The legal consequences from the collapse of DJE Texas Management Group are expanding as Denver-based Platte Canyon Capital has filed a lawsuit against Devin Elder, the former head of the multifamily syndicator. The lawsuit, reported by the San Antonio Business Journal, accuses Elder of fraud and breach of contract related to the July sale of the Allure Apartments in San Antonio.
Platte Canyon Capital is seeking over $1 million in damages. The complaint alleges that Elder took $52,000 in rent from the property after it was sold, according to records from Bexar County’s 37th Civil District Court. The dispute focuses on the 268-unit Allure Apartments at 7770 Pipers Lane, one of several assets sold off during DJE’s recent financial troubles.
According to Platte’s lawsuit, Elder and his affiliated entities, including DJE Properties and 7770 Pipers LLC, misrepresented both the occupancy rate and financial condition of the apartment complex before selling it. DJE allegedly informed Platte that more than 90 percent of units were leased and that tenants were ready to fill any vacancies. However, after taking control, Platte found many tenants were either behind on rent or had stopped paying entirely. The suit claims DJE had not started eviction proceedings or taken steps to recover unpaid rent.
Platte contends that the real occupancy rate was about 15 percent lower than what was represented by DJE.
The legal filing also accuses DJE of collecting rent payments for two months following the closing through its online portal—totaling over $52,000—in violation of their sales agreement. Platte says Elder has not returned these funds.
“Elder’s communications convey not refusal, but inability, to return what is in effect stolen rent,” wrote David Denton, attorney for Platte Canyon Capital. “Platte construes the inability to pay to mean that the money is already disbursed and gone — especially given the backdrop of lawsuits, investigations and investor demands.”
The purchase was financed with an $18.2 million loan from Prime Finance Partners; other terms were not made public. Representatives for Platte and their attorney declined comment while Elder, his counsel and broker Newmark did not respond to requests for comment.
Since February there have been multiple lawsuits against Elder and DJE Texas Management Group as well as an ongoing FBI investigation into alleged money laundering and wire fraud involving the firm. In August federal investigators launched a criminal probe into DJE following a June warrant authorizing seizure of properties tied to Elder across six counties in South Texas totaling over 1,000 acres.
