13 Undercover

Strange Harris County land deals

Thursday, March 13, 2008

A former Houston City Council member talks about the money he made in what he now admits are strange Harris County real estate deals.

And we have new revelations tonight about an FBI corruption investigation. We learned a powerful Houston state senator has been questioned about his links to an indicted developer. (READ MORE ABOUT THAT HERE)

It's the latest development in an FBI investigation that's focusing in part on who got the winning hand in county real estate deals worth tens of millions of your dollars.

Ever been in a game of poker? And get the winning hand over and over?

David Blumhardt certainly has the luck of the draw. He's does nine real estate deals with your Harris County Commissioners.

The county building on Old Spanish Trail is just one of them.

Who else had a winning hand on Old Spanish Trail? Former Houston City Councilman Louis Macey.

"I don't buy to flip or sell and I have some of the first properties I ever bought," Macey said.

Months earlier the county had turned down Macey's offer to lease the property, but now the new county building director wanted to buy it for taxpayers. His name is Michael Surface.

"Maybe it is strange, what do you say when the county says it wants to buy your property?" asked Macey. "Especially at the price they wanted to pay me. Originally he said we know what you paid for it and we'd allow you to make a $200,000 profit. It's a wonderful profit."

Tax records show Louis Macey took ownership of the property on 11/17/1997. Within three weeks he already had a contract to sell it. Not to the county, but to a company called DLC Properties Inc. That's David Blumhardt's company.

I asked him if it was his understanding that Blumhardt was working for the county.

"I thought he was, Surface told me the county wanted to buy it," Macey replied.

And here's where the Old Spanish Trail deal gets really curious. In January 1998. Harris County Purchasing publicly asks for the first time for proposals to lease/ purchase at least 45,000 square feet of office space.

There's just one bidder, David Blumhardt's company. But we have a draft of a county lease agreement for the very same property dated in September. Months before anyone else even had a chance to bid. That draft lease was with another company called RFS Properties, also owned by David Blumhardt.

The deal is already done I said to Macey.

"Sounds that way," he said.

Sounds funny I responded.

"It doesn't look good," he responded.

Even the county attorney's office at the time noticed the proposed lease agreement on Old Spanish Trail "appeared to be identical" to another county deal in Baytown.

Blumhardt won that one too.

I asked Macey if he thought it was strange now.

"If you look back it is," he replied.

Blumhardt's company also had the winning hand of a lease purchase of another county building on West Office. It was previously being leased to Harris County by a corporation run by architect Leroy Hermes. He sold it to Blumhardt's company. As we've reported Hermes dealings with county officials are part of an ongoing FBI investigation.

All three deals were done while Michael Surface was a county official.

Months after he left the county, Surface bought land that became the $35 million dollar real estate deal on Murworth. You know who's the landlord of the property the county is leasing to buy? David Blumhardt.

Then there's El Franco Lee's maintenance facility on El Rio. Tax records show it was bought by El Rio Development LLC in October 2000. Manager Michael Surface. It was sold to HC Maintenance LLC three months later. You guessed it, David Blumhardt.

We told you about the old HEB about 5815 Antoine. Tax records show it was bought by Town and Country Ventures two months before the county advertised it needed a building. By now you now the rest. Town and Country Ventures = Michael Surface. Who bought the property from Surface and then did the deal with the county? A corporation called HC 5815...yep& David Blumhardt.

"That all those showed up in the ownership of the same people, yeah that's strange," Macey said.

Friday night, we show you connections to a county commissioner. Boy it's a small world.

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