Wed Sept 6 2023

ys Ponzi Scheme

9/6/23

Jeffrey Beyer — best known as one of the three “Beyer Boys” who carved out a career in the plumbing, heating and cooling businesses — is accused in a lawsuit of operating “a Ponzi scheme” to aid his failing business.

San Antonio businessman Kyle Pawelek says in the suit filed Friday that he’s been stiffed by Beyer, a “longtime friend” and president of Beyer Mechanical Ltd. of Selma, on millions of dollars in loans “used to prop up his financial house of cards.”

Pawelek alleges Beyer told him the loans would be used to buy scarce heating, ventilation and air conditioning equipment that would be resold at a large profit through Beyer Mechanical. Those were lies, Pawelek says, and the money instead was used by Beyer to “shore up his personal and business financial situations,” “stave off creditors” and support his “lifestyle.”

Beyer, Beyer Mechanical and other defendants “have engaged in a scheme to rob Peter in order to pay Paul, with Pawelek cast in Peter’s role,” the complaint says.

He has sued for fraud, unjust enrichment and conspiracy and seeks more than $4.7 million he says he loaned Beyer, plus interest and unspecified punitive damages. Pawelek also seeks a receiver for all of the defendants’ assets and a restraining order and injunction to prevent Beyer from disposing of any assets.

Beyer did not respond to multiple phone calls. William “Dick” Davis, his lawyer, said in an email he was meeting with his client at 2 p.m. Tuesday and would respond to a query about the lawsuit. He hadn’t responded by Tuesday evening.

 J.D. Pauerstein, Pawelek’s attorney, declined to comment on the lawsuit.

Family-run businesses

Beyer and his two brothers, Perry Jr. and Pat, were commonly known as the Beyer Boys while growing up. They chose to incorporate the name when they each launched a family-run business.

According to the Beyer Boys website, Beyer Mechanical specializes in commercial heating and air conditioning.

Pat Beyer is president of Beyer Air Conditioning and Heating, specializing in the residential market. His LinkedIn page also says he is vice president of Beyer Mechanical.

Perry Beyer Jr. started Beyer Plumbing Co. in San Antonio and ran it for more than three decades before his death in 2020. Son James Beyer is operations manager and daughter Liz Beyer is office manager, its website shows.

A few years ago, Selma lured the businesses to the city with an incentive package that would reimburse them for 90 percent of ad valorem taxes paid for six years, the San Antonio Express-News reported at the time.

Neither Beyer Air Conditioning and Heating nor Beyer Plumbing is involved in the lawsuit.

Pawelek, 32, owns Texas Construction Concepts. He says Jeffery Beyer, 59, asked him for a $1.6 million loan in July 2022 to buy mechanical equipment in bulk. Beyer said he had “priority access” to the equipment because of his long relationships with manufacturers and distributors, Pawelek’s lawsuit says.

Pawelek was assured there was “no risk” in making the loan because the equipment had already been sold to other buyers, the suit adds.

He made the loan and, later, loaned an additional $1.7 million. Those two loans were quickly repaid by a Beyer business called JM Partners LLC.

In November, Pawelek agreed to make a third loan for $3 million. As he did with the two prior loans, Beyer drafted a promissory note. The loan had to be repaid by Jan. 13.

Shortly before it was due, the lawsuit says, Beyer asked for a fourth loan. Pawelek loaned him another $3 million Jan. 12 without a written promissory note, the suit says.

‘Bounced checks’

Beyer allegedly missed the payment due dates on both loans. 

Beyer, his wife Melodie, and the Beyer Mechanical and JM Partners are unable to pay their debts and their liabilities exceed their assets, the suit says.

Pawelek says Beyer did not disclose that he owed more than $1 million in unpaid taxes to the Internal Revenue Service. Comal County records show the IRS filed tax liens for more than $1.7 million for income earned from 2014 through 2020. The liens were released last month, an indication the taxes have been paid.

In his suit, Pawelek also said he believes that merchant lenders have made high-interest loans to Beyer Mechanical and are “capturing its receipts in a ‘lock box’ arrangement in order to apply the money to their loans.” 

“This has left Beyer Mechanical strapped for cash to fund its current operations,” Pawelek says.

Instead of repaying the loans, Beyer offered “a series of false representations, bounced checks, and partial payments.”

“These lies evidently were part of the Ponzi scheme and were used to give Beyer time to keep looking for new victims so he could pay the old one,” the complaint adds.

Beyer first told Pawelek the third and fourth loans had been been repaid but Pawelek never received any wire transfers, the suit says.

In April, Beyer blamed the merger of his bank, Universal City’s TexStar National Bank, with American Bank of Corpus Christi for delaying a wire transfer. Despite Beyer’s assurances that the money would be in Pawelek’s account within two days, the suit says, the money never arrived.

Frozen accounts

Several days later, Beyer sent Pawelek “an image of a personal bank account statement showing more than $17 million in pending deposits at Beyer Mechanical.”  Pawelek alleges in his suit the figures in the image “were altered in an attempt to defraud” him.

On April 21, Beyer again promised that had made a wire transfer and would write checks to cover the remaining balance. All three checks that Beyer wrote were rejected by Pawelek’s bank for insufficient funds, the suit says. In addition, no wire transfer ever arrived.

In May, Beyer blamed the payment delays on the IRS freezing his bank accounts, the suit says.

That same month, though, Beyer Mechanical wired $1.3 million to Pawelek.

Pawelek says he’s still owed $1.7 million on the third loan, plus the entire $3 million on the fourth loan. Beyer has “ignored” demands for repayment, the suit says.

In his suit, Pawelek says he suspects the Beyers paid the IRS tax liens from the sale of a property on River Road in New Braunfels. The Comal Appraisal District’s website shows the couple have a residence on River Road. He also said he believes Beyer has been marketing for sale two lake houses on Mary Boulevard in New Braunfels.

“This appears to be an effort to convert illiquid real estate that might be subjected to creditor claims into easily-concealed cash,” Pawelek alleges.

Wyoming LLC

He also alleges the Beyers transferred 1,117 acres of land at 4000 FM 140 West in Atascosa County to a Wyoming limited liability company that shares its name with the property’s address. The Atascosa Central Appraisal District has assessed the property at more than $3.8 million.

“Wyoming limited liability companies often are used in attempts to hide assets from creditors,” Pawelek says. He adds the Beyers “did not receive equivalent value for the transfer of the Atascosa Ranch” to the LLC, which also is a defendant in the suit.

The lawsuit links to a website that says the assets of a Wyoming limited liability company are protected from the personal creditors of the members.

Pawelek wants to achieve an “avoidance of the transfer” of the ranch to keep it from falling outside the reach of his collection efforts. He also wants a restraining order and permanent injunction to prevent the sale of Atascosa property, the lake houses and and the Beyer Mechanical’s headquarters building at 17105 Beyer John Drive in Selma.

Pawelek’s suit was filed in state District Court in San Antonio.

Written By

Patrick Danner

Patrick Danner is a business reporter for the San Antonio Express-News. Email Patrick at pdanner@express-news.net.