Minnesota apartment owner accused of COVID-19 relief fund fraud
(ABC 6 News) – On Wednesday, ABC 6 News told you how 11 Minnesota renters settled for thousands against one of the state’s largest housing owners.
Today, we bring you more on Monarch Investment Management’s pending legal woes – as the owner of 15 apartment complexes across the state faces accusations of fraudulently applying for thousands, maybe millions, in COVID-19 aid money.
About a year ago, several attorneys involved in the Olmsted County class action suit that previously accused MIMG of hiding charges filed a new civil case in Hennepin County.
That case alleges that Monarch Investment properties violated the Minnesota False Claims Act when they applied for RentHelpMN funds toward the start of the pandemic.
Landlords who received the money were supposed to guarantee that they would not evict tenants for the time periods the state’s money covered.
According to the suit, Monarch Investment properties – like the Gates of Rochester and Crystal Bay — got the money, then evicted tenants anyway.
Larry McDonough, a senior fellow with the National Housing Law Project and policy attorney for HOME Line, said it looks to him like the plaintiffs have a strong case.
“The law on COVID rental relief is not confusing, the statement that this will bring the tenant current is not confusing, and if it’s proven that the other action took place – going to the tenant and saying ‘you owe me more money,’ then evicting them – that seems pretty concrete to me.”
Christopher Coon, with Dunlap & Seeger, isn’t quite so sure. If MIMG, a nationwide rental organization, simply mismanaged funds repeatedly, that may not be enough to win the case.
“They have to be able to show that there was a transfer of monies to companies involved – but not only that, but the companies knew they would not be honoring their promises to the government and the public when they accepted those funds, and they ended up not doing that, in this case,” Coon said.
Millions in state funds
According to the state’s Housing communications director Jill Mazullo, RentHelpMN provided $449 million in assistance to renters and landlords between April 2021 and January 2022.
About $3.4 million of that went to MIMG housing units – including $623,000 paid out to the Gates of Rochester, about $411,000 to Upper Town LLC in Saint Cloud, and $377,000 to Heritage Manor – also in Rochester, per court documents.
It is unclear how much of that money may have been obtained under false pretenses, according to court documents.
When a landlord filed for RentMNHelp money, they signed documents promising the following: “I agree that, during the period of time covered by the rental assistance payments, I will not terminate the lease or file an eviction action against the household for nonpayment.”
Another statement read, “I understand that payments obtained under false pretenses or fraud, payments for costs paid by any other source, or payments for any period of time in which the tenant is not residing in the unit must be repaid and may be subject to recapture and appropriate legal action.”
The entire point of RentHelpMN was to keep people from being homeless during the early pandemic.
McDonough said as a large management company, it’s not entirely reasonable to assume the evictions happened by mistake.
“I think that’s part of the factual argument here, is that almost contemporaneous with getting the money and making the promise to square the accounts, then the owner is taking the action that seems to be in direct conflict of that promise,” he said. “…Those two actions, if proven, would tend to probably show a reasonable per- a reasonable person that that’s a lie. That it was a lie that I was going to square these accounts, only to immediately take action in a way that was contrary to that.”
Renters got letters from the state confirming that payments had been made on their behalf, Mazullo said.
Rochester residents prompted the suit
According to court documents, MIMG got nearly $10,000 to cover one Gates of Rochester resident’s missed payments, including rent for January 2022.
The Gates then filed to evict the woman on Jan. 14, 2022, according to court documents, claiming she still owed that month’s rent.
The woman filed again for RentHelpMN funds, which covered another $2,000 in rent and fees – but the Gates of Rochester filed to evict the woman once more, citing unpaid rent for the months of January and February – both of which had been covered by the COVID-19 aid funds.
MIMG similarly filed to evict a Crystal Bay tenant, claiming the woman had not paid rent or fees for months RentHelpMN had covered.
According to the Hennepin County civil suit, an unknown amount of RentHelpMN money went toward illegal utility and fee charges – the same hidden fees that were the subject of the Olmsted County class action suit, according to court documents.
ABC 6 News reached out to MIMG, the Gates of Rochester, and assorted other Rochester properties earlier this week, and did not receive a response.
Next steps
The Hennepin County civil case is scheduled to go to trial Jan. 26, 2026.
If MIMG lost, they could be forced to repay up to three times the amount of money they gained fraudulently, Coon said.
“Hopefully it would be a signal to – not only landlords, but other members of society or entities that think they could pull something like this off,” he said. “That they not only risk not pulling it off, but have to pay for it.”
However, McDonough said most cases settle before trial.
According to Mazullo with the State of Minnesota, the attorney general’s office is investigating Monarch Investment and Management Group, and is deciding whether or not to involve itself in the lawsuit.
The Attorney General’s Office declined to comment on the ongoing case.