If you are a tenant in the city of Milwaukee, you likely rent from a property management company or real estate investment group with a name that includes the acronym ‘LLC’ which stands for Limited Liability Company. The availability and widespread use of LLCs started in the late 1990s as a business mechanism intended to be used as a liability firewall to protect owners and investors from tenant litigation, code enforcement fines, and to avoid the payment of personal and corporate taxes. Legal tools like LLCs reduce landlord accountability to their tenants and the government, promote reckless investment strategies, and lay the groundwork for systematic disinvestment from rental properties. If you ever drive around Milwaukee’s north side and wonder why so many of the houses are dilapidated and falling apart, even those that aren’t boarded up and are still lived in, this is the reason.
A 2019 study by Adam Travis found that there is a direct relationship between LLC ownership of a rental property and the likelihood that that property has fallen into disrepair. The risk protection and anonymity that LLCs provide to landlords facilitate their use of a ‘milking’ approach to rental property acquisition and ownership, which relies on strategic disinvestment through the extraction of rents while expenditures on maintenance are neglected. Tenants have little to no recourse because they often do not know who their landlord is, only the name of the LLC they rent from and maybe the phone number of a property manager.
Municipalities too struggle to identify landlords who hide behind LLC shell companies either due to corruption (which has been alleged of the DNS by many tenants who have contacted the Milwaukee Autonomous Tenants Union)) or because the name of the actual owner of the LLC cannot be found anywhere. The Travis study also found that LLC shell company schemes disproportionately affect Black and Brown homeowners. This is unsurprising because there is more money to be made renting dilapidated and rundown apartments to poor, working class Black and Brown people. Just look at Milwaukee’s largest private slumlord Berrada Properties, which pulls in millions every month using these same exploitative practices.
Shell LLCs are a huge problem in terms of their lack of transparency, making it difficult to identify who is actually behind the property and who is behind these schemes. This is because many landlords incorporate their LLC using a registered agent, usually a real estate lawyer who charges an annual fee to act as the registered agent, sometimes for hundreds of LLCs. For example, while researching a landlord called Enigma Properties LLC after receiving about a half dozen complaints over a few months, MATU realized that the person listed as the registered agent of the LLC in the Wisconsin Department of Financial Institutions (WDFI) database is not the owner. The registered agent is instead a real estate lawyer named Michael D. Orgeman, a registered agent for nearly 500 LLCs in Wisconsin. We further found that Enigma Properties LLC is itself just a front that doesn’t own any properties in Milwaukee. All of the properties that appear on the website for Enigma Properties LLC are actually owned by other LLCs, the registered agent for which is also Michael D. Orgeman. For example, Enigma’s property at 930 N. Marshall St. is actually owned by H-930 MARSHALL LLC and S-930 MARSHALL LLC, which are both shell companies registered to Michael D. Orgeman.
The layers of shell companies and registered agents make it very difficult for Enigma tenants, MATU organizers, or public servants to find out exactly who owns this company. Making it almost impossible to hold them accountable for the negative impacts their practices have on the Milwaukee tenants specifically and the fabric of social life in general.
The use of LLC shell companies is a form of strategic disinvestment from Milwaukee’s aging housing stock that allows landlords to remain anonymous and liability-free, creating the conditions where they can extract maximum rents while investing minimally into maintenance. In reality, landlords do not provide housing, they are gatekeepers of housing. It is builders, electricians, plumbers, roofers, drywallers, and finishers that provide housing. Landlords merely capture the housing using advantageous financial tools at their disposal which allows them to accumulate massive profits while turning much of the city into slums. We do not need landlords. Milwaukee tenants would be better off if landlordism was abolished and they were given the power to collectively manage their own affairs.