STEUBENVILLE — Flamengos Investments, the North Carolina-based company that purchased the foreclosure-bound Fort Steuben Mall in 2022, still hopes to recoup at least some of its more than $11 million investment from the company that sold it to them.

Last week, Jefferson Common Pleas Judge Michelle Miller ruled Flamengos’ lender, Total Finance, could move forward with foreclosing on the mall due to an unpaid $6.4 million note. That ruling clears the way for Total Finance to proceed with foreclosure and a sheriff’s sale.

The registered owner of the mall is Fort Steuben Mall Holdings, of which Flamengos is the sole member.

Flamengos had filed suit against Brookwood Capital in August 2022–less than three months after taking ownership of the mall–claiming Brookwood had made “representations” about the condition of the property, leases, rents and income projections designed to boost its appeal to potential buyers and that Flamengos relied on those representations when it bid $11.6 million for the mall.

The suit alleges Brookwood provided interested buyers with a “rent roll” suggesting dozens of tenants were leasing space and that the new owner could anticipate $140,000 a month in rental income from the property and that Brookwood committed to repairing the mall roof and parking lot “to the satisfaction” of the new buyer.

In the lawsuit, Flamengos alleges fraud, negligent misrepresentation and breach of contract by Brookwood, claiming small businesses then located within the mall were “induced” by the former owner to sign rental agreements with promises “those leases would never be enforced” and Brookwood never, in fact, collected rent from any of them even though they were included on the Rent Roll as part of the mall’s cash flow.

The suit also alleges Brookwood owner Ben Hamd committed to repairing the roof and patching parking lots to their satisfaction as a condition of sale, but claims he made only minimal repairs to the roof and “failed to complete the most basic repairs to the parking lot, including filling all the potholes…”

It alleges Hamd failed to disclose to the buyer that he already had a $1.8 million estimate for the roof work that concluded roughly 132,500 square feet of roofing was in “urgent” need of repair and another 146,600 square feet was in “poor condition,” instead producing an estimate from another contractor for under $100,000.

But Brookwood Capital founder Ben Hamd has, from the start, denied the allegations, saying in 2022 his company has a long and successful track record in the retail sector. In an April 10 conversation Hamd declined to weigh in on the mall’s looming foreclosure or comment on the Flamengos litigation, though he did question “why you want to write about me” and, after being asked about the Flamengos complaint, concluded the call by saying, “I appreciate you calling me on a thing that’s not really your business.”

U.S. District Court for the Southern District of Ohio Judge Matthew McFarland a day earlier had rejected Brookwood’s motion to dismiss the lawsuit, finding Flamengos “pled sufficient, articulable facts alleging that (the scheme) could continue indefinitely and that the scheme is defendant’s regular way of doing business.”

McFarland is currently allowing the plaintiff to argue that Brookwood has on at least two other occasions created so-called “fictitious and fraudulent leases” to drive up the price of its commercial properties — citing a restaurant in Tennessee and a mall in North Carolina — and then used the proceeds to purchase other properties.

The lawsuit suggests Brookwood used the proceeds from the Steubenville mall’s sale to purchase another mall in St. Paul, Minnesota.

Hamd and Brookwood Capital, however, contend the onus is on buyers to do their own due diligence and insists the purchase agreement stipulates properties are sold “as is, where is” and claims Flamengos “acknowledged and agreed that that they relied on their own “independent investigation and evaluation of every aspect of the property and not on any materials supplied by” Brockwood.