Lawsuit Filed Against Self-Described “Al Qaeda” of USC Student Housing

Los Angeles, Calif. — The University of Southern California (USC) and the developer of a proposed mixed-use student housing development for USC students today filed a lawsuit against Conquest Student Housing. The litigation is the result of a two-year campaign by Conquest to monopolize the student housing market around USC and its threats to attack competing development projects.

The lawsuit alleges a pattern of racketeering, abusive litigation, extortion, fraud and intimidation by Conquest officials who described themselves as the “Al Qaeda” of USC student housing, even going so far as to state they know how to “bomb” competitive development projects. Conquest officials have said they would do whatever it takes to prevent the construction of the University Gateway Project, which is being developed by Urban Partners LLC on land leased from the Shammas Family and USC. The University Gateway Project is an exciting urban infill, mixed-use, transit-oriented development designed to increase the limited supply of suitable student housing in the area near USC.

“Conquest’s attempt to monopolize the USC student housing market through abusive litigation must be stopped. Conquest’s tactics of threats and intimidation, as outlined in the complaint we filed today, have the ultimate effect of increasing the cost of development and decreasing the supply of new apartments and condominiums available to residents of California,” said Matthew Burton, a Principal of Urban Partners. “They are so intent on eliminating or preventing competition that they have said they are willing to spend more than a million dollars to stop a single project.”

“Conquest’s destructive campaign has caused harm to USC and our students, who face a limited supply of area housing, by preventing the development of additional student housing near campus,” said Michael L. Jackson, Vice President of Student Affairs for USC. “Conquest’s anti-competitive and abusive conduct has also wasted the time and resources of public agencies and the courts.”

The lawsuit names Conquest, its principals Brian Chen and Alan Smolinisky and other Conquest agents as defendants and spells out a long list of tactics used to control the student housing market around USC and attempt to stop the University Gateway Project and other student housing projects in the area, including:

• Threatening another developer that had a site under contract for development of a student housing project near USC with unfounded environmental litigation. In that case, a representative of Conquest said they should be thought of as “Al Qaeda” and said they know how to “bomb” competing development projects through litigation under the California Environmental Quality Act (CEQA).
• Interfering with a number of Urban Partners’ development projects in California and Washington, in which Conquest has no relevant interest, in retaliation for Urban Partners’ attempt to enter the USC student housing market.
• Threatening to block or delay any of USC’s own future development plans if those plans include student housing.
• Telling USC officials that they will do whatever it takes to prevent construction of the University Gateway Project, then boasting to others that Conquest is using CEQA to oppose other projects involving Urban Partners in order to stifle competition and put pressure on Urban Partners to abandon the University Gateway Project.
• Offering to pay a local resident in order to induce the resident to oppose an Urban Partners development.
• Initiating numerous abusive challenges to the environmental impact report (EIR) and entitlements granted by the City of Los Angeles on the University Gateway Project — all of which were rejected. Conquest subsequently sought to further delay the project by filing an additional round of appeals with the courts.
• Misrepresenting the scope and size of the University Gateway Project to area residents and others to incite artificial concern within the community. Conquest-sponsored advertising, Web site and other materials falsely stated that Urban Partners was planning to work with the City of Los Angeles to take homes through eminent domain, wrongly stated that the project had inadequate parking, and made other false claims.

The lawsuit was filed in U.S. District Court, Central District of California by Steptoe & Johnson LLP, legal counsel for Urban Partners, USC and the University Gateway Project. It alleges Conquest has violated the Racketeer Influenced and Corrupt Organizations Act (RICO), the Sherman Act, the California Unfair Competition laws, and other state and federal laws. The lawsuit requests a permanent injunction to prevent Conquest from continuing its illegal activities and asks for unspecified damages.

To download a PDF version of the complaint, click here.

About Urban Partners LLC

Urban Partners is a real estate investment, development planning and management firm. The company pursues select market niches where complexity or innovation creates exceptional potential for its partners and clients. Urban Partners’ business model is focused on equity-based investing and development. Urban will also provide fee development services in certain instances. Current equity projects include residential and mixed-use developments in urban core and high population growth areas of the western United States and major land development projects requiring detailed planning and entitlement strategies. Urban Partners’ projects and services include land development, mixed-use development, apartment and condominium homes, transit-oriented development, student housing, financial restructurings, built-to-suit development and the adaptive reuse of historic structures.

The company was founded in 2000 by Paul Keller, Dan Rosenfeld and the late Ira Yellin. Matthew Burton and John Hrovat became Principals of the firm in 2005 and 2006, respectively.

About the University of Southern California

Founded in 1880, USC is the oldest private research university in the western United States. USC annually enrolls more than 33,000 students in exceptional degree programs at the undergraduate, graduate and doctoral levels. USC’s 3,200 full-time faculty provide instruction in more than 77 undergraduate majors and 139 graduate degrees and conduct world-class research in every area of scholarly inquiry. USC is a global university, hosting the largest number of international students in the U.S. and enjoying an extensive network of programs in the Pacific Rim and around the world. Under the leadership of the institution’s 10th president, Steven B. Sample, USC has become world-renowned in the fields of communication and multimedia technologies as well as in cross-disciplinary teaching and research, has received national acclaim for its innovative community outreach programs and has solidified its status as one of the leading research universities in the United States. USC is the largest private employer in Los Angeles, annually stimulating $4 billion in economic activity in Los Angeles County.

About the University Gateway Project

The eight-story University Gateway Project will be home to more than 1,600 students and will provide more than 11,000 square feet of student service facilities, including computer rooms, laundry facilities and exercise rooms. The 421-unit project will also contain 83,000 square feet of neighborhood-oriented retail, including a bookstore and restaurant. The University Gateway Project is designed to help increase the limited supply of student housing near USC and enjoys widespread support in the surrounding communities from a diverse roster of community groups and civic and elected leaders. The project will be built entirely with private money and uses no public subsidies.

Contact: James Grant, USC Media Relations, at (213) 740-6156 or james.grant@usc.edu