About

 

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446 Stanwood was the historic home of the Chi Tetarton chapter of Phi Sigma Kappa from 1961 to 2010. The founding brothers created Chi Tetarton Phi Sigma Kappa Housing Corporation to own and operate the property. Housing Corp. was controlled by the chapter and its alumni. The mortgage was quickly repaid, and the property went without a mortgage for nearly 40 years.

In 2005, title to the property secretly was deeded to Droopy Corporation, which was controlled by a small group of Chi Tet alumni from the early 90’s. Droopy operated with a similar sounding fictitious name as its predecessor –  Housing Corporation. This allowed Droopy to move foward without anybody (outside of the small group) to know of its existence. Droopy’s “leaders” then encumbered the property with a $90,000 mortgage, which went unauthorized and unannounced, and the funds were used in 2006 for a major renovation to the Stanwood house.

In 2007, the directors of Droopy surrendered control of it, and the property, to individuals who also were involved with Phi Sigma Kappa Properties (PSKP), an affiliate of the PSK National organization. Again, this action was unauthorized and announced. The men from PSKP then announced that PSKP had acquired the property. However, county records show that title to the property continued to be held by Droopy, the de facto successor to and constructive trustee to Housing Corp.

PSKP’s acquisition announcement appears to have been a willful misrepresentation of fact. It appears that the new Droopy officers/directors were self-dealing. They concealed Droopy (and their roles within) as trustee of Chi Tetarton’s signature asset, and falsely claimed that the property had been acquired by PSKP, the other organization that they represented.

PSKP dramatically increased the rent to the chapter, well above market, so much so that in 2010, the chapter was forced to find housing elsewhere.

Later in 2010, Droopy (controlled by the men from PSKP) sold 446 Stanwood, at the time that Michigan real estate values were at rock bottom. The property sold for $109,900, which repaid the $90,000 loan. Once again, the transaction went unannounced. PSKP apparently pocketed the sales proceeds, perhaps as a claimed set off against some unspecified debt.

There has been no accounting or disclosure provided for:

  • the creation of the purported debt
  • the proceeds of sale
  • the process to authorize such payment/notice to stakeholders.

This blog seeks to document and explain the loss of the chapter’s signature asset, and its significant accumulated value.

2 thoughts on “About”

  1. Droopy/Housing Corp got a mortgage loan in 2005 for $90,000 and used it to renovate the house. A Chi Tet alumnus personally guaranteed the loan. While this clearly was a generous act, this brother should have shared this information with all of Chi Tetarton (instead of just with his close friends). We would have asked “what happens if/when you no longer wish to guarantee this loan?”

    By 2007, this brother realized that it wasn’t in his best interest to guarantee a loan for his fraternity’s property. But in 2007, the mortgage industry was in the midst of a meltdown, and there was no way to refinance. So the loan guarantor turned to Phi Sigma Kappa Properties to try to bail him out of his undisclosed predicament. In 2007, National brothers from PSKP secretly became officers/directors of Droopy/Housing Corp. PSKP falsely announced its acquisition of the property, and conducted business as if it was the rightful owner of the property. After the renovation, he house was surely worth significantly more than the $90,000 loan. (Zillow now values the property at approx. $150,000.

    By 2008, the global economy collapsed, and real estate values in Michigan plummeted drastically (you remember that, don’t you?). With 446 Stanwood’s valued now decreased, PSKP lost interest in acquiring it. The appropriate action would have been for the national PSKP brothers to acknowledge that PSKP never owned the property, resign their positions in Droopy/Housing Corp, and offer control of Droopy and the property to Chi Tetarton alumni. However, to acknowledge the previous dishonest statements would be awkward. It was more convenient for the PSKP guys to sell the property. Also, selling the property was now the only way to relieve the loan guarantor of his obligation. The loan guarantor wanted to sell, the national guys wanted to sell to save embarrassment. But the decision should not have been theirs. The property belonged to the brothers of Chi Tetarton.

    Not wanting to disclose the true reason, National & PSKP needed to create an excuse as to why a sale was needed. They blamed the active chapter. In March 2010, Michael Carey, the Executive Director of Phi Sigma Kappa, wrote a letter to Chi Tet alumni, stating that the Chi Tetarton chapter desired to leave 446 Stanwood and move to Greek Village, near the other fraternities and sororities. Carey’s letter also referenced deferred maintenance of property (ignoring the 2006 $90,000 renovation). His story is not credible. Chi Tetarton brothers had lived at Stanwood for 49 years, why would they suddenly leave on the heels of this renovation? (It is believed that the real reason that the chapter moved was because PSKP, falsely acting as property owner, jacked up the rent well beyond market price.)

    Carey further wrote that PSKP was forced to sell the property to “mitigate the financial damage to the organization”. The property is currently being operated at a deficit, and in the event of a sale it is unlikely that PSKP will receive funds in excess of its basis in the property.” However, in reality, PSKP had no basis or any financial interest in the property, and had no obligation to absorb operating losses. The national guys were free to walk away. They didn’t sell to mitigate financial damage. They sold to mitigate the fallout of having to acknowledge three years of false statements.

    PSKP then went dark. Chi Tetarton’s asset was sold for $109,900 in September 2010-a fire sale at the bottom of the market. No announcement was made of the sale-anywhere, not even on the Chi Tetarton alumni Facebook page. When later confronted about his the contents of his March 2010 letter, Phi Sigma Kappa Executive Director Michael Carey insisted that everything in the letter was true, refusing to address the publicly recorded documents that contradicted him.

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