- Associated Press - Thursday, March 26, 2015

JOPLIN, Mo. (AP) - The city of Joplin has sued a Texas-based company that it hired to help in recovery efforts from the devastating 2011 tornado, accusing it of fraud and seeking at least $1.5 million in damages.

The lawsuit was filed Wednesday in Jasper County Circuit Court against Wallace Bajjali Development Partners and the company’s two partners, one of whom filed for bankruptcy on Tuesday, The Joplin Globe reported (https://bit.ly/1EHa6an ).

The city hired the company, of Sugar Land, Texas, in 2012 to oversee plans to rebuild after the tornado damaged thousands of buildings and killed 161 people. The city learned in January that the company had closed, and that its owners - David Wallace and Costa Bajjali - had resigned.

Wallace filed for bankruptcy Tuesday in U.S. District Court in Houston, listing debts of between $10 million and $50 million, with 200 to 999 creditors and assets of between $500,000 and $1 million.

Peter Edwards, the city’s attorney, said Wallace’s bankruptcy filing might not protect him against Joplin’s lawsuit.

“In cases where there is fraud, you can’t get rid of that in bankruptcy court,” Edwards said.

Wallace doesn’t have a working home phone number, and a phone message left Thursday at Bajjali’s home wasn’t immediately returned. Susan Kopecky Hellinger, an attorney who represented the company in an earlier case, didn’t return phone or email messages from The Associated Press.

The 46 pages of creditors listed in Wallace’s bankruptcy court filing include the city of Joplin, as well as New Prime Inc., of Springfield, which extended a $5 million line of credit to Wallace Bajjali. Another creditor is the city of Amarillo, Texas, which also hired Wallace Bajjali to lead development in that city.

Joplin and Amarillo ended their contracts with the company after learning that Wallace and Bajjali had resigned.

Joplin is now using private investors to drive redevelopment rather than seeking another master developer, Mayor Mike Seibert said.

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Information from: The Joplin (Mo.) Globe, https://www.joplinglobe.com

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