Tech consulting firm owner Andrew Grossman will stay for 6 months unless he pays $10.5M stemming from a Fannie Mae case.
Andrew Grossman isn’t the typical inhabitant of the Hennepin County workhouse.
In April, the 62-year-old Twin Cities businessman was found in contempt of court for failing to pay a $10.5 million deficiency judgment to government-controlled mortgage giant Fannie Mae. The judge found Grossman “less than forthcoming” and accused him of sheltering $11 million distributed from his late father’s trust in 2012.
Grossman will stay in the workhouse for six months unless he pays the debt. The two parties in the unusual case, which has stunned and mystified his longtime acquaintances, have been butting heads since Fannie Mae foreclosed on Grossman’s Vintage Lakes apartment and townhouse complex in Oklahoma City in 2007.
Grossman claims that the foreclosure was illegal and fraudulent and that it involved a deliberate lowball appraisal, according to multiple documents.
An appeal to overturn the judgment has been in front of the Oklahoma Supreme Court for more than a year. But Fannie Mae has been victorious in nearly every ruling in the case.
For Grossman, investment in real estate was a sideline to his award-winning technology business, Ambient Consulting in Golden Valley. He also ran his late father Bud’s car-lease empire for several years.
Grossman has taken a stridently anti-Fannie Mae stance. And in an unusual move for someone involved in legal difficulties, he has hired a widely known Twin Cities communications consultant, Jon Austin, to advise and speak for him.
“Much like the American economy, Andy Grossman was victimized in the last decade by the unscrupulous actions of Fannie Mae, which engaged in a pattern of reckless rule-breaking in order to cheat him out of his property,” Austin said. “He has fought and continues to fight this injustice … because of the harm it has caused and — just as importantly — because he believes that Fannie Mae and those who enabled it must be held accountable for their actions.”
Grossman can leave the workhouse during the day to run his business. But Fannie Mae’s aggressive attempts to enforce the judgment have resulted in dire financial consequences for him, his lawyer wrote in a brief to the Oklahoma Supreme Court.
“He now sits on financial death row,” the document said. “As a matter of public policy, Fannie Mae’s record for illegal acts is formidable and has placed a plethora of individuals on financial death row.”
From luxury to lowdown
Fannie Mae (the Federal National Mortgage Association) was placed into conservatorship in 2008 to stabilize its troubled financial situation because of its significant impact on the mortgage market. Many in Congress have said that the agency should be abolished, but lawmakers also face tough choices deciding how to attract enough private capital to ensure broad access to home loans.
When Grossman bought Vintage Lakes, located in an Oklahoma City suburb called The Village, it was described as a luxury property. The 436-unit complex had a swimming pool and tennis courts.
A year before Fannie Mae received judgment against Grossman, The Village City Council criticized him for lack of fire protection and deterioration of the property. In 2008, The Village’s city manager wrote in a newsletter that Vintage Lakes was an eyesore and the site of 30 percent of the crime in the city, but Grossman was no longer the owner at that time. The property has since been redeveloped.
Fannie Mae spokeswoman Callie Dosberg said last week that the agency tried to work with Grossman to address safety issues that followed years of neglect, but he was unwilling to make changes to make the properties livable.
But Austin said Grossman oversaw two significant rehabs of the property during his last 18 months of ownership.
“Fannie Mae continues to play ‘three-card monte’ with the truth, this time in an effort to obscure its misconduct from the last decade that unfairly and improperly deprived Mr. Grossman of his property,” he said. “This sort of confidence game shouldn’t have worked in 2007, and it isn’t working in 2014.”
In Grossman’s Supreme Court appeal, he said appraisers purposely undervalued the property and didn’t even get out of their cars to inspect it.