Derrick Mitchell, the chairman of the Texas Southern University Board of Regents, has been hit with a lawsuit alleging collusion (secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others) and fraud (wrongful or criminal deception intended to result in financial or personal gain) in a real estate deal.
Developer Baljit Gambhir alleges that Mitchell sold him The Palm Apartments complex near TSU, which included state-owned furniture as part of the purchase, and provided an agreement that the university would guarantee student tenants.
Gambhir claims Mitchell knew that the agreement was in jeopardy of being terminated by TSU because it had not been properly vetted, yet failed to disclose.
By press time, neither TSU nor Mitchell had provided a statement.
Gambhir alleges that in 2010, Mitchell conspired with former TSU Chief Operating Officer and Vice-President Gloria Walker, who worked with Mitchell, when both were under contract with Houston Community College.
The two entered into a “memorandum of agreement” regarding the complex owned by Mitchell, without following TSU’s contract procedures.
The agreement, according to the lawsuit, stated that TSU would collect rent from the scholarship or financial aid packages of students who signed a lease at The Palm Apartments.
“This agreement effectively designated The Palm Apartments as student housing for TSU. (It) virtually guaranteed 100% occupancy of the apartment complex as well as 100% collection rate on rent. It was a sweet deal for Mitchell,” the lawsuit states.
When Walker left TSU in 2011, Gambhir claims Mitchell used his position as an attorney for TSU to keep the agreement in place. In 2012, Gambhir alleges Mitchell learned TSU would be building a new dorm.
“Mitchell knew that the construction of this dormitory and TSU’s need to fill the dormitory with TSU students further threatened continued use of The Palm Apartments as student housing. Mitchell figured that the sweet deal of having a steady stream of prepaid tenants supplied by and managed by TSU for The Palm Apartments was soon coming to an end. He decided to sell The Palm Apartments,” the lawsuit continued.
Enter Gambhir, who says he paid $200,000 over fair market value because of the existence of the agreement. Gambhir brought the property, along with Mitchell’s company, 5020 Paige Properties, LLC in 2014, and within months discovered the agreement had been terminated
“Gambhir was shocked,” the lawsuit states.
In 2015, Mitchell was appointed to the Board of Regents for TSU and soon thereafter was elected board chair. Gambhir contacted Mitchell and asked him if he could exert any influence at TSU that would result in a continuation of the agreement.
The lawsuit continues: “Mitchell told Gambhir that he could not help, but would be interested in buying the property back at a price much lower than what Gambhir paid to him. Mitchell attempted to capitalize his fraud upon Gambhir by re-purchasing the property for an amount far less than Gambhir had paid.”
Gambhir refused the offer and in 2016, says he was told that as board chair, Mitchell had “directed that all housing contracts for students between TSU and outside entities be terminated at the end of this academic/fiscal year.”
“Gambhir had lost a material part of the bargain he paid for in purchasing The Palm Apartments, and it was Mitchell who had given the final order to terminate the agreement,” the lawsuit stated.
Gambhir added that Mitchell requested the return of TSU furniture that had been illegally moved from TSU premises into The Palm Apartments by Mitchell and Walker, and that the furniture and all other personal property on the premises were part of the sale.
Gambhir refused to return the furniture and has since been contacted several times regarding an internal investigation at TSU regarding the furniture.
Visit defendernetwork.com to see the lawsuit.