The annual Wayne County tax auction gets underway this month and can be expected to get much less attention than it did a few years ago. The auction has been a lot smaller in recent years as the county has placed moratoriums on selling owner-occupied homes and launched more payment plans that can reduce the debt of low-income homeowners.

One thing hasn’t changed since the days when the county sold tens of thousands of properties at a time. 

An investigation by Outlier Media of 2022 auction results shows real estate speculators continue to scoop up properties while owing taxes and racking up blight tickets, in part because Wayne County still doesn’t enforce its own rules. 

The county takes even notoriously bad actors in Detroit real estate at their word when it comes to the auction. It asks bidders and buyers to agree to abide by rules including paying property taxes and not having unpaid blight tickets, but doesn’t appear to be checking whether they’re telling the truth.

A pair of high-profile and controversial real estate owners in Detroit who bought large sums of properties at the 2022 auction have both unpaid taxes and unpaid blight tickets. 

Dennis Kefallinos is currently being sued by the City of Detroit for blight. Kefallinos spent $425,083 on nine properties in the 2022 auction. He bid on all the properties he won using his own name. 

Salameh Jaser was sued by the city for failing to maintain his large portfolio of properties but the lawsuit was dropped a month after it was filed in 2020. Jaser has racked up hundreds of blight tickets and still owes tens of thousands of dollars in fines.

He was allowed to spend more than $5.2 million to purchase 325 properties spread out across Detroit in last year’s auction, according to deeds analyzed by Outlier Media. Those properties account for nearly 15% of all sold at the auction — both in raw numbers and dollars.

Bidders in the auction only have to sign an affidavit promising neither they nor the person they may be bidding on behalf of are not violating county rules.

Wayne County Treasurer Eric Sabree’s office did not respond to questions about oversight of bidders or winners by time of publication. The county also didn’t say whether it’s ever prosecuted someone for signing a false affidavit. 

The county’s system is far from airtight. 

Outlier reviewed bidder and property deed holder information from the 2022 auction. Twenty-five separate entities, both individuals and companies, spent more than $100,000 at the auction. In only a handful of cases did the winning bidder’s name match who got the deed.

Randy Hourani, a real estate agent based in Dearborn, successfully bid on the most properties. He distributed deeds to 10 different limited liability companies — all registered to Jaser. 

County deed data from Regrid, a parcel data company, shows Jaser owns additional property in the city and owes taxes for some of those properties. 

Even the most cursory of looks demonstrate Jaser breached the tax auction affidavit. Since 2018, his properties have accumulated 634 blight tickets, according to data from the city. He still owes $48,155 to the city for 163 unpaid tickets. 

Four of his homes are also subject to foreclosure for two years of unpaid taxes.

Jaser did not respond to multiple messages by phone and email. 

Easily broken rules

For years, speculators have easily skirted and in some cases flaunted the county’s tax auction rules. All the top buyers at the 2015 auction owned properties with delinquent taxes, for example.

Enforcing these rules could be difficult. Buyers often try to conceal their identities by having other people bid on their behalf and hide behind impersonal limited liability companies. 

Wayne County doesn’t appear to be trying very hard to make sure buyers with bad records don’t participate in the auction. Though some buyers actively hide their identities, others don’t even bother. The county isn’t doing anything about those owners either. 

Kefallinos was comfortable using his own name to bid on properties in the tax auction despite long-standing accusations of buying distressed properties and then forgoing almost all maintenance. The city filed lawsuits against Kefallinos earlier this year, saying conditions at four of his properties had become a nuisance and safety hazard. 

It is not just the blight. Kefallinos found hundreds of thousands of dollars to bid on new properties, but a random sampling of properties he already owns demonstrates he is behind on his taxes on several of them. 

Both of these conditions put him in violation of the affidavit he signed before participating in last year’s auction.

A lack of transparency

The county is less forthcoming with tax auction records than in the past, making it difficult for Detroiters to know who is ending up with city property. 

The county does publicly release the names of bidders in the auction, but not who ends up with the deeds. In past years, reporters and researchers have been able to access this information from the county fairly easily. 

When Outlier asked for those records earlier this year through the Freedom of Information Act, it denied our requests several times, saying the records didn’t exist. Outlier finally got the records after a successful appeal, but the county delivered the deeds on a USB flash drive, with the data split up over 2,500 separate files of code, making it difficult to analyze. 

Without the deeds, Outlier wouldn’t have known that Hourani awarded the deeds he won to Jaser.

Wayne County’s actions, Detroit’s problem

The city often ends up paying for the cost of speculation that takes place at Wayne County’s tax auction. By not screening buyers with questionable records, the county continues to put the burden of holding property owners accountable or managing blight back on the city. The city pays for these actions through costly lawsuits, demolishing buildings and a loss of tax dollars. 

In addition to the lawsuits against Kefallinos, the city has active lawsuits against property investors Michael Kelly and father-son duo Steve and Stephen Hagerman for lack of maintenance on hundreds of properties. All three have purchased scores of property through the tax auction over the years. 

The city declined to comment on the county’s lack of oversight at the auction. 

Residents also suffer when speculators with poor records are allowed to amass property. Speculation, largely enabled through the tax auction, has been a leading cause of blight in neighborhoods. 

“Members tell us all the time about speculators in their neighborhoods sitting on homes,” said Joanna Velazquez, campaign manager at Detroit Action. “It takes a while for them to be brought up to code, so then there’s a bunch of vacant homes that aren’t accessible to the community.”

Eric Dueweke is president of the Morningside Community Organization and a professor emeritus at the University of Michigan who’s extensively studied the county’s tax auction. Jaser owns 80 homes in the 48224 ZIP code where Morningside sits, including the 34 he bought at last year’s auction, according to data from Regrid. Some of Jaser’s homes do get renovated and sold or rented out, Dueweke said, but just as many sit vacant and become an eyesore to the neighborhood. 

“Nobody can renovate 325 properties quickly,” said. “And Jaser has a history of sitting on properties for years.”

Dueweke thinks Wayne County needs to have a way to make sure properties bought in the auction don’t become blighted. He mentioned the Detroit Land Bank Authority’s ability to take back homes that don’t show renovation progress after six months.

“As a community leader, I want to hold anybody who buys auction houses to that same standard (as the land bank),” Dueweke said. “If you want to buy 10 homes in Morningside, great. But you have to fix them up or at least show progress.”

Data Driven Detroit assisted with data processing for this story.

UPDATE: This article has been modified to clarify that it was the Wayne County Treasurer’s office, not the Treasurer himself, that did not respond in time for publication. After publication, the office provided a statement that denied a lack of oversight.

Aaron (he/him) believes in telling true stories about real people. He doesn’t think there’s anything better than a crisp fall afternoon at the Detroit Jazz Fest.