Doug Bennett can picture a line — of what length, he cannot say — of people waiting to get a piece of whatever is leftover financially of Watson Management Services LLC, now that the sole owner is dead.
Mid-Valley Media has learned there may be dozens of landlords to whom Angela Watson owed the rents she collected from their tenants.
Doug Bennett speaks about his experience as a client of Watson Property Management after his court date in Albany on Aug. 18. He won a $7,256.10 judgment.
In lawsuits, some say she stopped paying in March. Others in April. Many others said they didn’t get the rent money for May, the month she sent an email, obtained by this news organization, to tenants asking for the rents to be paid in cash, cashier’s check, money order, credit card or Zelle.
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Many property owners say over the last year, the money transfers came later and later, until they stopped altogether.
Bennett of Chattaroy, Washington is in the line, because he sued her and served her while she was still alive. On Aug. 12, he won a $7,256 judgment.
His lien joins many others: tax liens filed by the government; other successful litigants, including former contractors and other landlords; and business entities that have publicly announced their intention to collect with the Oregon Secretary of State’s Office.
Bennett can imagine this figurative line, even though he doesn’t know exactly where he is in it, because of his background in banking, overseeing the commercial real estate business in five states. Now retired, it is that familiarity that leads the landlord with two rental homes in Albany to believe he will never see a penny.
Doug Bennett speaks about his experience as a client of Watson Management Services just outside of Courtroom 5 at the Linn County Courthouse on Aug. 12.
The imagery of a line of creditors is borrowed from bankruptcy proceedings. But it may be even more complicated than that in this case. There may in fact be two figurative lines.
One is for people and entities looking to collect from Watson Management because the latter owes the former as a cost of doing business — the vendors who have successfully sued; a financing company called Madison Advance LLC that has a legal judgment and lien for $141,450; and unnamed companies that are on record with the state, indicating that they intend to collect via collateral they define as “all present and future assets of the debtor.”
The other line may be the property owners, and by extension their tenants who are owed missing deposits. That’s because deposits and rent proceeds are held in client trust accounts, essentially in escrow. That money was never Watson’s to begin with .
The Oregon Real Estate Agency requires property management companies to hold all rent proceeds and deposits in bank accounts separate from their business accounts. After Watson failed to respond to requests for documentation related to property owners’ rent proceeds, the agency suspended her real estate license in July.
But the investigation continued, even after the suspension and after Watson’s death. The bank that held her clients’ trust accounts later reported to the Real Estate Agency that Watson had closed out the client accounts in early June. The state agency does not know what happened to those funds.
Despite $7,000-plus in taxes owed to the state of Oregon, a spokesperson for the Department of Revenue said his agency would not go after property owners’ rents and tenants’ deposits.
“The Department of Revenue does not try and take money from client trust accounts,” Oregon Department of Revenue’s Robin Maxey said. “Financial Institutions already know that client trust accounts contain third-party money, so they typically do not send us the proceeds of an account with that label.”
And if they do, the third-party can file a claim, he said.
Albany police investigators have been looking into the claims property owners like Bennett have made, alleging that Watson collected rents but didn’t turn over the proceeds to the landlords. Police Chief Marcia Harnden has said she cannot say much.
Albany Chief of Police Marcia Harnden, seen here at an event in March, says the investigation into Watson Management Services is very complicated.
“Currently we are wading through a mountain of documents. These cases are tedious and complex and we don’t believe it will resolved quickly, but we do have an investigation ongoing,” Harnden said by email last week.
Given that the investigation and the revelation that Watson closed her client trust accounts without telling the state, there may be a way to claw back the money — from wherever it went — if litigants can show fraud, Bennett’s attorney has told him.
But that task is monumental, Bennett knows from personal experience. To track disappearing money while working for the bank, Bennett hired forensic accountants, who he learned can end up costing more than the attorneys.
“When you hire a forensic accountant, they don’t know what they’re going to (find). They just start and flip this over and flip that over, and off they go down the rabbit trail,” he said.
With his loss in the four digits, it’s just not worth it to him. But it may be worthwhile to someone who has a lot more to gain, he said.
One of two rental properties Doug and Bonnie Bennett of Chattaroy, Washington own in Albany.
Someone like Mohit Singla of Eugene, who owns 31 units once managed by Angela Watson. He’s out of about $150,000, six months’ rent, and an unknown total of deposits, which he says could also be in the six figures.
Except, he still hasn’t decided whether to sue the company, still hasn’t calculated it whether it would be worth it, financially or emotionally. He has talked to an attorney but has yet to sign on the dotted line for representation.
In a recent phone conversation with Mid-Valley Media, Singla’s voice was panicked. Right now, some of his frustration is with the state of Oregon, which he said does a great job of regulating other industries, like restaurants, nail salons and construction.
But when it comes to providing protections for landlords and tenants, the Oregon Real Estate Agency only steps in when there’s a complaint.
“There is nothing. No insurance requirements, no financial requirements, no bonds,” he said, his ire divided between the state and Watson.
Untangling it all would be a “very, very long road,” Singla said, before pausing. Then, in regards to Watson Management Services, he asked the question that hangs over this story, the question that remains unanswered:
“What did they do with the money ?”
Read the first story in this series in the Democrat-Herald and the Gazette-Times.
Read the second story in this series in the Democrat-Herald and the Gazette-Times.
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Penny Rosenberg is regional editor of three Lee Enterprises news publications in the Pacific Northwest. She earned a Master of Legal Studies from UCLA School of Law. She can be reached at Penny.Rosenberg@lee.net and 541-812-6111.
