,000 was needed to satisfy Franklin Bank, then why was the loan amount $240,000 with US Federal?

After this, the same series of events occurred on the same days as 2321 Lyndale:

On 9/19/08, Aspen Funding LLC had a $500,000 line of credit attached to this property. For some reason, this document was not filed with the county until 1/16/09. In the interim, US Federal Credit Union filed an intent to foreclose on 11/5/08.On 4/9/09, the Aspen loan was modified and the maturity date was changed to 10/1/09. Aspen filed an intent to foreclose on 10/26/09.

An interesting footnote is that on the Aspen lines of credit, near the top of one of the first pages, "Michele S Pamiko" is written in cursive, almost as if it were a signature of an actual person. The area where this appears, however, is not a place on closing documents where one would sign.

There are plenty of unanswered questions here. If $170,000 was all that was needed to satisfy Franklin Bank, what happened to the other $70,000? How is it that The principal of one LLC (Koenig) is able to continuously repurchase his foreclosed properties under a different LLC, of which he is still a principal? How is it that Pamiko apparently continued to get access to credit when they were in a state of near-constant default? Did his contractors who had to file for mechanics' liens ever get paid? If so, by whom? Who is Michele S Pamiko? And how is it that in the course of losing scores of properties to foreclosure over the years, the Koenigs are still able to maintain such a lavish lifestyle?

The Koenigs are free to respond with a message or comment to explain their side of things, and it will be published by this blog. JNS readers, if you have more information or ideas, you too know what to do.

A Message Across The Bow To "Pirate" Paul Koenig From Johnny Northside...

Image from the Koenig Blog, used under First Amendment Fair Comment And Criticism, horse called "Who Let The Cat In" 

Dear Paul Koenig,

I was inside your 2.5 million dollar house today, you heartless property pirate. I met the woman with seven children (some very small and vulnerable, also very cute and photogenic) the woman you put in that house, and the facts would tend to prove you knew...

...foreclosure was looming, and she'd be in a tough spot and probably forced to move again. But you didn't care. She says Pamiko promised to fix things and never did. I saw those things today, the things you didn't fix, leaving that woman in a difficult, unhealthy and unsafe environment, where she is forced to do the best she can under the circumstances.

This is a woman who works for her own money to pay her rent and, notably, she is amazingly kind and gentle with her children despite being in tough economic circumstances. But you don't care about any of that, do you? All you seem to care about is the almighty dollar and scamming it from somebody--whoever that might be, Paul, individuals down on their luck at Mystic Lake around 1999, your former girlfriend who now lives in California--oh, yes, those facts are coming out, too, all about the alleged domestic violence--whoever it might be, all you care about is getting money so you can support your high-rolling lifestyle of ponies, vacations to Florida, FOUR WASHING MACHINES IN YOUR BASEMENT.

I saw the basement of your 2.5 million dollar house today. It sure didn't look like YOUR basement, Paul. I'm guessing it didn't smell like your basement, either.

I am writing you this, in front of everybody, to let you know GOD SEES WHAT YOU DO, PAUL, and soon enough the rest of the world will, too, considering how many different individuals and official entities are trying to get to the bottom of the spectacular financial mess you created, and two of those entities are mainstream media outlets. Think you're notorious through this blog, Paul? Just wait. 

Now, Paul, you've been telling your story to somebody else--you're not faithful to me, you cheat on me, and we both know who else is involved--and you're saying, well, here's the facts in my defense but don't have Johnny Northside publish this. So, Paul, I haven't even seen those emails because I said, well, if I can't publish it...I don't want to see it.

But now, Paul, I strongly suggest you communicate with me directly--my email is right on the header of this blog--and you start telling me your side of things. Because soon enough everybody will hear the other side...the side of a decent woman with seven children who you put in that 2.5 million dollar House Of (Apparent) Scam...and people are going to think very badly of you, Paul.

I'm sure even if you tell me your story, people will still think very badly of you and I strongly suspect you'll be going to jail in the not-too-distant future, but I'm offering you an opportunity coated in virtual gold, here. I will publish your side, word for word, and all you have to do is forward the information.

In the meantime, may Almighty God keep that woman and her children safe from the obvious physical dangers of that house formerly owned by Pamiko. God and Regulatory Services. Word comes by text message from Hawthorne Housing Director Jeff Skrenes that Regulatory Services is "(expletive) on it" shortly after our all-too-revealing look at what is happening inside the $2.5 million House Of Pamiko.

* * *

Regular readers should be advised this story is bigger than Johnny Northside, and as I've predicted for months, it will boil over from the small confines of this blog as much bigger media sharks move in for a big bite of Paul Koenig's posterior. Watch all over the media for these facts, I won't be bothering to replicate all that coverage here, but helpful readers can feel always free to post links for the convenience of, I don't know, posterity. (What is "posterity" on the internet? People three years from now?)

In any case...

Watch. Watch and see the spectacular sinking of the pirate ship "Paul Koenig."