Pangea Properties Settles Chicago Housing Voucher Lawsuit

More than seven years of legal proceedings seeking damages for targeted, systemic overcharging for Section 8 tenants ended last week.

Pangea Properties was accused of systematically overcharging the Chicago Housing Authority for housing choice voucher tenants as alleged in a 2018 whistleblower lawsuit filed by a former employee of Pangea, Antoni Muhawi. The case was closed with a joint stipulation of dismissal, the Promote reported. Court records filed Aug. 18 show that unless the charges are reinstated in 30 days, the allegations are dismissed with prejudice. Any specific damages awarded to the federal government or Muhawi were not outlined in the court filings. Previously, Pangea denied committing fraud or systemic overcharging while admitting that there were some isolated cases of overcharging.

Whistleblower complaints against Pangea’s practices began a decade ago, when an investigator with CHA’s Office of the Inspector General received a complaint from a voucher tenant, who was told when touring an apartment that the rent was $820 per month, according to internal emails filed as evidence in the lawsuit. But when she said she had a Section 8 voucher, Pangea told her the rent would be $970. Pangea had 1,130 units with Section 8 tenants at the time of the investigation.

Muhawi’s complaint alleged that Pangea had an “established internal policy” instructing property managers and leasing agents to quote new Section 8 tenants a monthly rent price $150 higher than the target rent for the unit, an amount that matched what the Section 8 renter told the CHA in her complaint.

Pangea was one of Chicago’s largest landlords until it sold its portfolio of more than 400 buildings — amounting to 7,500 units — to New York-based Emerald Empire in 2022 for $600 million. It was one of the largest multifamily real estate deals in Chicago’s history. The 2022 sale came after another lawsuit was filed against Pangea Properties. More than a dozen tenants accused the landlord of ignoring repeated requests for repairs, threatening their safety by deferring property maintenance.

The 153-page class-action complaint said Pangea racked up 5,000 reports of city violations since 2009, including no heat in the winter and rodent and insect infestations.

Earlier this month The Real Deal reported that Fannie Mae and Emerald entered a forbearance agreement on at least $125 million worth of loans associated with the purchase of Pangea’s holdings.

— Eric Weilbacher