It’s been three years since an empire of shoddy rowhomes came crashing down around Philadelphia slumlord Robert N. Coyle Sr. — a man accused of cheating tenants, blighting blocks, defrauding banks and leaving whole neighborhoods to deal with the fallout of decades of the property neglect that was his trademark.
But even as he faces a federal indictment for four counts of loan fraud, Coyle has apparently been trying to continue making money on his stock of hundreds of properties as they languish in a hazy area between default and foreclosure. Meanwhile, another landlord has been trying to buy up Coyle’s fallen empire. And central to both of their efforts — at least, until recently — was Coyle’s son, Robert Coyle Jr., who, as a recent lawsuit (by him) reveals, was helping broker such deals in exchange for the right to manage his father’s old properties.
The scramble to carve up and profit from what spoils remain, as scores of tenants hang in the balance, is the latest twist in a years-long standoff of headache-inducing complexity and tragic inertia.
To understand it, you have to back up to 2009, when Coyle and the hundreds of properties he owned in Kensington and Port Richmond under various company names first came to public light via an expose by the Daily News. The paper reported that Coyle had defaulted on more than $15 million in loans taken out on those properties, and that he had kept his business running in part by making bogus rent-to-own agreements with his tenants — who, instead of finding themselves owners of their houses, faced the prospect of foreclosure by the banks who’d lent to Coyle.
These tenants, the houses and their neighbors have for three years now been trapped in a state of limbo that’s become, in an odd way, a microcosm of the collapse of the U.S. housing market itself. The $15 million Coyle had borrowed using his properties as collateral was a pre-bubble figure — that is, wildly distorted and far more than the houses were worth. When Coyle stopped making payments on that debt, shortly after the economic collapse in 2008, the banks who lent him that outlandish sum suddenly found themselves with a conundrum: If they simply foreclosed on the properties and took them to sheriff’s sale, they would realize enormous losses. But sitting on the properties could cost even more if the housing market in those neighborhoods didn’t radically improve (it hasn’t).
Neighbors and community groups, meanwhile, saw the prospect of a mass foreclosure of hundreds of properties in some of the city’s most vulnerable areas as a potential disaster that would open the floodgates of vacancy, blight and slumlord rule.
And then there are the occupants of Coyle’s old houses. Some — who had entered rent-to-own agreements with Coyle (or, as several told City Paper some years ago, with his son) and who’ve invested their own money into the houses — have their own legitimate claims to ownership.
For the last three years, this mess has remained more or less stagnant. Early on, groups like Community Legal Services, the office of Councilwoman Maria Quiñones-Sánchez and Volunteers for the Indigent Program tried to negotiate with the various banks holding Coyle’s debt, but with limited success. A few tenants have been able to purchase their homes, and others have been allowed to stay on better terms than they might have been without legal help.
Coyle himself essentially vanished from public view. But Coyle Jr., who had managed many of his father’s properties, is still around and kept himself busy trying to broker a deal between his father and another landlord, while positioning himself to take over some of his father’s empire.
That landlord is Manilal Mathai. Coyle Jr. sued him in April in federal court for allegedly violating a “confidential” agreement that would have allowed not only Mathai but also both Coyles to continue to profit from Coyle Sr.’s withering inventory.
According to the suit, first reported by the blog Philadelinquency, Mathai approached Coyle Jr. in 2010, shortly after he’d purchased his first batch of 65 Coyle properties from another bank, and asked if Coyle Jr. could help him purchase more of his father’s inventory. (Coyle Sr. was apparently incommunicado by this point.)
Coyle Jr., who spoke with City Paper last week, has repeatedly claimed he does not work with or for his father, and hasn’t for 14 years. “It’s a strange relationship, which I would rather not comment on right now. … People have associated his problems with me, which is unfortunate,” he said. He nonetheless acknowledged that he agreed to approach his father on Mathai’s behalf and helped draft an agreement whereby Mathai would purchase more than 60 more properties mortgaged to Nova Bank. For this effort, Coyle Jr. would get a cut of the sale and contracts to manage the properties for Mathai. (Coyle Jr. owns two management companies, Apex Management and Brownstone Property Group.)
“I asked my father, ‘Are you in a position to sell them, and would you sell them?’” Coyle Jr. says. “Again, it’s a strange relationship, but business is business.”
Coyle claims that an arrangement was made in which he provided Mathai with information that would give him an “edge” — but that Mathai instead went behind both Coyles’ backs to strike a deal with Nova Bank. Mathai, city records confirm, purchased not the properties themselves but the debt attached to them, which would allow him to foreclose on the properties if he should so choose.
Mathai did not respond to a request for comment; nor did Sherman Toppin, a real-estate law firm that had been acting as receiver for some of the properties and is representing Mathai in the suit.
His dispute with Coyle Jr. aside, Mathai’s second move toward sweeping up Coyle’s properties has neighbors worried that he’s on his way to becoming Coyle reincarnate.
Indeed, Mathai’s first purchase of 65 Coyle properties from another bank didn’t exactly endear him to suspicious neighbors like Jamie Moffett, whose studio abutted a blighted, drug-infested Coyle property acquired by Mathai. (Moffett says Coyle and Mathai inspired him to start Kensington Renewal, a nonprofit project to buy blighted homes and resell them to responsible homeowners.) Moffett called Mathai repeatedly, and says he was repeatedly assured that Mathai would fix the place up. Instead, it, too, sat vacant and blighted for nearly a year before Mathai made repairs and got a tenant.
Maura Kennedy of the city’s Department of Licenses & Inspections says Mathai was among the landlords targeted by L&I over the last year. The city took him to court for code violations on 15 properties, resulting in fines of more than $16,000. Kennedy says Mathai has since complied with most of the city’s requests that he better maintain the Coyle properties he acquired.
News of the Coyle Jr. lawsuit came as a surprise to many who’ve been following the Coyle case: It revealed not only that Mathai now controls 60 more Coyle properties, but also that Coyle Sr. and his son, an active player in the local real-estate market, have been doing business together and had a hand (or tried to) in Mathai’s dealings. The last thing anyone in the area wants to see is another Coyle.
“Obviously, we’re worried,” says Sandy Salzman, executive director of the New Kensington Community Development Corp., which has been a loud voice in the Coyle affair. “He already owns a lot of the Coyle properties in the area, and it’s great if he’s going to do something with them. But is it a shell game? Are they just passing properties back and forth? That’s my concern.”