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April 18, 2024
PI Global Investments

Leaders Of Silver Star REIT Trade Barbs


The former and current CEOs of a Houston-based REIT are trading accusations in response to the filing of a lawsuit by the company’s executive committee in December.

Silver Star Properties REIT is suing its founder and former CEO, Allen Hartman, for estimated damages of $50M, accusing him of fraud, breach of fiduciary duty and illegal meddling in the attempted sale of Silver Star’s assets.

In an interview with The Real Deal, Hartman called the allegations false and accused the executive committee, led by co-CEO Gerald Haddock, of illegal activity by changing bylaws to “entrench and re-elect themselves” without shareholder approval. 

He also claimed the executive committee is avoiding holding a meeting that would liquidate the company and return capital to stockholders, something Hartman claims the business charter required to be complete by April 2023.

“They’re breaking the law in a lot of different ways,” Hartman said.

Hartman lambasted Haddock and his co-CEO, David Wheeler, calling them “evil” and a “bump on a log,” respectively. 

“Haddock is doing everything he can to destroy me, individually,” he told TRD. 

The executive committee responded to these allegations in a Tuesday filing with the Securities and Exchange Commission, saying Hartman cited “no factual bases to support any of these statements.” 

“Mr. Hartman has made numerous false, misleading and malicious statements, including regarding his long-time colleagues at Silver Star, and has acted to the material detriment of Silver Star and its shareholders,” the committee said in its slide presentation.

The filing also directed shareholders to media reports of Haddock’s contributions to the business and community.

“How does a madman or maniac or evil person or devil get this kind of recognition of success?” Haddock said in an interview with Bisnow. “All [Hartman] is doing is trying to cover for his own mismanagement, mistakes and lack of integrity. We called him out, and now he is vindictive.”

Silver Star is attempting to remove Hartman from its board. Hartman was previously expelled from Whitestone REIT, another company he founded. 

“I should have named a better board,” Hartman told TRD when asked what he learned from his last ousting. “That’s what happened then, and that’s what’s happening now.”

The lawsuit accuses Hartman of taking on unauthorized debt, making suspect payments to family members and allowing political and religious activities to distract from his work responsibilities.  

In response to allegations that he unlawfully solicited proxies to influence stockholders, Hartman said he threatened to do so but didn’t actually do it. He said he has since filed paperwork with the state of Maryland to be able to legally talk to proxies.

Haddock told Bisnow Hartman’s media campaign against his colleagues is his way of deflecting blame and is similar to how he behaved when he was removed from Whitestone REIT years ago. 

“That’s why we decided he does not belong in Silver Star,” he said. “We don’t want to be associated with him.”

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