A lawyer and a CPA in Greensboro are raising questions about the accounting and recordkeeping at U.S. Rep. Robert Pittenger’s former real estate firm, as part of an effort to collect more information for the company’s investors.
Pittenger, a Charlotte Republican, founded Pittenger Land Investments in 1985, but sold the company to his wife, Suzanne, after he was elected to Congress in 2012. Robert Pittenger last month confirmed the FBI is investigating the company, but said he is confident neither he nor the company have done anything wrong.
PLI identifies raw tracts of land in potential growth areas, and then gathers investors to buy the properties, which are held by limited liability companies. The goal over time is to make a return by selling the properties to developers. But some investors have said they have been unhappy about the slow pace of land sales and a lack of transparency about PLI’s operations.
Bradley Jacobs and Doug Covington, who represent trusts that have invested in 36 Pittenger properties, sent a letter Tuesday to PLI investors updating their efforts to gather information on eight of the parcels. PLI has provided a “substantial amount of information,” but has not been “fully responsive,” they wrote in a letter obtained by the Observer.
Their initial review “raises questions concerning gaps and a possible lack of proper accounting in ... some of the LLC’s books and records,” the letter states. “We will be requesting additional information concerning those gaps.”
Jacobs and Covington are trustees for family trusts set up by Mike Haley, a business executive who was once a major McDonald’s franchisee, based in Greensboro. Covington is Haley’s longtime financial adviser and Jacobs is an attorney with the Greensboro law firm Tuggle Duggins.
Suzanne Pittenger said: “PLI has responded, or is in the process of responding, to member requests for information. All relevant information will be provided to any investor requesting it, and PLI’s approach is to be as open and transparent as possible with regard to any questions that any members have.”
The letter says that investors who have communicated with the trustees have expressed concerns about “recent events surrounding PLI,” and that other groups of investors are conducting their own due diligence. A Nashville investor, for example, has sent a letter to investors in a property in Tennessee, seeking to collect email addresses from investors so they can communicate with each other.
In their letter, the trustees said they sought information from PLI, with assistance from their counsel, Mike Wenig, another Tuggle Duggins lawyer. Wenig said Tuesday that the letter speaks for itself.
The trustees said they are working to set up an investor meeting by the end of the month, likely a conference call. Unless the quality of the information received improves, the trustees are concerned that “PLI may not be the proper choice to serve as the administrative manager for these LLCs,” the letter states.
As administrator of the LLCs, PLI collects fees for property taxes, insurance and other expenses, and handles other administrative duties. A majority of the investors in an LLC can vote out the manager for cause, according to an operating agreement for one of the LLCs.
The trustees also said their view is that “full and transparent accounting for the fees and expenses” paid by investors is critical. An investor oversight committee may be needed to examine PLI’s plan to sell properties through an outside brokerage firm, they added.
Suzanne Pittenger has said the company’s interests are aligned with those of investors because it holds significant stakes in the LLCs. In an Aug. 28 memo to investors, she said the company has buyers interested in seven of 52 properties and is evaluating the offers.