Mystery Woman

Where is Lisa Krempasky and why are so many people suing her?

Sep 20, 2006 at 4:00 am
Lisa Krempasky's Crestwood law office sits empty. So does her eggshell-blue home on tree-lined Oak Street in Webster Groves. Neighbors say the 40-year-old attorney vanished without warning early this summer, closing the doors to her firm and slipping away from her house in the quiet hours before dawn.

"I haven't seen her since June," says a Webster Groves neighbor. "I woke up on several mornings to find her loading a pickup truck with furniture. It was five o'clock in the morning."

In Krempasky's absence, neighbors say they're constantly visited by process servers attempting to serve the lawyer with court summonses as a defendant in at least ten lawsuits alleging real-estate fraud. One persistent server has gone so far as to push a baby stroller through Krempasky's neighborhood, in hopes of slapping her with court paperwork on the off-chance that she returns home.

More recently, it's the beneficiaries of the Charles H. Norman Trust who've come knocking on neighbors' doors. One resident recalls the day this summer that an elderly man showed up, sobbing and accusing Krempasky of cheating him out of thousands of dollars.

As executor of the estate once belonging to the legendary founder of WGNU (920 AM), Krempasky has sole authority over a trust rumored to be in the tens of millions of dollars. But two years after Norman's death, the beneficiaries of the trust say they've yet to see a penny. Now, many of those would-be recipients fear Krempasky may have drained the trust dry by investing in development deals tied to one of the city's largest real estate scandals in recent memory.

The scheme attracted a diverse array of characters — from banks and professional loan sharks to casual investors and do-gooders hoping to raise money for orphans and widows in Africa. Over the past four years, they sunk millions of dollars into dilapidated St. Louis buildings and homes slated for renovation. Many have since discovered that their investments are as worthless as Florida swampland: Little work has been done to fix up the real estate, and dozens of speculators claim title to the properties.

At the center of the controversy is Doug Hartmann, a St. Louis real estate developer and former boxing promoter who employed Lisa Krempasky as his attorney until early this year. In the past six months, creditors have filed dozens of lawsuits against Hartmann, claiming that he and several of his associates — including Krempasky — "conspired to commit fraud" and "unjustly enriched" themselves by borrowing millions of dollars against properties already secured as collateral for other loans.

As many as 200 buildings and homes in the city that were once connected to Hartmann and his company, DHP Investments, now have "clouded" titles, according to the lawsuits. Many of the properties remain in complete disrepair, with the deeds filed against them adding up to five or six times their true worth. For example, a ramshackle house in the Benton Park neighborhood has eleven deeds filed against it totaling more than $630,000. The City of St. Louis Assessor's Office, meanwhile, places the market value of the property at around $80,000.

"I've seen properties with as many as sixteen deeds of trust recorded against them," says William Sauerwein, a Clayton attorney representing a half-dozen banks who've filed suit against Hartmann. "As far as the sheer number of properties affected, this is the biggest mess I've seen in nineteen years as a real estate litigator."

In recent months the 44-year-old Hartmann has attracted the attention of the FBI, the United States Postal Inspection Service and the United States Department of Housing and Urban Development, according to sources who say federal agents have interviewed them about the developer.

Neither Krempasky nor Hartmann returned repeated calls for this story. Their attorneys also declined comment. Many of the investors wrapped up in the scandal were reluctant to speak on record for this article, citing lawsuits they plan to file against the developer and his former attorney. Privately, though, they tell a complex story of deceit and fraud that they claim has both Hartmann and Krempasky at its center.

The saga begins sometime in the late 1990s, when Charles "Chuck" Norman first met Lisa Krempasky.

Best remembered for his advertisements on billboards and the backs of buses that began with the trademark "Chuck Norman says....," the radio mogul was renowned for both his generosity and his parsimony. His annual Christmas gala raised tens of thousands of dollars for local charities. Friends recall Norman routinely picking up the tab for meals and vacations, but only if he could barter payment in exchange for advertising on his radio station. Former employees say that's how Norman landed Krempasky as his attorney.

"Chuck was always trading services in exchange for advertising," recalls Norman's longtime friend Art Ford. "Krempasky came on as a trade exchange. She provided legal services for him in exchange for ads."

Ford, who served as WGNU's general manager from 1986 to 2000, says it wasn't long before Krempasky and Norman's full-time caregiver, Esther Wright, exerted their influence over the frail and increasingly senile Norman. Wright, who now serves as general manager of WGNU, did not return calls for comment for this article.

As this article went to press, rumors were swirling that WGNU is facing severe financial shortcomings and, according to several former staffers, could not make its payroll for the two weeks ending September 15, with employees told that they'd be paid sometime in the near future. An employee who answered the phone at WGNU declined to comment on the matter.

"You're going to have to talk to Lisa Krempasky," he said.

Norman's trust supposedly left control of the station to Krempasky and Wright, but little is actually known about the estate. Some beneficiaries say that Krempasky is rumored to have allowed just one former WGNU employee access to the trust documents — and only after the employee signed a contract agreeing to keep the contents a secret or be subjected to a $25,000 lawsuit from Krempasky.

Ford says Norman always told him that he wanted to donate most of his assets to charities upon his death, and that in the mid-'90s he helped Norman draft a portion of his will that would have provided ownership shares in the station to longtime employees. That document became null and void in 2000, when Norman specified that all of his assets go into a trust controlled solely by Krempasky.

"The last few years of his life, Chuck wasn't himself," says Ford. "There's no telling what they were telling him. He was incapacitated."

The belief among the 25 to 35 beneficiaries of the trust is that Norman bequeathed $10,000 to every staffer employed with WGNU for a period of three years prior to Norman's death. But how much they're actually entitled to — or when they might receive payments — remains a mystery.

Last month Krempasky sent a letter to beneficiaries blaming the IRS for the delay in disbursing the trust's funds. The letter was dated July 19 but postmarked August 18.

"As you all know, a major hurdle to getting your money is getting final approval from the IRS," Krempasky wrote. "Since I have been making little progress on this front, I have hired a law firm that works specifically in this area to push this petition through. As is probably obvious, there is really nothing quick with the IRS. This petition will require them to resolve the taxes in nine months. I hope it will happen faster, but this will give them a deadline."

The letter did little to appease the growing concerns of the trust's beneficiaries.

"It seems like just another stall tactic," says beneficiary Jacqueline Sincoff. Upon receiving Krempasky's letter last month, Sincoff sent a complaint to the Missouri Office of Chief Disciplinary Council, which disciplines attorneys on behalf of the Missouri Bar Association. Sincoff asked the council to investigate why Krempasky no longer kept a law office, did not return phone calls and hired an outside law firm when she herself is an attorney.

Clayton attorney Emmett McAuliffe accuses Krempasky of "not coming close to fulfilling the basic responsibilities of a trustee." Last week McAuliffe filed a lawsuit in St. Louis County on behalf of beneficiary Susan Smith Harmon, who served as a radio host at WGNU until being fired earlier this spring. The suit asks that Krempasky provide a full accounting of the trust's assets or forfeit control.

"Since January we've asked that, pursuant to Missouri law, she provide us with a copy of the trust," says McAuliffe. "She's never returned one call. As one attorney to another, there's a code of ethics that we be courteous and professional with one another and that we return each other's calls. I never expected the game to go on this long."

Equally perplexing, says McAuliffe, is the speculation among beneficiaries that over the past two years Krempasky loaned millions from the Charles Norman Trust to Doug Hartmann's DHP Investments. There appears to be merit to such speculation. Documents on file with the City of St. Louis Recorder of Deeds office show that since 2004 Krempasky loaned out in excess of $9 million from the Charles Norman Trust to DHP Investments and other corporations tied to Hartmann.

"I think there are definitely some conflict-of-interest issues here," says McAuliffe. "By definition of a trustee, she's supposed to be guarding these people's money. That wouldn't include wildly speculating in businesses owned by one of her clients."

Former WGNU host and trust beneficiary Nick Kasoff first heard of Krempasky's involvement with Hartmann this spring, when a friend of his in the real estate business sent him a foreclosure notice for a property tied to the Charles Norman Trust.

"At that point I became pretty alarmed," Kasoff says. "I went to the Recorder of Deeds' office and did a search on the Charles Norman Trust. I came up with millions in loans made out from the trust to DHP Investment. I got in my car and drove around to look at some of these properties that the trust lent $100,000 to $250,000. They were vacant shells that had been vacant for decades."

Kasoff took his concerns to the Crestwood Police Department earlier this summer when Krempasky still maintained her law office in the St. Louis County suburb. He says a detective interviewed him about his complaint and said he would pass along the information to federal investigators. Since then Kasoff says he's been kept in the dark about any pending investigation. Crestwood Interim Police Chief Mike Paillou confirms his agency is not looking into Krempasky, and Kasoff holds little hope that he'll ever see the $10,000 he believes was left for him in the trust.

"My personal opinion is that sooner or later she's going to be removed as the trustee and we're going to discover that there is little, if anything, left," he says.

While Lisa Krempasky was attending to Chuck Norman's affairs in the late 1990s, Doug Hartmann was planning his first and only foray as a boxing promoter. It didn't go well. Having secured a television contract and a downtown hotel to stage the five-bout match in January of 1999, Hartmann failed to provide an ambulance. The oversight cost a young boxer his career and the hotel millions of dollars.

Dropped to the mat with a knockout punch, Mexican pugilist Fernando Ibarra Maldonado gathered himself on the canvas only to collapse soon after entering the dressing room. It would be 90 minutes before he eventually reached a hospital. By then the fighter had suffered irreversible brain damage.

A jury later awarded Maldonado $13.7 million in damages in a lawsuit filed against the Regal Riverfront Hotel. Hartmann was originally named as a defendant in the suit but was released from the case prior to trial. Attorneys associated with the case say Hartmann didn't have enough assets to include him in the civil suit.

By 2001 Hartmann re-emerged, this time as a developer buying derelict buildings in St. Louis and rehabbing them for a substantial profit. He called his company DHP Investments, standing for Doug Hartmann Productions. In May of 2004, Hartmann established Krempasky as the registered agent — or legal contact — for DHP Investments. One month later, according to files at the Recorder of Deeds office, Krempasky began lending tens of thousands of dollars from the Charles Norman Trust to DHP Investments.

The influx of cash led to a spending spree, with Hartmann buying up dozens of properties throughout the city. Soon others joined in — as many as 50 individuals in total — lured by Hartmann's promises of high returns on their investments. As Hartmann met with new investors and drove around the city in his Mercedes sedan looking for new real estate opportunities, investors say, Krempasky worked behind the scenes, setting up corporations between Hartmann and his new financers. In almost every case, Krempasky established herself as the attorney of record for the new corporations.

Many of Hartmann's investors were so-called hard-money lenders, wealthy individuals who make short-term loans at interest rates of up to 20 percent. Others were acquaintances of Hartmann or people who attended weekly services with Krempasky at Victory Fellowship Church in Crestwood.

A pastor at the church describes Krempasky as a quiet member of the congregation who in years past helped raise funds for foreign and domestic missionaries. The money that the handful of church members invested with Hartmann, says the pastor, was supposed to benefit those missions.

"They weren't investing for themselves," he says. "This was all about taking the money from these investments and giving it to the poor in Africa — widows and orphans."

Gary Detmer knew Hartmann from their days at Southwest Missouri State University in the early 1980s. A 43-year-old pharmaceutical salesman, Detmer wouldn't fall into the category of a wealthy, hard-money lender. He drives a Chevrolet Impala company car and lives in a modest $200,000 home in west county. A friend of his invested in several of Hartmann's real estate deals and made a substantial profit. The friend suggested that Detmer do the same.

"Doug's sales pitch was that the city was hot," recalls Detmer. "He told me at worst-case I'd see a 10 percent return on my real estate investments — not 40 percent, but still the return would be substantial."

So convinced was Detmer of the fortunes to be made, he converted his retirement savings into a fund for the exclusive purposes of investing in properties to be rehabbed by DHP Investments. Other money he borrowed from banks, taking out more than a million dollars to purchase seven buildings, most all of them in destitute city neighborhoods marred by crime and vacant properties. Detmer says that in each case Krempasky served as his — and Hartmann's — personal attorney, setting up the legal work for the real-estate transactions.

Still, Detmer says, his investments showed significant returns — at least on paper. Last fall, though, the payments stopped, and Detmer claims Hartmann abandoned all work on the rehabs. Today all seven of Detmer's properties sit empty, and he's come to realize that Hartmann completed little if any significant work on the buildings — despite drawing large sums from the escrow accounts set up to pay for the renovation of the properties.

Detmer also learned that his ownership in several properties is in limbo, with several other investors also holding deeds to the buildings. One of his investments, a two-family flat in the Shaw neighborhood, has thirteen deeds filed before his.

"I've given up thinking of where all the money could have gone," says Detmer, whose bloodshot eyes reveal the sleepless nights he's spent pondering his situation. "All I think about now is how to get out of this mess."

Early this summer, Detmer says, FBI and HUD agents interviewed him about Hartmann, and he remains optimistic that the developer and Krempasky will face criminal charges. Reached for comment, the federal agencies would neither confirm nor deny that an investigation is underway.

Like several other investors, Detmer says he now sits on the brink of financial ruin, with his bank loans far exceeding the value of the properties. But in some ways, he says, he's lucky. He knows some investors who are out millions of dollars. Detmer estimates he's just $1.5 million in the hole.

Last month Detmer filed two lawsuits against Krempasky. The first accuses her of breach of contract after she allegedly agreed last fall to take over Detmer's debt and liabilities but failed to do so. The second alleges forgery, with Detmer's name attached to a notarized deed that he insists he never signed. The document provided him with $17,000 from the Charles Norman Trust.

"I never signed that document, and I never received any money," Detmer says.

Others tied to Hartmann and Krempasky allege that their signatures were also forged on loan documents. Coincidentally, several beneficiaries of the Charles Norman Trust believe documents involved in Norman's estate show evidence of forgery. Probate records show that a document examiner hired last year to review the public amendments to the trust concluded that several of Norman's signatures appeared inconsistent.

In a suit filed July 31 against both Hartmann and Krempasky, Reliance Bank alleges that the pair worked in tandem to deceive investors by delaying the recording of deeds. "Upon information and belief, Krempasky and Hartmann, acting as agents of DHP and on its behalf, conspired and agreed with each other and with other person whose names are unknown to commit fraud against Reliance," the suit states. "Krempasky and Hartmann acted deliberately and intentionally in furtherance of a conspiracy by and between them for the purpose of inducing Reliance to approve the loan."

Clayton attorney William Sauerwein makes similar claims in suits he's filed on behalf of a half-dozen local banks. The attorney alleges that Hartmann and Krempasky directed title closers to refrain from filing deeds on real estate so that the properties appeared free of liens when Hartmann's investors went to banks to take out additional loans.

Sauerwein, however, feels little sympathy for the bulk of the private individuals caught up in the scheme. Lured by the fantastic profits to be made with Hartmann, Sauerwein maintains, the investors became victims of their own greed, playing fast and loose with the rules in order to further profit from their investments.

"These hard-money lenders did not function in any customary way," says Sauerwein. "They did not attend closings, and they gave money to Hartmann to do what he wanted. They allowed him to roll over the loans into different properties. They were investing in Doug Hartmann, not real estate."

Cindy Rees, a rehabber currently renovating several properties tied to DHP Investments, puts it another way: "They thought they were investing in gold mines," she says. "But all they got was dirt."

On July 21 Lisa Krempasky failed to appear before the probate court for a scheduled hearing involving the Charles Norman estate and, as a result, was temporarily removed as its personal representative. But the removal was little more than a technicality.

Thomas Glick, Krempasky's attorney for matters involving the trust, says he's to blame for the missed court date, and within a week he successfully petitioned the court to reinstate his client. Yet for Krempasky's growing number of detractors, her failure to show in court only completes her disappearing act.

They say dozens of phone calls to Krempasky remain unreturned and that she now uses a P.O. box as the return address for her law practice. This past spring, Krempasky removed herself as the registered agent for the many of the limited-liability corporations she established between Hartmann and his many investors. In total, according to the Missouri Secretary of State's office, Krempasky resigned from at least six companies between February and April.

She severed ties as Hartmann's registered agent with DHP Investments in late March. On July 24 the Secretary of State's office administratively dissolved DHP Investments for failing to find a replacement. The action prohibits Hartmann from conducting further business in the state under the company banner.

In recent months city residents and politicians have taken Hartmann to task, claiming that his defunct properties have pockmarked large sections of south St. Louis with unfinished and derelict buildings. Since December 2004 St. Louis City has slapped DHP Investments with nineteen nuisance and housing violations, according to records in the St. Louis City Municipal Court.

Hartmann, too, is rarely seen anymore by his many investors, his home in O'Fallon now owned by one of the lenders to whom he owes money. Gary Detmer saw Hartmann for the first time in nearly a year at a deposition last month. Dressed in shorts and a T-shirt, Hartmann provided few clues as to what happened to his real estate investments.

"He pleaded the Fifth Amendment to everything," Detmer recalls.

While there's no record of Krempasky investing the trust funds in real estate ventures in recent months, the attorney continues to wheel and deal as a member of ITEX Corporation, the trading exchange through which she first met Chuck Norman. In recent weeks Krempasky has offered up for barter a pair of Rams football tickets, two cemetery plots in Atlanta, property in Texas and a home in Pine Lawn, according to Herb Speck, the co-owner of local ITEX affiliate the St. Louis Trade Exchange. As is the case with all of his clients, Speck says, he never asks how Krempasky obtains the items she barters.

"Lisa gets so much stuff, I don't know what she's going to have for me when she calls," says Speck. "She takes it to the extreme, and saves a ton of money in the process. She did over $100,000 worth of trades through us last year."

Krempasky now lives in north St. Louis, in a neighborhood that could not be further removed from her white, suburban existence in Webster Groves. Like many of the homes that she and Hartmann bought over the past two years, the three-story structure is in need of work. The block is littered with fire-damaged and boarded-up buildings.

A big gray cat comes to the window of the home when visitors knock on the door, but no one answers. A neighbor named Virgil confirms that Krempasky lives there but keeps to herself.

"She leaves early in the morning. We don't see much of her," says Virgil. "She's a good neighbor."

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