Wolf of Main Street

The end of federal protections for renters in August was supposed to create an eviction crisis with ominous notices on front doors, families kicked out of their homes and possessions heaped on curbsides throughout the U.S.

It never happened.

There was no big wave of evictions — because they were happening all along. Despite billions spent by the federal government to protect and support the vulnerable during the pandemic, companies took advantage of weaknesses in the law to churn tenants with little knowledge of their rights and few options. One of the most successful was Monarch Investment and Management Group of Franktown, Colorado.

As middle America’s fastest-growing landlord, specializing in places with widespread poverty and few protections, closely held Monarch had its best year ever in 2020 — despite the pandemic, despite the ravaged economy and despite federal rules to protect renters. Eviction bans, owner Bob Nicolls told investors in a videotaped meeting in September, were “more of a nuisance than anything else.”

Speaking at his headquarters about a week after the U.S. Supreme Court struck down the Biden administration’s first eviction moratorium, Nicolls said the end of the ban, scant new housing supply and a return to full employment would create ideal circumstances for “popping the clutch.” It was an opportunity, unprecedented in his lifetime, to raise rents.

“Where are people going to go?” Nicolls said on the video. “They can’t go anywhere.”

Nicolls said in an email that the company raises rents “just like other landlords.” He pointed to a nonprofit charitable fund established by Monarch that has provided thousands of dollars in aid to tenants. One of Monarch’s hired lawyers said the companies he represents would rather not cause hardships for families, but leases must be respected and owners have a right to their rent. Several tenants said the company was fair to those who paid on time. But the company’s tactics for those who fell behind on rent, unusually aggressive and openly discussed, show how the government failed some of its most vulnerable citizens.

The federal bans on evictions were porous. A March 2020 law applied only to properties with federally backed mortgages, while a later U.S. Centers for Disease Control and Prevention moratorium let landlords initiate evictions if tenants didn’t preemptively declare their rights. State orders stopped evictions cold, but many places never adopted protections. Meanwhile, cities and states struggled to distribute billions in emergency rent relief as eviction orders expired — leaving large landlords such as Monarch with barely checked sway over tenants.

The U.S. Justice Department declined to comment in response to emailed questions about how it enforced the terms and penalties of the eviction orders.

There is no comprehensive national accounting of evictions; 1 in 3 U.S. counties have no annual data at all. Despite the federal government’s attempt to stop them, Goldman Sachs Group Inc. in August predicted 750,000 by the end of 2021. However, Princeton University’s Eviction Lab counted nearly that many filings in just the six states and 31 cities it tracks, according to Matthew Desmond, a sociologist who is Eviction Lab’s principal investigator.

The federal government has found that many of these actions were questionable. “Major multistate landlords are forcing people out of their homes despite the government prohibitions or before tenants are aware of their rights,” the Consumer Financial Protection Bureau said in a statement last year.

During the pandemic, Monarch and its lawyers challenged tenants who tried to invoke federal orders against eviction. The company papered apartments with ominous flyers and neglected repairs. Even eviction documents filed in court but not executed gave Monarch leverage to push out slow-to-pay residents without a judge’s order or a sheriff’s knock.

Founded in 2004, Nicolls’s company has earned a place on the National Multifamily Housing Council’s top 10 list of owners, with some 69,000 units, a number that has doubled since 2016, stretching across 20 states. And the company is growing: In 2021, Monarch added 8,137 units, buying buildings in Cedar Rapids, Iowa; Wichita, Kansas; and cities in Indiana, Michigan, Ohio and other states. Monarch acquired more apartment units than all but three of the nation's top 10 owners in 2021, according to the council.

Unlike other major apartment owners and real estate investment trusts, Monarch has zeroed in on the fringes of smaller cities, what Nicolls called “secondary markets, tertiary markets and supertertiary markets.” Mainstays such as Related Companies or Starwood Capital Group deal in luxury accommodations, but Monarch shuns them, and maximizes returns by running the aging two- to three-story garden-apartment complexes itself.

“They’re more problematic and difficult to manage,” Nicolls told the investors in September's videotaped meeting. More established landlords “don’t manage, they hire third-party managers, so we feel like we have a big advantage on them there.”

Evictions come fast and cheap in the Midwest, where few protections exist and tenants are rarely guaranteed counsel. This criteria matters to Monarch: In his September address to investors, Nicolls said that Minnesota, once Monarch’s best market, had soured due to its highly restrictive eviction moratorium. “Hopefully, it will wash away,” he said.

In an analysis of evictions at specific apartment complexes in places where the data are available, Monarch emerges as an outlier. While there are hundreds of large apartment buildings in the St. Louis and Kansas City, Missouri, areas — and some companies evict more tenants overall — Monarch stands out for the concentration of eviction attempts at buildings it owns and manages.

In just St. Louis and Kansas City, more than 1,000 households have faced filings by Monarch since March 2020, most as actual evictions were prohibited.

In Kansas City, the company filed cases against 54 households at a complex called the Ridge at Chestnut from March 2020 through the end of the federal eviction ban in August. Since the ban ended, Monarch has filed at least 58 more cases there. All told, Monarch moved to evict about one-quarter of Ridge residents since the start of the pandemic. More than two-dozen households faced eviction more than once. Two did so four times.

Some Monarch tenants face filings year after year, Missouri records show. At the Oak Park Apartments in north St. Louis, more than 80 households saw multiple filings since Monarch acquired the complex in 2018. Fourteen faced eviction more than once during the pandemic. Over the short time that Monarch owned Oak Park (the building sold in June), the company filed 480 evictions, touching the majority of families living at the 756-unit complex.

That’s just one of two dozen of the company’s properties around St. Louis, which is one of more than 50 cities where Monarch operates.

Monarch’s Man

Matthew Chase, a St. Louis lawyer who often represents the company and other landlords, thrived during the pandemic. In 2019, Chase filed over 2,000 evictions in St. Louis County, he said in a Zoom interview, between sips from a coffee mug printed with the word “Evictions.” In 2020, he filed about 1,450, and in 2021, he approached his pre-pandemic rate, with 1,800.

A self-styled guru for the real-estate bar, Chase convened landlords and attorneys in October 2020 for a virtual discussion of the “latest eviction news” — namely, the federal moratorium issued half a year into the pandemic. File cases anyway, he told them. If tenants don’t know about the CDC moratorium, don’t go out of your way to tell them.

“They shouldn’t have signed a f------ contract for a thousand-dollar-a-month unit for a year if they're too f------ stupid to sign, to know anything, to read the news, to have any idea about their rights,” Chase said.

Someone on the Zoom session, which Chase posted on his website, offered an amen.

“They were literate and smart enough and wise enough to sign a contract,” Chase added, “but now they're too ignorant, illiterate and stupid to know the law sufficiently that we have to give them all their defenses? F--- that!”

Chase said in the interview that the companies he represents want to treat families fairly, but leases are sacrosanct.

“Our landlords don't want people out in the street,” he said. “They want to file evictions quickly, because the eviction lawsuit process is the last legal means to enforce the contract.” He said the moratoriums “caused more and more tenants to become deadbeat non-payers.”

However, Chase also said that when tenants did present a “piece of paper” citing the moratorium, he would challenge their claims to hardship from poverty or illness. He said of one tenant: “You're sick because you're morbidly obese. None of that has anything to do with a contract you signed to pay rent, and frankly — don't care. Don't care anymore. And my clients, the landlords, no longer care.”

One former Monarch executive for building acquisitions and sales, Ron Skelton, said the company in fact worked hard to avoid evicting tenants during the pandemic, even launching the aid fund. Tax records show that the Home Together Fund, a nonprofit launched in April 2020, garnered some $618,000 from donors, many of whom were executives, investors, vendors and employees of Monarch. The fund made grants for at least $414,000 in rent on behalf of 301 tenants — paid out to the company.

“We have complied with every law and we have spent much time helping our residents,” Nicolls said by email. “Our fund lasted a long time as few residents needed help from it.”

Skelton said Monarch isn’t flipping properties for quick money. “They’re trying to do the best they can with the tenants, because they’re in there 10 to 15 years with them, minimum,” said Skelton, who’s now a Monarch investor.

Tara Raghuveer, founding director of KC Tenants, a Kansas City group organizing for renters’ rights, said Monarch bought buildings outside the urban core, in areas where lower-income tenants have been pushed by rising costs closer in. On these suburban rims, multifamily properties are lucrative: Waitlists run long, and competition is minimal because affordable housing is scarce.

L. Donald Huelson, a lawyer representing landlords, including Monarch in Kansas City, said companies typically have a plan when they purchase.

“You might come in with a set of higher criteria to be an occupant,” said Huelson, who said about 10% of his Kansas City cases come from Monarch. For example, he said, a landlord might require an income three times a tenant’s rent.

That's the federal definition for affordability, but for many households, that standard was out of reach even before the pandemic. There were just 38 affordable apartments for every 100 extremely poor renters in Kansas City in 2019, according to the National Low Income Housing Coalition.

That’s why the acquisition of a building can correlate with a flurry of eviction filings. Filings keep risk low and returns high for property owners. More than half the households that receive an eviction notice from Monarch wind up paying and staying, according to a February article by the company’s chief financial officer, Andy Newell, in Multi-Housing News. About one-quarter leave on their own. One in 10 is physically evicted and 0.2% declare bankruptcy.

As of February 2021, only 11.5% of tenants facing eviction had successfully used their rights under the federal moratorium, according to Newell’s article.

Generally, real-estate companies hire local lawyers specializing in evictions to navigate courts that are often clogged and fast-moving, while tenants often lack representation. Filings show that Chase is one of four lawyers who typically represent Monarch in St. Louis County. During the pandemic, he hosted video calls for landlords and lawyers that were livestreamed on Facebook, posted on YouTube and promoted on his law firm’s website.

“We evict grandparents who are poor, evict cancer-stricken people who are attending chemo. It’s sad,” Chase said on his YouTube channel after the first CARES Act eviction moratorium took effect. “What’s sadder is that somebody who purchases property for hundreds of thousands of dollars is given the finger by the law.”

The virtual gatherings were part vent sessions, part strategy meetings. Chase offered tactics and guidance on everything from terminating a month-to-month lease to how to put the “kibosh” on tenants declaring their rights by urging deals that would avoid formal eviction.

“Everything’s got a hole,” he said in the October 2020 session, referring to the CDC declaration.

And some tenants are indeed far in arrears. Christian Croft, 25, moved into the Oak Park Apartments in St. Louis in June 2019. Nearly two years later, he said, he was sick with Covid, unable to go to his construction shifts, two months behind on his $625-a-month rent and denied emergency rental assistance. He got an eviction notice despite the moratorium.

Croft kept trying to catch up, according to a ledger shared by Chase, who represented Monarch in the case: He paid $500, then $50, then $500 again as charges accumulated. But his missed work left him too far in the hole. By the time he moved out, Croft owed $5,821.33 in past rent and other charges, according to the court’s judgment in May 2021, including more than $1,000 in late fees and $320 in attorney’s fees.

Huelson, the Kansas City lawyer, said Monarch does more than any other company he works with to link tenants with government assistance. “They are really proactive,” he said.

Some tenants say the company is no help at all. Of 11 interviewed, six had been given notices of eviction. They described poor communication and badgering, even in cases that didn’t result in expulsion.

The Arbors of Grandview, a Kansas City complex that Monarch bought in December 2020, is fine for those who pay rent on time, said Lynn Logan, who had been there almost 10 years. “I haven’t had any issues.”

But during the pandemic, many neighbors didn’t pay, or couldn’t. Since the company acquired the Arbors, Monarch filed for eviction against at least 45 of the 298 households, including three filings only days after the sale had been finalized.

Hanging On

On a November afternoon at the Jackson County Courthouse in Kansas City, Huelson approached the plexiglass protecting a judge and reeled off a bill facing Deoun Parker: $2,660 in rent, $360 in attorney fees, $200 in late fees. Monarch wanted its money, and it wanted Parker out of the Arbors. Over a video hookup, she dissented faintly.

Parker, who had lived at the Arbors for three years, said in a later interview from her sparsely furnished, $916-a-month two-bedroom that her property manager doesn’t accept money orders or cash, and she had been unable to use a card-payment system. “I had the money, but they locked me out,” she said. “How can I pay my rent when I’m locked out?” On Dec. 9, a judge dismissed her case after she paid her past-due charges, but the blot on her record remains.

Patrice Gates, left her Arbors of Grandview apartment voluntarily in March 2021, she said, about two months before her lease officially ended. An eviction case against her had been dismissed, but she said that after her neighbor’s plumbing backed up, her home was unlivable. “That apartment had a floor that was always wet,” said Gates, who at 49 had had a kidney transplant and a weak immune system. When she submitted a doctor’s note explaining why she had to break her lease, the company charged her $2,000 for the remaining months, she said. She’s paying it off $50 at a time.

Monarch’s “eviction protocol, if you want to call it that, is very aggressive,” said Robert Swearingen, an attorney for the Legal Services of Eastern Missouri, who has represented St. Louis-area tenants. “I’ve had clients who they’ve basically told, ‘We don’t care about rental assistance. We want you out.’”

Swearingen said some of his clients were explicitly told by Monarch landlords that they wouldn’t honor the CDC moratorium even before tenants cited it — an allegation the company didn’t address. Others received threatening notices on their doors, he said. One notice that Swearingen provided informed a tenant of eviction, with words printed over the Missouri state seal and a notation that Chase had been copied on the notification.

“YOU ARE BEING EVICTED!!!!” another notice promised, against a fire-engine-red background. “Please Make A Payment Today to Avoid Execution Out of Your Home By Sheriff,” it continued — even though sheriffs weren’t authorized to perform evictions. Some clients just left, Swearingen said.

Marrisa Peppers said that her Monarch-owned apartment in St. Louis was filled with what looked like mold and the carpet became wet every time it rained. “Things just started falling apart,” she said.

Just as bad were the constant eviction notices posted on her door for the whole building to see.

“Instead of, you know, folding the paper up and pinning it to your door — even put it in your mailbox — why are y’all walking around putting eviction notices on people's doors and telling them if you don't pay, you gotta go?” she said. “It was embarrassing.”

Chase won possession of the premises for Monarch in July 2021, and Peppers went to live in a hotel for a month before moving in somewhere new.

Croft, the construction worker, has been living with his mother and brothers in a two-bedroom since he lost his apartment. He hasn’t looked for his own place, because of the eviction on his record and chance he’d be turned down. When he was trying to remain at the Oak Park Apartments last year, he had known there was some law that might protect him, but he had no attorney and little faith that the law would matter to Monarch.

“I was just scared,” Croft said. “I honestly didn't think they would honor it.”