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Low-income renters say Chicago real estate giant exploited them

The 151-page complaint alleges Pangea Real Estate made millions by neglecting low-income renters’ units on Chicago’s South and West Sides.

CHICAGO (CN) — Chicagoland renters filed a novella-length class-action suit against large property management company Pangea Real Estate, which operates more than 400 buildings in Chicago alone, in Cook County Circuit Court on Monday.

“Pangea’s core business model is premised on maximizing landlord profits by neglecting to maintain its rental properties in compliance with the health and safety laws of the State of Illinois and the City of Chicago,” the 151-page complaint reads. “Pangea’s deceptive and illegal business practices have caused Plaintiffs and other tenants to pay Pangea millions of dollars of rent and fees for unsafe and improperly maintained housing.”

Among other things, the suit alleges that Pangea knowingly allowed its tenants to endure “rodents and insect infestations, lack of heat during cold months, lack of running water and hot water, mold issues, leaking water, sewage issues, defective windows and doors, lead paint violations, large holes and cracks in interior walls and ceilings, and maintenance performed without permits.”

Pangea’s properties in Chicago are clustered around the city’s South and West Sides, areas of the city with many low-income, majority-Black and brown neighborhoods. The suit compared the company to an “empire” that presented a façade of benevolence to vulnerable people looking for affordable housing. Besides its several hundred Chicago buildings, the company also manages properties in Indianapolis and Baltimore.

“We don’t view our residents as just a part of our business, but rather as a part of our family. We don’t see the neighborhoods we service as locations where we have buildings, but as the communities we live in,” a statement on Pangea’s website states. “That’s why we take the time and effort to ensure each and every Pangea apartment is one you’re excited to call home!”

This friendly image, the suit claims, obscures the company’s thousands of reported building code violations over the past decade.

“Pangea promotes an image of nice apartments managed by a good landlord, and it intentionally omits disclosure of health and safety issues in its buildings. Data from the City of Chicago’s Department of Buildings reveals that Pangea has had over 5,000 reported building code violations among the Chicago Pangea Properties since 2009,” the renters argue.

To whit, a single Pangea building located at 5501 W. Washington Boulevard on Chicago’s West Side was listed in the city’s records as having been cited for code violations close to 200 times since 2009; 13 times this year alone. Pangea continues to advertise apartments in the building on its website, calling it “a newly renovated apartment community” with “highly sought after amenities.”

Pangea was founded in 2008 by Al Goldstein and Steve Joung, a pair of high school friends who made their wealth before launching the company: Goldstein made Crain’s “40 under 40” list in 2012 for the pair’s 2006 sale of CashNet USA, an online payday loan company they launched and then flipped for $265 million. While Forbes reported the company had $447,000 in revenue in 2009, it also stated that since then it has pulled in “$470 million from individual investors, family and other sources.”

At a Monday press conference, attorney Christopher Wilmes of the law firm Hughes Socol Piers Resnick & Dym, one of the lawyers representing the class of tenants, said Pangea profited by housing people in “grossly” substandard units. A 2019 investigation in the Chicago Reader, cited in the complaint, also found Pangea had taken thousands of its tenants to eviction court since 2009, winning over $11 million in judgments in what the suit called “a largely successful eviction-for-profit scheme.”

Besides Pangea itself, the suit also lists as defendants dozens of affiliate LLCs which the 2019 Chicago Reader investigation claimed were shell firms meant to shield the company from litigation. The class action complaint wants to pierce this corporate veil.

“Allowing the primary defendants to hide behind the facades and alter egos of their dummy, sham entities would enable the primary defendants to avoid liability for the severe harm they have caused plaintiffs,” the suit argues.

To compensate the class of tenants, the class asks each member to be awarded two months’ worth of rent or twice the actual damages they sustained from their apartments’ poor living conditions. The suit also calls for a neutral receiver to manage the Pangea properties in the company’s stead, and punitive damages to be determined at trial.

“Pangea should be ashamed of their treatment of this largely low-income, Black and brown population of residents,” Wilmes said Monday. “They must be held to account.”

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