Universal Properties Realty Government Services LLC, the company that works with public nuisance programs in several municipalities, is facing a collection lawsuit, the cancellation of most of its municipal contracts to run public nuisances, and an eviction case to vacate its offices in Hato Rey after the Center for Investigative Journalism (CPI, in Spanish) published an investigation that revealed irregularities during the expropriation processes.

Meanwhile, the Francis & Gueits Law Offices firm had a contract until this week with the public nuisance program in Caguas with which it executed a scheme like that of Universal Properties Realty, as the CPI revealed. The legal firm was actively representing the Municipality of Caguas to expropriate properties in that town, but Caguas Mayor William Miranda Torres canceled the agreement on September 12, effective October 12, 2023.

Although the letter does not explain the reasons for the cancellation, in April the Municipality of Caguas commissioned an investigation into the services provided by the legal firm whose partners are Christian Francis Martínez and José J. Gueits Ortiz. As part of that audit, the city canceled the contract of Universal Properties Realty in May, which also provided services to the municipal public nuisance program. The Caguas mayor also referred Universal Properties Realty to the Department of Justice (DJ) for possible irregularities in its performance and subsequently sued the company for money collection.

“The cancellation of the contract [with the Francis & Gueits law firm] comes from the summation of the things that have been investigated. The review of the contracts of the third-party buyers, the claims, and responses regarding their invoicing, but also largely arises from the concern that has come up regarding Mr. Francis’ controversies with Court staff, such as judges and bailiffs. On this matter, the Municipality considered that it was not a situation that the Municipality was willing to support,” said the Municipality of Caguas’ investigating officer, Alex Rivera Longchamps.

In the letter canceling the contract, the Municipality of Caguas asked Francis & Gueits to present motions to the court within the next five days to request the relief of the Municipality’s legal representation. They were also asked to deposit the money they received from third parties to acquire expropriated properties into the municipal coffers in five calendar days. In addition, the firm must deliver all the documents related to the expropriation cases that were assigned to it to the city council.

The law firm oversees 263 cases, according to data provided by the municipal administration. Rivera Longchamps said he was not assigned new cases but acknowledged that Francis continued “to be the attorney on record in the assigned cases,” and was actively continuing to litigate them. Francis did not respond to the CPI’s request for comment.

Rivera Longchamps attributed the time taken by the Francis & Gueits audit to the allegedly voluminous information that was required from the law firm and to the City Council’s decision to include a report on independent property appraisals that the firm has submitted to the Court.

Eliezer Cruz Rodríguez of ECR Appraisal Group, LLC already submitted the independent appraisal report to the Municipality, but at the time of the interview with the CPI, on August 25, the municipal investigator had not finished comparing the valuations of the properties that the independent appraiser provided with those that Francis & Gueits presented in court. The Municipality did not require a review of all appraisals that the firm used.

“A sample of three appraisals was done by another appraiser not related to the Francis & Gueits firm. These appraisals arrived a week ago. We’re comparing what the appraiser says about the value of the property on the same date versus what was reflected in the valuation report of the appraiser who hired Mr. Francis,” the investigating officer explained at that time.

Rivera Longchamps said a preliminary evaluation of the sample of appraisals shows that the methodology used by the independent appraiser is different from those submitted by Francis & Gueits. The main difference is that, in virtually all cases handled by the firm, the appraiser subtracts the cost of demolishing the property from the fair compensation, while the independent appraiser does not include the cost of demolition unless that action is necessary. Fair compensation is the compensation that the Municipal Government must pay to the person who loses their property.

A CPI investigation revealed that 84% of the 121 expropriation cases that Francis & Gueits and Universal Properties Realty filed in court between 2020 and 2023 state that the properties must be demolished and the costs of that supposed demolition and debris cleaning are subtracted from the appraisal, even if the demolition never happens. This effectively lowers the valuation of the properties and, therefore, reduces the price that the person or company that will buy the property will pay.

The CPI also revealed that, after receiving several complaints, the Professional Real Estate Appraisers Examining Board is investigating the methodology used by Francis & Gueits and Universal Properties Realty. Demolition can be taken into consideration in some appraisals when the structure’s rehabilitation is unfeasible, as several experts have explained to the CPI.

The Municipality of Caguas did not preventively stop the litigation of the expropriation cases but has continued its hearings at the Caguas Judicial Center with Francis as its legal representative. Without yet knowing whether the appraisals were accurate enough to establish fair compensation, the Municipality went ahead with the judicial processes. These expropriations are not carried out for a municipal purpose but rather the properties are sold to other people or corporations.

The mayor of Caguas told the CPI during a previous interview that the contract with the firm, in May 2021, came after he had an informal approach from Francis, who then made an official proposal to the city council.

“The [guy] comes up to me once, I’m exercising at the gym with my son, and he tells me: ‘we have a company that can do this’ and I referred him to my Permits [Office] director [Jaime Plaza]. And that was how the matter was addressed,” the mayor said.

Miranda Torres said he heard about Universal Properties Realty’s services in meetings of the mayors of the island’s eastern region and from Jerry Cruz Figueroa, who works in the Senate’s Administration Office, during a visit he paid to Senate President José Luis Dalmau in the Capitol. On May 17, 2021, he awarded them a contract to handle public nuisances.

Both the law firm and Universal Properties Realty were compensated when the expropriated property was sold. By taking these cases to Court for the expropriation, they already have a potential buyer for that property.

Universal Properties Realty, like Francis & Gueits, were referred to Justice in March by pro-independence lawmakers María de Lourdes Santiago and Denis Márquez. Subsequently, the mayor of Caguas and that of San Germán, Virgilio Olivera Olivera, referred their contractor Universal Properties Realty to the DJ.

Although Justice Secretary Domingo Emmanuelli declined to comment on the investigation, the agency did confirm that an investigation is underway.  Prosecutor Fabiola Acaron Porrata-Doria is overseeing the investigation following a special designation by the Secretary. The Special Investigations Bureau (NIE, in Spanish), under the Department of Public Security (DSP, in Spanish), is also participating in the investigation. Meanwhile, the Comptroller’s Office is working in coordination with Justice since both entities received the referral from the legislators at the same time, said Comptroller Yesmín M. Valdivieso.

The CPI learned that documentation has been required from several mayors. In the case of Caguas, Rivera Longchamps said he was interviewed on June 5 by prosecutor Acaron Porrata-Doria. Without going into the details of what was discussed, the lawyer said the conversation lasted about two and a half hours.

“I recently learned [at the end of August] that the Prosecutor also interviewed engineer Jaime Plaza [director of the Municipality of Caguas Permits Office],” Rivera Longchamps added.

Meanwhile, the mayor of San Germán, who also canceled the Universal Properties Realty contract, said he has not been interviewed, but the prosecutor appointed by Justice and agents in charge of the investigation had a first meeting with the officials of the San Germán’s Office of Internal Audit. Justice has also requested information from the Municipality of Juncos, Mayor Alfredo Alejandro Carrión said.

So far, the DJ’s investigation focuses on people or entities not in public service or that do not occupy government positions under the jurisdiction of the Office of the Panel on the Independent Special Prosecutor (OPFEI, in Spanish), according to what Emanuelli told the panel of former judges.

Justice informed the Panel that it will not carry out a preliminary investigation but rather that the Prosecutor’s Office will investigate thoroughly. Last July, OPFEI reported that it had filed the notification of the complaint submitted by the Puerto Rican Independence Party legislators, while Justice would be the agency in charge of the investigation.

Caguas judge notifies Justice of a discrepancy in appraisals

when Judge Elías Rivera Fernández, of the Caguas Judicial Center, said in court that he would notify the Justice of the minutes of that hearing in which he expressed that the appraisal of a residence to be expropriated in an exclusive Caguas neighborhood seemed below the price of the real estate market. The appraisal was presented to the judge so that he could determine the fair compensation that the property owner should receive. Rivera Fernández, on the other hand, dismissed the expropriation claim.

Francis & Gueits had filed two motions in Superior Court to request Judge Rivera Fernández’s recusal or inhibition from all expropriation cases handled by the firm and that are assigned to his courtroom. Tensions between Francis and the judge had reached their peak. Several of the expropriation cases of the Municipality of Caguas have been litigated in Judge Rivera Fernández’s courtroom, who has questioned some of the valuations presented to him to establish fair compensation to the expropriated property’s owner.

The firm alleges in those motions that the judge’s conduct tends to show prejudice and random actions in expropriation processes that obstruct due legal process, including the presentation of evidence.

The lawyer argues that the judge’s actions show a “recurring pattern” in which he issues “judgments evaluating the evidence without listening to it or holding scheduled trials.” Which, in his opinion, “constitutes an abuse of judicial discretion that, added to his use of the power of his judicial position to try to intimidate the undersigned by making a referral of a criminal nature to the Department of Justice, constitutes unethical conduct,” says the motion submitted in July.

The judicial file shows that the judge clarified to Francis that he did not make a referral of a criminal nature but rather “notified” Justice what was stated in the hearing in which the judge expressed his disagreement with the appraisals and with the insistence of the Municipality of Caguas, through Francis’ representation, to expropriate a property providing low compensation when one of the interested parties — the bearer of the mortgage note — would submit the property in public auction. The CPI asked Justice if the agency received that notification and the date of receipt, but as of press time, the agency had not responded.

With the dismissal of that case, Rivera Fernández prevented the expropriation of a two-story, four-bedroom, three-and-a-half-bathroom house with a swimming pool, in a golf course area of the Caguas Real Urbanization. The house has a mortgage note of almost $1.5 million, but the fair compensation proposed by the Municipality of Caguas is $190,642.07, and that was the amount recorded in court by Encinales Realty, which provides services to the Francis & Gueits law firm.

The judge found the declaration of public nuisance of the property — in 2013 — strange because the structure does not represent a safety or health risk, it does not run the risk of being occupied because it has closed doors and windows, and it is in a controlled-access complex.

“This property is certainly not a public nuisance. It has deteriorated due to a lack of maintenance. What it needs, as we say on the street, is a little love, pressure washing it, painting it, putting in the furniture and that’s it,” said the judge when stating that the property was 90% livable.

In the dismissal ruling, Rivera Fernández points out that the Municipality of Caguas “intends to expropriate, through the declaration of public nuisance, a real estate property that is located in one of the most expensive urbanizations within the municipal territorial extension, at only a fraction of the value, according to the documents properly provided.”

“From the Registry Certification that accompanied the petition [to expropriate], it appears that Mr. Aaron Márquez Sánchez acquired the Property for the price of $726,400 in 2005, he mortgaged it up to $783,874 in 2006, however, in 2021, the value had dropped by 67% [appraised $260,000, or, 33%] and the fair compensation recorded in 2022 was 24% [$190,642.07]. We find it suspicious, especially when the appraisal photos don’t show a structure that is in ruins or that constitutes an imminent danger or threat to life or safety,” the ruling adds.

Although mortgage holders Luna Residential II, LLC. and First Bank, committed to preserving and rehabilitating the property to auction it, Francis warned that the Municipality of Caguas could request a review of the rejection to insist on getting this property transferred to someone else.

Universal Properties Realty in financial trouble

At least four CPI sources said after allegations of irregularities that have led to the cancellation of Universal Properties Realty’s contracts with municipalities, the company has serious financial problems. Of 22 contracts that Universal Properties Realty had, it only has current contracts with the municipalities of Las Piedras, Morovis and Aibonito. The CPI asked Universal management for a reaction, but there has been no response to our request.

On August 7, 2023, the Municipality of Caguas sued Universal Properties Realty for breach of contract and collection of $1.5 million that, despite collection efforts, the company has not remitted to the city council since April, when the contract was canceled. The lawsuit accuses the company of having improperly withheld $1,569,173.19. That amount includes $128,603.19 in fines and taxes that the company collected that it did not remit to the Municipality.

On August 16, F. Castillo Family Properties, Inc. also sued Universal Properties and José A. Deyá, who was the company’s vice president and secretary, for collection of money, eviction, and damages. The real estate company is seeking $49,763.04 for rent and payment of services and interest and $12,440.76 in legal fees. Deyá is no longer part of the company’s management. The company’s two other partners are Andrés Reyes Vélez and Abraham Freyre Medina.

Also, between July and August, Attorneys Antonio Álvarez Torres and José Manuel Auffant Colom, hired by Universal Properties, resigned due to communication problems with the company and thousands of dollars in accrued debt for fees, according to legal documents. They ask that their names be removed as attorneys of record in the forced expropriation cases that are active and state that Universal owes Álvarez Torres $67,000 and $28,000 to Auffant Colom.

“Irreconcilable differences have arisen regarding the handling of the cases between the undersigned attorney and Universal after the latter did not cooperate with the legal representation in terms of providing the documents, information, and witnesses that must be presented in the cases,” the motions read.

Auffant Colom told the CPI that the lack of communication with the company’s directors began when the CPI’s investigations into possible irregularities in the administration of private-public nuisances’ management contracts in more than 20 municipalities came to light.

He said although he told them about the documents he required in Court and the dates to deliver them, he did not get a response, or if they answered, the company did not comply with delivering them. It also did not provide for compliance with the terms of the summons and as the cases progressed, the appraisers were not available.

“It all started when the stories started coming out. When the media issue exploded, I began to lose communication, they didn’t send me the documents. There was an impasse in communications with Universal,” Auffant Colom said. “Basically, I couldn’t continue handling the cases as I was supposed to, and I had to resign because I couldn’t look bad before the Municipality or the Court. I would call them, and they didn’t answer; I asked for the documents, and they didn’t provide them to me. There came a point where I told myself: ‘This is as far as I’ll go.’ That wasn’t in my power, but since my name was there it would seem that I was the one who was making the Court look bad,” he added.

These attorneys represented municipalities in forceful expropriation cases, but their fees were paid by Universal Properties Realty, who served as a sort of agent for the municipalities that hired them.

Álvarez Torres did not want to comment on this story.