Allegations of mismanagement, poor living conditions at Indy apartments prompt lawsuit from Indiana’s attorney general

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INDIANAPOLIS – The Indiana Attorney General’s Office filed a lawsuit involving a pair of Indianapolis apartment complexes, alleging that mismanagement led to poor living conditions for residents.

Aloft Mgt, LLC and Fox Lake AHF, Inc. are accused of “allowing the Fox Club and Lakeside Point apartment complexes in Indianapolis to fall into egregious disrepair, endangering the health and welfare of thousands of residents,” according to Attorney General Todd Rokita.

Aloft is the property manager of Lakeside Pointe at Nora apartments on the north side of Indianapolis. Fox Lake is a nonprofit corporation that owns both Lakeside Pointe and Fox Club apartments on the south side.

Rokita is asking for a receiver to be appointed to take control of the property management companies’ finances. He’s also requesting the removal of the board of directors.

“It’s the court’s authority and decision to make whether that’s appropriate here,” said Scott Barnhart, chief counsel and director of the Consumer Protection Division of the Indiana Attorney General’s Office. “We’re asking for one, but from a standpoint of making sure that consumers are protected.”

The Attorney General’s office has asked the court for an emergency hearing within the next several weeks to address the issues presented and make sure the process is followed appropriately.

The move to request receivership comes after a yearlong investigation from Rokita’s office uncovered “neglect and mismanagement” that led to fires, a lack of heat and air conditioning, water damage, mold, broken windows, and other problems that resulted in poor living conditions.

“This has been a months-long investigation into these complexes’ very important, very real issues to the residents that are living there, and so from that standpoint, this lawsuit is just a culmination of a lot of work,” said Barnhart.

The lawsuit also comes a month after the most recent fire at the complex, where the main office building and clubhouse were destroyed on the early morning of June 12, 2021.

“In this case, it is in part because of my office’s unique role governing nonprofit corporations that we are able to take this action today,” Rokita said in a statement. “The defendants’ pattern of unlawful conduct, including a failure to maintain even basic habitability standards, is not only unfair but runs counter to Fox Lake’s stated purpose of providing low-income housing in the Indianapolis community.”

Indianapolis Mayor Joe Hogsett issued a statement following the filing of the lawsuit Tuesday.

“We welcome today’s news of the Attorney General’s office seeking a receivership over the Fox Club and Lakeside Pointe apartment complexes. This move will help protect residents while offering hope for improved management of the property. Making sure tenants remain stably housed will continue to be our top priority, and we’re thankful to community stakeholders for their longtime advocacy on behalf of their neighbors.”

Mayor Joe Hogsett

According to the Attorney General’s Office, Fox Lake has received more than 600 Notices of Violation (NOV) from the Marion County Public Health Department (MCPHD) since 2017, with at least 50 still pending in Marion County Court.

“The property at Lakeside Pointe has been repeatedly inspected and continues to fail to meet basic habitability standards because of a failure to repair or remedy violations,” the lawsuit reads.

In 2019, the county health department completed a “sweep” of Lakeside Pointe, where the entire property was inspected, documents say. According to the lawsuit, more than 200 violations were found at that time.

Data provided to CBS4 by the MCPHD shows between Dec. 1, 2019, and mid-July, Lakeside Pointe at Nora has been issued 169 notices of violation, where Fox Club has received 38. Each Notice of Violation has the potential to have one or more violations as part of the order.

Just last month, Fox Lake placed residents at risk of having their water shut off by failing to make a payment toward a $1 million bill to Citizens Energy Group.

The combined outstanding utility charges for water and sewer at Lakeside Pointe and Fox Club exceeded $1.2 million owed to Citizens Energy Group as of June 22 and, “the utility accounts continue to be in significant arrears,” documents show.

CBS4 reached out to Citizens Energy Group, and the company issued a statement Tuesday on the status of the payment arrangement and possible water shut off at Lakeside Point:

In late June, Citizens reached a payment arrangement with affiliated properties Lakeside Pointe at Nora, 9000 N. College St., and Fox Club Apartments, 4401 S. Keystone. To date, the payment arrangement is current and the properties will not be subject to disconnection on August 2.

Spokesperson, Citizens Energy Group

The lawsuit also said that Lakeside Pointe residents “report going days, weeks, and sometimes months without necessary repairs to heating systems and air conditioning units.”

From the lawsuit:

Fox Lake and Aloft have betrayed the trust of the residents at Lakeside Pointe, Fox Club, and the community by continuing to take rental payments and failing to deliver habitable living conditions. As such, the State brings this action under its authority in the Indiana Deceptive Consumer Sales Act, the Indiana Nonprofit Corporations Act, and the Indiana Home Loan Practices Act.

The lawsuit claims Fox Lake is unable to fulfill its purpose as a nonprofit providing housing for low-income residents. Fox Lake recently lost its charitable property tax exemption from Marion County, the Attorney General’s Office said.

The complex’s out-of-state owner, JPC Charities, obtained property tax exemption in 2006 by claiming it offered charitable services in the form of affordable housing, but that was revoked for the second time in a year, back in February after the failure to remedy ‘deplorable’ conditions.

Board members with the Marion County Property Tax Assessment Board of Appeals revoked the tax exemption and sent the owners a tax bill totaling more than $400,000.

“Fox Lake has continued to waste assets or misappropriate funds to purposes yet unknown, as it has collected rental payments from residents without addressing the basic purpose of providing housing,” Rokita said in the lawsuit.

The state also alleged that Aloft is engaging in real estate transactions without the license required by law. “Aloft has not applied for or maintained a state license as a real estate broker company,” documents said.

The lawsuit also claims that Aloft and Fox Lake are engaging in gross neglect of the maintenance of Lakeside Pointe “to the severe detriment of its residents.”

“There’s certain standard that should be met in Health and safety from a residents standpoint and we have very serious concerns that the standards are not being met here,” Barnhart told CBS4.

A resident, who did not want to be identified, said, “Everything here is messed up and it shouldn’t have gone this far. It shouldn’t have gone this far.”

She has only lived at the complex since March but said in that short time frame she has experienced nothing but stress and fear.

“You shouldn’t have to worry where you live, that’s it. You just shouldn’t have to and that’s all I do,” said the resident. “It’s a nonstop worry, all of the residents here not just myself.”

According to the woman, she said her neighbor’s ceiling caved in after a recent storm, displacing him from his unit.

“It’s a circle, like are we gonna wake up with no water, are we gonna wake up with no water, is our house gonna burn down tonight, is somebody going to kick our door in,” she rhetorically asked. “It’s insane. It’s way past insane and I’m ready for new owners. Everybody here is ready for new owners.”

Last month, State Senator Fady Qaddoura and State Representative Carey Hamilton sent a letter to the Indiana Attorney General’s Office, requesting it files for injunctive relief and to put the complex into receivership. CBS4 reached out to both following Tuesday’s filing.

“I applaud the Attorney General’s Office for taking legal action against the landlord of Lakeside Pointe at Nora in Senate District 30. Over the past few months, I worked very closely with community groups and the Attorney General’s Office to bring justice to more than 400 families living at the apartment complex. All Hoosiers deserve to live in dignified and adequate living conditions.”

State Senator Fady Qaddoura, (D)-Indianapolis

State Rep. Hamilton also released a statement following the move by the AG’s office.

“After many months of conversations with a range of stakeholders working hard to provide livable conditions for the residents of Lakeside Pointe in Nora, I am thrilled to see legal action against the derelict, out-of-state property owners, Aloft Mgt., LLC. I will continue to work with community groups and the Attorney General’s Office to help ensure that living conditions improve dramatically and that families can stay in their homes.”

State Rep. Carey Hamilton, (D)-Indianapolis

In a letter dated July 12, State Rep. Justin Moed also urged AG Rokita to take action on behalf of the hundreds of tenants at the Lakeside Pointe and Fox Club complexes. He issued a statement to CBS4 Tuesday morning:

“I applaud the Attorney General for his vigilance in ensuring that Hoosiers residing in the Fox Club and Lakeside Pointe apartment complexes receive justice for their current unsafe and unsanitary living conditions,” Moed said. “I look forward to seeing action and advocacy on behalf of the tenants, and accountability for Aloft Management’s negligence. It is heartening to see state leaders working together to uplift our neighbors.”

State Rep. Justin Moed (D)-Indianapolis

CBS4 News has also reached out to the parties named in the lawsuit for a statement. Neither has responded to requests as of Tuesday evening.

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