Alleged Slumlord’s Trial Is a Family Affair

     LOS ANGELES (CN) – In his second trial in as many months, a former landlord is fighting claims that he and his family failed to repay a $500,000 investment in four slum apartment buildings.
     Opening arguments in a jury trial in Superior Court began Wednesday, with defendants Franco Haiem, his wife Orit Haiem and brother Farzad Haiem in the courtroom.
     On the other side of aisle is Israeli Gabriel Barazani. He claims he lost his life’s savings when he gave the Haiems $535,000 to join their business, Mayan Ganem Investment, in 2008.
     Orit Haiem is his first cousin and persuaded him to invest in the properties, Barazani says.
     Barazani’s attorney Martin Horwitz told jurors the Haiems persuaded Barazani to invest in four properties owned by Los Angeles slumlord Frank McHugh, who was sentenced to 4 years probation in 2010 after one of his apartment buildings collapsed.
     The Haiems promised Barazani a 50 percent stake in Mayan Ganem and 4 percent annual returns, Horwitz said.
     In 2008, Barazani flew from Israel to Los Angeles as the Haiems sought to complete the deal, Horwitz told jurors, driving Barazani from LAX in a Mercedes Benz, then wining and dining him at their Beverly Hills home.
     But after Barazani invested the money for the down payment, the Haiems mismanaged the properties and defaulted on their loan with McHugh, who had financed the properties, the attorney said.
     The rental properties were foreclosed upon and the city entered one of the buildings into its Rent Escrow Account Program because of substandard conditions in the property, Horwitz said.
     “Defendants took the rent money for themselves and left Gabriel empty-handed,” the attorney told the jury.
     Barazani wants the 12-panel jury to award him $2 million in damages.
     But in a March counterclaim, the Haiems say Barazani had agreed to pay all expenses for the building but refused to pay maintenance costs as the properties deteriorated.
     The $1.6 million complaint for breach of contract and fraud claimed that Barazani entered into the deal with the Haiems to launder money “going to and from Israel” and avoid paying taxes.
     Barazani and his father were arrested in Israel “on suspicion of concealing millions of dollars of income they earned through illegal operation of a waste landfill site,” the court filing states.
     The Haiems said that when they bought the properties they had no idea that McHugh “was a criminally convicted slumlord.”
     Their attorney Brian Urtnowski told the jury that Barazani entered the deal with his eyes wide open and had “buyer’s remorse.” He said the Haiems neither defrauded him nor misappropriated money from Mayan Ganem.
     Barazani had asked the Haiems to find investment opportunities for him in California when the family visited him in Israel, not the other way round, the attorney said.
     The case demonstrates why “family should not do business together,” Urtnowski said.
     “It starts out fine, then we end up here,” Urtnowski told the court.
     He said many of the conditions at the properties existed from when McHugh had managed them. Franco Haiem had spent $250,000 maintaining the buildings, he added.
     “This was a Frank McHugh property. It had the crosshairs of the City of Los Angeles on it,” the attorney said.
     Orit Haiem had nothing do with the transaction or the business, but merely translated for her husband and cousin, Urtnowski said.
     In a separate case in April, Franco Haiem reached a $2 million settlement with 100 tenants of an apartment building on Maple Avenue, after four days of a jury trial .
     Those tenants of a South L.A. property claimed that under Haiem’s ownership they lived in deplorable conditions, suffering through a severe cockroach and mice infestation .
     Two other tenant lawsuits are pending against Mayan Ganem Investment, involving its apartment buildings on West 10th Place and West 12th Place. Those lawsuit for negligence allege conditions similar to those at Maple Avenue.
     The apartment buildings on West 10th Place make up two of the four properties cited in Barazani’s lawsuit. Mayan owned two more buildings on West Place, according to the complaint. There are a total of 44 units in the four buildings.
     Franco Haiem declined to comment during a morning break in proceedings.
     Horwitz wrote in an email that the state court has struck the money laundering and arrest allegations from the case.

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