"Texas developer delivered 'heartbreak and desperation' with unmet expectations"
In a recent lecture in our FINC 371 class, we spoke in depth about the fiduciary duty a service provider has to their client. This topic came to mind once again a few days later, as I read an particularly interesting article in the Houston Chronicle about developer/businessman, David Wallace. I was raised in Sugar Land, Texas and had met Wallace on several different occasions while he served as mayor from 2002 to 2008. When I read about his real estate ventures, I was astounded at his inability to see his projects all the way through. Look no further than Joplin, Missouri.
In May of 2011, an EF5 tornado ripped through the town of Joplin, killing 158 people, injuring over 1,000 more and causing roughly $2.8 billion in damages. The town was devastated and was looking for extreme aid in the recovery process. In comes Wallace Bajjali Development Partners, a real estate development firm that focused in large-scale municipal investments that was created by David Wallace and Costa Bajjali. They had been praised for big-name projects around the Sugar Land area and across Texas, which was partly the reason Wallace had won the election for Mayor in 2002.
Wallace Bajjali LP was hired by the city of Joplin to lead an $800 million redevelopment effort that promised a shin city full of beautiful new residential and retail properties. However, Joplinites soon learned the hard way what Sugar Land natives had known all along: David Wallace and his partner were not what they made themselves out to be. When all was said and done, Wallace and Bajjali had left town with $1.7 million in fees and a $5 million private loan. The partners had failed to build a single property. By the time 2014 rolled around, Joplin officials couldn't get a hold of Wallace or Bajjli at all, as they learned that the company had closed its doors and the two businessmen were MIA.
The "slick-tongued salesmen" had pulled off similar tricks in the past, as developments in Waco and Amarillo had also been played on big stage. Joplin officials said they had heard rumors of Wallace's past projects, but were completely swayed by Wallace's slick and convincing sales pitch. As of today, Wallace is being sued by two former employees in Joplin for fraud and breach on contract. The city continues to rebuild and believes it will eventually be better off now that Wallace is no longer in the picture.
This story was difficult for me to read, as I feel that Wallace's actions have tainted the reputation of my beloved hometown of Sugar Land. This is an incredible city that was once voted the 3rd Best City to Live in the U.S. by Money Magazine. So much culture, history and livelihood was once credited to a man that I look up to as a kid. Wallace was always so genuine and welcoming to me and my family during the times that I met him, making it so disappointing to now know that his genuineness was merely a deceitful facade. I know that the city of Sugar Land is now in better hands and I hope justice is found for both Joplin and Wallace himself.
The article was a great example of how important trust, loyalty and commitment are in massive real estate investments such as the Joplin deal. The city not only lost a large sum of money in the faulty business of Wallace Bajjali, but they also faced a serious setback due to the time lost in the process. It's so vitally important to do your due diligence and thoroughly check your client's background when making an expensive investment, and Joplin failed to sift through Wallace's smooth lingo and fancy renderings.
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