Friday, December 11, 2009

Court filings detail troubles at Today Realty Advisors

Today Realty Advisors, the lead investment vehicle of Dallas mogul Eric Brauss, had negative equity of $8.3 million at the end of October. By that time, Brauss was already making preparations to close down the company.

Those details emerged in new court filings this week as some investors got a Dallas state court to approve the appointment of a rehabilitative receiver for several Brauss partnerships. The investors claim that millions of dollars have been diverted from partnership funds.

Brauss, who liked expensive cars and lavish homes, shut Today Realty in mid-November and may have left the country, according to court documents.

"That left no one as general partner to call the shots," said Stefani Eisenstat, an attorney with Dallas-based firm Riney Palter. She represents a group of investors who are fighting to keep the Brauss real estate empire out of federal bankruptcy court.

Over the years, Brauss companies invested hundreds of millions of dollars in projects such as shopping centers, apartments and land. Brauss and his wife, Christine, also were major patrons of the Dallas arts scene, including the opera and performing arts center.

Other details from court filings this week, including a copy of a Dec. 4 deposition of Today Realty executive vice president Sue Shelton:

•In a phone call to Shelton on Nov. 12 or 13, Brauss ordered the Today Realty offices closed.

•The 10 remaining employees, including Shelton, were terminated the following Monday. Each received 2 ½ months of severance pay and insurance through the end of the year, and each was allowed buy his or her company computer for $100.

•The company had been downsizing for more than a year. At its peak, it employed 120.

•In October, Brauss told Shelton that he was going to start playing "hardball" with the landlord and not pay the November rent.

•Brauss' salary was $175,000 a year, plus fee and partnership income. Christine Brauss' salary was $75,000.

•Shelton's salary was $150,000 a year, plus bonuses. She said she made $350,000 in her best year.

In the deposition, Christine Brauss' attorney, Eric Redwine, tried to establish that Eric Brauss made all the business decisions, not Christine, who filed for divorce last month.

Redwine asked Shelton how Eric Brauss referred to his wife's business acumen.

"That she was a dumb blonde, and it would be time wasted on her anyway," Shelton responded.

Asked Thursday about that statement, Redwine said, "That's how Eric Brauss viewed her."

But Brauss' attorney disputed the statement.

"Eric would never say anything derogatory like that," Larry Friedman said. Friedman said he had talked to his client three times by phone Thursday, but he did not know where Brauss was. He said Brauss was still running the partnerships.

The court battle over the Brauss empire is complicated. On Sunday, one of Christine Brauss' companies, Buckingham Financial, filed for Chapter 11 bankruptcy, which could move the case to federal court.

But Eisenstat's clients want the case to remain in state court with a rehabilitative receiver appointed for all 39 partnerships.

Friedman said that favors a few investors rather than all. He was upset by the latest court move Wednesday, saying he wasn't given proper notice.

Eisenstat said proper notice was given.