A California company that rents out apartments to international students on behalf of two Champaign-Urbana apartment companies has defaulted on its payments, leaving owners and dozens of University of Illinois students in financial limbo, officials say.
World Elites Housing Inc., known as WeHousing, failed to make its full April payments to The Pointe at U of I in Urbana and Campus Property Management as required by its leases with those two companies, officials said Wednesday.
Students who had signed leases through WeHousing sought advice last week from UI Student Legal Services, worried that they might lose their security deposits and that they'd be in default if they didn't keep paying WeHousing, said Tanisha King-Taylor, director of the UI's tenant union.
Company officials at The Pointe arranged meetings with tenants Wednesday to explain the situation, answer questions and offer support.
The company's owners said they're pursuing legal action against the owner of WeHousing, Alan Gao, to get the money back, including the students' security deposits, but said the students might also have to consider their own legal options.
They urged tenants to pay their rent directly to The Pointe rather than to WeHousing, pledging to keep it in a trust account with their attorneys until the situation is resolved.
Co-owner John Ziff and others promised the students that no one will be forced out of their apartments as long as they stay current on their rent, even though The Pointe is still owed "six figures" by WeHousing.
"We're not going to ask them to leave," manager Brian Agnoletti told The News-Gazette. "They're still welcome to stay here."
Company officials also offered to apply the money tenants paid WeHousing for security deposits to their August and September rent if they sign a new 12-month lease at The Pointe.
"We hope that we're earning your respect and your loyalty by going this extra mile right now," Ziff told them.
WeHousing was created in 2012 as a rental broker, connecting thousands of international students, mostly from China, with housing on U.S. college campuses for a commission. It opened an office in China in 2016.
About two years ago, the company decided to enter into master-lease contracts with apartment owners in Illinois and California, including Criterion3 Lifestyle, which operates The Pointe at 1601 W. Florida Ave., U, a 432-bed upscale Urbana student housing complex.
WeHousing rents a certain number of units — including 152 bedrooms at The Pointe — then takes responsibility for leasing them to students. The tenants send rent payments to WeHousing, which in turn sends The Pointe a check every month, Agnoletti said.
WeHousing does the same for 38 apartments in two buildings owned by Campus Property Management, at 1010 W. Stoughton St., U, and 1106 S. Euclid St., C. Campus Property Management has set up a similar payment arrangement for tenants with its attorney while it's pursuing payment from WeHousing, a company official said.
Ziff and others said they'd had a good relationship with WeHousing until the last year or so. Josh Bridges, corporate marketing director for Criterion3, said The Pointe has been working with WeHousing for about four years, and one owner had worked with them for several years before that through another company.
"The relationship deteriorated fairly quickly," he said.
In April, the company didn't make its scheduled payments, then paid only about 10 percent of what was owed for that month, Agnoletti and Ziff said.
"They basically said they didn't have any money," Agnoletti said. "We reached out to our students and let them know they're going to start paying us their rent, since WeHousing defaulted on their master lease for us."
But WeHousing then started sending messages to students, saying they had signed a contract and were still obligated to pay WeHousing the rent, Agnoletti said. The company also threatened to withhold the students' security deposits, he said, which scared the residents.
"Right now, they're actually calling 15 times a day," said Maxwell Newberry, who works at the UI Research Park and just moved in to The Pointe in March. "They're essentially telling me I need to pay more rent, reminding me every couple hours or so."
Criterion3 served WeHousing with a notice of default last week, giving the company five days to pay, Ziff said. He also talked to WeHousing's owner, Alan Gao, who offered a compromise proposal, but it was "inadequate," in part because it didn't protect the tenants' security deposits, Ziff said.
WeHousing's website was down Wednesday. The phone number listed for the company headquarters in Pleasanton, Calif., south of Oakland, was out of service, and a message left at Gao's number was not returned. Several officials said they've been told the company's offices there have been cleared out.
The Pointe's owners urged students Wednesday to contact UI Student Legal Services and King-Taylor, director of Off-Campus Community Living for the UI, for further help and legal advice.
King-Taylor, who also attended the meeting, said Student Legal Services took 40 to 50 calls last week from students worried about security deposits or being double-charged for rent and didn't know "what to do next." Some had already paid for the entire semester, she said.
WeHousing will have 30 days to return their deposits after the leases expire in August, and that's likely when the students could take legal action, she said.
She praised The Pointe for being "transparent and open and honest with us" and for coming up with workable solutions.
King-Taylor said her understanding is that WeHousing is in default on its contract with The Pointe, so its agreements with the students are "null and void."
"At this point, it very much feels like a scam, like a scene from a movie where people just took the money and ran away," she said.
Peter Tian, a first-year law student, said he's considering a class-action lawsuit against WeHousing. He also thinks the FBI should get involved, saying WeHousing's attempts to get more money out of tenants after defaulting amounts to wire fraud.
He didn't know about the company's problems until a friend showed him a notice about WeHousing defaulting and he saw other posts from tenants in California on social media.
Tian said The Pointe's offer to help cover some of the students' costs is "pretty generous." He said he will likely sign another lease, saying the rent is reasonable, and he has another two years of law school.
Given that he's leaving the country for an internship in May, "I really want to conclude this as soon as I can."