On Oct. 25, 2011, Will Sherard, one of Milwaukee's most notorious landlords, was hit with six fines totaling $45,184 for providing tenants with substandard housing in a half-dozen north side properties.

In all, Sherard faced about 100 building code violations for a vast array of infractions — from renting properties that were deemed unsanitary to cases of bad wiring or plumbing. In one case, he was convicted of renting a house after the city posted a placard ordering the property not be occupied.

More than four years later, he still owes $39,600 on those fines.

Yet in that time, Sherard and his Morocco Investments LLC paid $636,000 in cash to buy 63 more houses and duplexes. Some of those properties are now racking up fines. And Sherard's unpaid bill for fines on all of his properties now tops $69,000.

Sherard is among a group of Milwaukee landlords who have figured out how to play the system, milking properties for maximum profit, then walking away after they stop paying taxes. That leaves the city to sell the houses at bargain-basement prices — or make taxpayers shoulder the cost of repairing them or tearing them down, a Milwaukee Journal Sentinel investigation has found.

Will Sherard

owned: 114



Fines owed: $69,850



Delinquent taxes: $20,025



Properties with monthly inspections*: 0



Additional notes: Owes about $70,000 in municipal court fines, though none of those debts are considered delinquent because he routinely makes nominal payments on each fine. City propertiesowned:Fines owed:Delinquent taxes:Properties with monthly inspections*:Owes about $70,000 in municipal court fines, though none of those debts are considered delinquent because he routinely makes nominal payments on each fine. All figures include properties held personally and those owned by associated limited liability coporations. *Refers to properties where violations have not been quickly repaired. Data as of mid-April. Sources: Milwaukee Municipal Court, City Treasurer's Office and Milwaukee Department of Neighborhood Services

If a property owner doesn't pay taxes for three years, the city typically files a tax foreclosure lawsuit and seizes the home, an action that erases the tax bill for the owner who let the property deteriorate, collecting rent all the while. The owner remains responsible for the fines.

The city's problem landlords have money. Collectively, three examined by the newspaper along with their related companies have spent more than $4.5 million in cash over the past eight years to buy homes at weekly sheriff's sales of foreclosed properties. Another is a company led by NBA star Devin Harris.

Sherard, when jailed under a federal judge's order related to lead paint abatement, once came up with $700,000 in a single week.

"They're like vampires," said Deputy City Attorney Adam Stephens, who oversees the section that enforces building code violations. "They suck what little equity is left and they just leave a husk of a property at the end."

For neighbors, the result is boarded-up properties that attract squatters or vandals — or empty lots that drag down property values.

"It's a broken system," said Andi Elliott, CEO of Community Advocates, a nonprofit group that advocates for low-income, at-risk residents. "You're not paying the bills for the property you have, yet you're paying cash for new properties."

It is all legal.

And the practices of the city and municipal court system have allowed it to continue, with officials promising a tougher approach after the Journal Sentinel began asking questions as part of its investigation. Reporters identified the depth of the problem by analyzing thousands of property sales and tax records, as well as state records revealing details about dozens of limited liability corporations.

The cycle begins at the weekly sheriff's sales, where the main requirement of buyers is their money be green. The buyer can be a slumlord or a tax dodger — nobody checks.

If the new owner doesn't keep the property up to code, the city can bring the owner to municipal court where a judge may slap the landlord with thousands of dollars in fines. The courts, however, also give the landlord months or years to pay the fine — generally without any objection from city attorneys.

Meanwhile, the landlord can keep collecting rent and buying new properties every Monday morning.

Consider Sherard's case.

Records show he makes small payments on the fines, as little as $100 every three months — just enough to keep the court from issuing arrest warrants or putting liens on his assets. He also eventually makes repairs ordered by city inspectors, though he is sometimes brought to court because of delays in completing them.

Rick Wood Municipal Judge Phillip M. Chavez says the court cannot single out landlords who owe fines but are buying additional properties with cash: "We can't selectively make someone pay more than anyone else."

Other landlords make no payments on their fines, knowing there is little chance of being arrested. A property lien filed by the city has no real impact unless a property is sold. And landlords know, eventually, if they stop paying taxes the city will step in and take decrepit properties, canceling their bill.

Last year, the city filed tax foreclosure suits on 937 properties, wiping out $10.5 million in unpaid property taxes for the former owners. That's a sum equal to the salaries of 176 rookie police officers.

In Sherard's case, three of the properties that were subject to those October 2011 fines by Municipal Judge Phillip M. Chavez have since been seized by the city, with $56,254 in delinquent taxes erased. He still owns the other three properties that were subject to the fines.

Matthew Desmond, a Harvard University sociologist and author of "Evicted," a new book that looks at low-income housing and evictions, said it is not unusual for a landlord to purposely stop paying taxes.

"It's part of the business model," said Desmond, who focused his research on Milwaukee. "Give it back to the city — that's what they say."

Others leave fines unpaid

Sherard is not the only landlord taking all the time he can to pay.

Los Angeles-based Divine Momentum Real Estate LLC rang up $193,636 in fines from 2012 to 2014. At the beginning of the year, the company owed $64,895 in fines plus another $251,729 in back property taxes — a figure that does not include interest or penalties — on 60 of its 66 properties.

Divine Momentum's primary financial backer is Harris, an all-star guard for the Dallas Mavericks and former standout for the Wisconsin Badgers and Wauwatosa East High School, according to several sources including a former employee who dealt directly with Harris.

After the Journal Sentinel raised questions about the properties this year, the company paid roughly half of its delinquent taxes. As of this month, it still owed $121,757 in taxes and about $38,000 in fines.

Another landlord, Mohammad Choudry, or one of the many LLCs that claim his south side home as their address, has paid $441,000 to purchase 34 foreclosed properties at sheriff's sales since 2007. Choudry, 56, and the associated LLCs currently owe $194,776 in fines for code violations dating back to 2010, plus another $331,879 in delinquent property taxes on three dozen properties.

Elijah M. Rashaed



City properties

owned: 194



Fines owed: $70,091



Delinquent taxes: $484,472



Properties with monthly inspections: 39



Additional notes: Convicted of disorderly conduct after he was initially charged with punching a city building inspector. a.k.a Dennis BellCity propertiesowned:Fines owed:Delinquent taxes:Properties with monthly inspections:Convicted of disorderly conduct after he was initially charged with punching a city building inspector.

In that time frame, Choudry and the LLCs paid only $16,500 in fines, records show.

In many cases, city officials don't even know who owns problem properties since many landlords keep their holdings in LLCs, which only require disclosure of a registered agent and a principal office. What's more, the city can only go after the assets of the LLC, not individual owners. And each LLC is a separate legal entity, so the assets of one cannot be seized to cover the debts of another.

"They provide protection to insulate the owners against liability," Chavez said. "A lot of folks have figured that out."

Elijah Mohammad Rashaed, 46, is the registered agent for about 20 LLCs, according to state Department of Financial Institutions records. Ten of those owe a combined $70,091 in delinquent municipal court fines, according to court records.

"LLCs are the scourge of this office," said Stephens, the deputy city attorney.

In response to questions from the Journal Sentinel, Stephens said the city will likely soon intensify its collection efforts, and may use the circuit court system more frequently to collect fines and taxes.

"There are probably 12 or so frequent fliers," Stephens said. "We're making a shift into into focusing on those people who are causing an outsized problem" in neighborhoods.

Familiar faces at sales

Every Monday morning, bargain hunters and lawyers representing banks and other lenders gather in the basement of the Milwaukee County Safety Building for the auction of properties that were foreclosed on because owners failed to keep up with mortgage payments. The group meets in a large, windowless room located behind a gym used by courthouse employees, just down the hall from the Sheriff's Office.

Graphic: The picture on fines

Last year, 2,103 properties were offered for sale. That's down from the 4,827 that were auctioned in 2010 when lenders and homeowners were dealing with the worst of the hangover from the 2008 recession. The average price paid by an individual investor last year: $36,000.

The weekly auctions are low key — there is no yelling or shouting out of bids. Rather, the auctioneer announces the property being sold and bidders respond. Usually the lender buys the property in order to protect its investment. The lender then recoups its loss by selling the home.

The sales are a cash business. Bidders put down 10% of the purchase price. Cash or a cashier's check are the only payments accepted. The remainder — again in cash or a cashier's check — is due a few weeks later, after a judge approves the sale.

Mohammad Choudry

owned: 52



Fines owed: $194,776



Delinquent taxes: $331,879



Properties with monthly inspections: 11



Additional notes: Has spent $441,000 since 2007 to buy foreclosed properties at sheriff's sales. City propertiesowned:Fines owed:Delinquent taxes:Properties with monthly inspections:Has spent $441,000 since 2007 to buy foreclosed properties at sheriff's sales.

One of the fixtures at the sales is Sherard, 75, a Milwaukee landlord for half a century who has twice been convicted of unfair rental practices, a misdemeanor. A 1992 conviction sent him to jail for 30 days. All told, city records show he or his Morocco Investments LLC owns at least 114 properties with 159 rental units.

Lenders or their lawyers generally sit in the front. Bargain hunters tend to congregate in the back, occasionally stepping into the hallway to work the phones. Sometimes, they enter into partnerships on the spot to buy a house.

As a group, the buyers shun the limelight.

"I'm buying for somebody else," Choudry said on a recent Monday as he walked away from a reporter in the hallway. "I buy junk. That's all they let me buy anyway."

Choudry, and companies linked to him, own at least 52 buildings that contain 83 rental units, according to city records.

Sherard bristled when asked at the courthouse last month about his slow payments and tax delinquencies.

"Who all are you writing about?" Sherard snapped at a reporter. "I don't have any more fines than anybody else."

Sherard declined to be interviewed again this month when a reporter approached him in front of his Capitol Drive office.

"You need to leave me alone," Sherard said, before driving off in his vintage Corvette.

Cat-and-mouse game

Sherard is a familiar face to city officials — from municipal judges to city attorneys to building inspectors.

Sheriff's sales Mike De Sisti Every Monday morning, bargain hunters and lawyers representing banks and other lenders gather in the basement of the Milwaukee County Safety Building for the auction of properties that were foreclosed on because owners failed to keep up with mortgage payments. Photo Gallery: Milwaukee County sheriff's sales

The six fines against Sherard that were issued in October 2011 are not delinquent because Sherard comes to court every 60 to 90 days and makes $100 payments on each fine. Then he appears before Chavez, the judge who issued the fines, and asks for more time to pay — a request that has been routinely approved.

At the current pace, it will take Sherard between 17 and 25 years to pay the three largest fines of $10,000 each.

Although he claims he can't pay his city fines in a timely manner, Sherard came up with $700,000 in one week in March 2011, after a federal judge ordered him jailed for failing to put up money for the lead paint cleanup at some of his properties.

Is the payment plan in municipal court too lenient?

"I can't say if it's enough or not enough," said Chavez. "We can't selectively make someone pay more than anyone else."

4014 W. Burleigh St. Buyer: Lonnie Slocum Sale date: Oct. 24, 2008 Price: $12,000 Fined: $9,780 on Aug. 20, 2013 Fines paid: $50 Tax foreclosure: 2014 (Photo taken in 2014) Taxes owed when seized by city: $27,367 Sold by the city for $2,500 Sources: Milwaukee Municipal Court; Milwaukee Department of Neighborhood Services; Milwaukee Department of City Development; Milwaukee County Sheriff's Office.

He said the judges do not consider the assets a defendant may have when assessing a fine: "I've never heard the argument made (in court) that because the defendant bought new properties they should be held to a different standard."

For their part, city prosecutors say payment plans are generally approved without a city attorney present. That's because the court has a walk-in policy that allows defendants to appear before a judge without their case being on the docket.

The result is a perpetual cat-and-mouse game, in which tenants complain to the city, building inspectors write orders and landlords refuse to make repairs — or delay them until the last minute — only to get fines that often go unpaid along with the property taxes.

Meanwhile, the failure to make repairs simply means another blind alley.

Repeated failure can result in city building inspectors conducting monthly reinspections. Until March, the procedure could cost a landlord up to $355 per visit. But a change in state law set a cap on the amount, limiting it to no more than twice what the initial inspection costs. In the city, that reduced the charge to $120.

The change in Madison was part of a bill backed by landlord and apartment owner groups and opposed by the cities of Milwaukee and Madison, as well as the statewide League of Municipalities.

State Sen. Frank Lasee, a De Pere Republican running for U.S. Congress, was the key sponsor of the bill, which limited the powers of building inspectors and increased the authority of landlords. For instance, the legislation made it easier to evict criminals and bars cities from targeting problem areas for building inspections.

Meanwhile, city building inspectors continue to chase landlords with little to show for it.

In 2009, Lonnie Slocum, another sheriff's sale regular, was fined $9,780 by Municipal Judge Valarie Hill for not fixing 92 out of the 102 violations found by city building inspectors on a single property. Inspectors said the property had defective doors, windows and a toilet as well as "potentially hazardous" wiring.

The city seized the house in July 2014, erasing Slocum's property tax debt of $27,367. But when they sold the home last year, city officials could only recover $2,500.

As for the fine, Slocum paid $50. It's not because he's broke.

Since 2007, Slocum, 42, and LLCs with which he is associated, have paid $2.7 million in cash to buy at least 116 properties at sheriff's sales. Slocum has sold many of the houses, but city records show he still owns at least 18 properties in the city, with 27 rental units.

Slocum ignored questions from a reporter in the hallway outside a recent sheriff's sale and did not return repeated messages left via phone calls, or a written message left at his home.

"We can't follow people around," said Hill. "I don't know if they're going to the (sheriff's) sales on Monday mornings."

Little consequence for violators

There are few, if any, consequences when it comes to unpaid fines.

If a defendant fails to pay, the courts can put a lien on the scofflaw's assets and issue an arrest warrant.

twitter.com/cspivak cspivak@journalsentinel.com

Until 2011, the courts issued cash bail warrants, which could result in police jailing those who did not pay their fines. But judges stopped issuing those warrants out of concern that low-income people were being jailed because they couldn't pay traffic or other municipal tickets.

"I'm not running a debtor's prison," said Municipal Judge Derek Mosley, who has been on the bench since 2002. "If they go to jail, you get nothing."

Instead, the judges began issuing arrest warrants.

But court policy requires people to have four interactions with police before they can be held for not paying fines, even if they tally hundreds of thousands. If a warrant pops up during a routine traffic stop, for instance, an officer may bring the person into the district station where they are given a date and released — a process that takes about 20 minutes, said Milwaukee Police spokesman Sgt. Tim Gauerke.

On the fifth interaction with police, the person may be arrested and held for up to 90 days or until they pay their fines.

Graphic: Tax foreclosures on the rise

Police do not seek out the landlords, even those who have dozens of outstanding warrants.

"We just had 145 homicides in the city," Mosley said of the 2015 tally. "Who am I to tell Chief (Edward) Flynn how to do his job?"

If police did want to find the scofflaws, they could simply go the sheriff's sales, which take place next door to the Police Administration Building. On a recent Monday, the cast of bidders included several with open municipal arrest warrants.

Choudry, for example, had 28 open arrest warrants on a Monday in December. He declined to discuss the fines and warrants.

"The business is a headache," Choudry said. "I'm trying to get out of it."

City lists 'egregious defendants'

Since 2010, the three municipal judges each year have ordered total fines of between $3 million and $3.3 million for violations of city building codes.

Last year, the city collected $1.9 million, up from $1.2 million in 2012.

James Miicke

owned: 7



Fines owed: $527,595



Delinquent taxes: $0



Properties with monthly inspections: 0



Additional notes: In 2007, he became the second Milwaukee landlord ever arrested for failing to pay building code fines. City propertiesowned:Fines owed:Delinquent taxes:Properties with monthly inspections:In 2007, he became the second Milwaukee landlord ever arrested for failing to pay building code fines.

But the fines owed by the 20 biggest deadbeats has increased fivefold since 2010 — going from nearly $200,000 to just over $1 million this year, according to the court's "Egregious Defendants" list, a roster of those with the most in delinquent fines.

The list does not include those who owe fines but are in bankruptcy or receivership actions. And LLCs are not listed because arrest warrants cannot be issued against a corporation.

James Miicke of Muskego is the top "egregious defendant," personally owing $361,095 in fines for offenses dating to 2005. Meanwhile, an LLC he is associated with owes an additional $166,500. All told, Miicke is tied to seven residential properties in Milwaukee.

Miicke said he would soon be selling all seven properties.

"Some of the money will go to the city," he said last week, quickly adding, "Not very much, because of the economy."

Number two is Todd Brunner of Pewaukee, once known as southeastern Wisconsin's foreclosure king because he bought hundreds of properties at sheriff's sales throughout the region. Brunner owes the city $161,019 in fines dating to 2012.

Todd Brunner

owned: 2



Fines owed: $161,019



Delinquent taxes: $39,649



Properties with monthly inspections: 0



Additional notes: The one-time foreclosure king of southeast Wisconsin, he filed for bankruptcy in 2011, and has lost most of the hundreds of properties he purchased at sheriff's sales. City propertiesowned:Fines owed:Delinquent taxes:Properties with monthly inspections:The one-time foreclosure king of southeast Wisconsin, he filed for bankruptcy in 2011, and has lost most of the hundreds of properties he purchased at sheriff's sales.

Brunner is facing federal bankruptcy fraud charges and "is disposed" to taking a plea deal to resolve the 2014 criminal case, his lawyer wrote in a November letter to the court. The case is stalled because of Brunner's health issues. Brunner's Federal Defender Services attorney declined comment on the city fines.

The municipal judges say they are doing as much as the law allows to gain compliance with building codes — something each of the three described as a priority.

"We want to keep it as fair as possible," said Chavez, a judge since 2007.

City attorneys and Mayor Tom Barrett counter that troubled landlords who have assets should be treated more harshly than those who own just one or two properties.

"There are a group of landlords who are more than willing to purchase properties, not deal with any of the issues underlying the problems the property has, rent them for X number of months or X number of years and then at the end of that period just walk away from them," said Barrett. "And then they show up Monday morning to purchase more."

In response to the Journal Sentinel investigation, Barrett said city attorneys will soon start asking to be notified when landlords with a history of problems appear to ask for court approval of a payment plan.

That way "we can appear and voice objections," said Gregg Hagopian, an assistant city attorney.

City officials say they are looking for other ways to crack down.

Last year, instead of seizing 31 properties on which Sherard owed delinquent taxes, the city sued him in Milwaukee County Circuit Court and won a $119,429 judgment.

Officials told Sherard the city would use collection techniques, such as garnishment actions, if he failed to pay up, according to Assistant City Attorney Kail Decker, who was involved in the case.

"We made it clear to him that he was going to have to pay his taxes," Decker said.

Barrett said the city will likely sue other landlords who don't pay their taxes or fines.

"There's a template here," he said.


The mayor said the city is also looking at ways to change the sheriff's sales — including ways to attract more potential bidders — in the hopes of limiting the number of properties that problem landlords purchase. Barrett described the sales as "a throwback to the 1940s — or the 1840s."

The system can be improved, said Frank Alexander, an Emory University law professor and foreclosure expert.

He said no state mandates that background checks be conducted of buyers at auctions of properties foreclosed for not paying mortgages. Doing so would be pointless, he said, since bad landlords could easily hide their identities by creating LLCs.

Milwaukee, and other cities, do screen buyers of properties seized for not paying taxes.

Alexander suggested that state legislatures mandate that all liens for property taxes, fines and other government bills be paid before a property can be sold at a sheriff's sale. Currently, a buyer becomes responsible for those expenses.

Doing so would force lenders to take steps to ensure properties are kept in better condition, he said.

At this stage, cracking down on those gaming the system relies on action by the same officials who have allowed it to go unchecked for years.

"The entire system needs to understand that people are gaming it," Barrett said.