A Buxton couple filed a federal lawsuit last week alleging that a Maine company knowingly rented their family a house filled with raw sewage and mold and later took their belongings.

The suit marks the latest legal action against companies formerly run by Scott Lalumiere, one-time president of Milk Street Capital, a Portland-based private lending and real estate investment firm that collapsed in late 2019. Lalumiere was the subject of a 2020 BDN investigation that detailed how his network of companies collapsed amid allegations of fraud.

Lalumiere is not a defendant in the lawsuit but he was the managing partner of the company, LH Housing, during the events described in the suit.

Bonnie and Blong Thao’s lawsuit, filed on Aug. 24, accuses LH Housing and owner Lalumiere’s former partner, Eric Holsapple, of being “slumlords who prey on and profit from the exploitation of vulnerable individuals.”

The Thaos rented the house in Old Orchard Beach from LH Housing for $1,600 a month in July 2015, after working multiple jobs to save up enough money to move their family out of public housing, according to their attorney, Laura White. But by October they found themselves homeless after the town condemned the house, the suit claimed.

Before moving in, the Thaos noticed broken windows, drug paraphernalia, trash and “other hazards,” according to the suit, which also claimed the electrical wiring was not up to code and the property lacked operational smoke detectors. But the representative from LH Housing promised the property would be cleaned and repaired prior to moving in, according to the suit.

But none of the repairs had been completed by the time they moved in, the Thaos said in their suit.

By late August, the plumbing stopped working properly and raw sewage began leaking into the house, forcing the family to go without running water for days at a time. After several delays, LH Housing eventually brought in a plumber who fixed the problem but left an “outrageous mess” in the house including raw sewage that the plumber never cleaned, the suit said.

Throughout the fall, the property became “overwhelmingly infested with mold,” the suit said, with a yellow-green film spreading across the Thaos’ furniture.

In October, during a birthday party for one of the Thaos’ children, a fuse blew. Blong Thao went into the basement, which he had never entered since it was not part of their rental. There he found raw sewage spilling out from a pipe near the ceiling, as well as feces, tampons, toilet paper and fluorescent mold throughout the room, the suit said.

During the few months the Thaos lived in the house, they all became sick due to exposure to mold and raw sewage, the suit said. For more than a month, members of the family were vomiting and suffering from diarrhea. The Thaos brought one of their children to the emergency room due to illness and dehydration. In 2017, one of the Thao children needed surgery to fix a clogged tear duct, which the suit alleges was a result of mold exposure.

By the end of October, the Thaos told LH Housing in an email that they would not pay their November rent due to the company’s failure to fix the property. Around the same time, they called the Old Orchard Beach code enforcement officer who told the family “to grab what they could and get out of the house because he was condemning the property,” according to the suit. They also allegedly lost the belongings they left in the house when LH Housing later used it to furnish other properties.

The company sold the Old Orchard Beach property in 2017, according to public property records.

Last year, the BDN found that Lalumiere and his network of companies owned at least 84 Maine properties worth about $16 million in November 2019. That month Lalumiere and his companies stopped making payments on the nearly $20 million they owed various lenders. At the same time, Lalumiere stopped coming into work, gave his daughter power of attorney over his business dealings and left the state. Within months, at least 45 properties were turned over to Lalumiere’s investors and lenders or sold in foreclosure auctions.

The Thaos are not the first to allege that companies operated by Lalumiere were not meeting their legal duties as landlords to provide tenants with safe housing. In 2018, for example, Lewiston sued Lalumiere and his companies for failing to repair nine rental properties they owned downtown. And last year, three men filed a lawsuit against the company, Lalumiere and more than a dozen other entities.

Holsapple said the suit was surprising and that he was looking into the allegations, adding that they were “not our style.”

Holsapple also noted that Lalumiere was managing LH Housing’s day-to-day operations at the time of the events described in the suit. Holsapple only took over control of the business to “clean up” after Lalumiere left, he said. Lalumiere did not immediately respond to a request for comment sent through his attorney.

LH Housing legally removed Lalumiere as a partner in 2019, around the time of the collapse of Milk Street Capital, Holsapple said. He declined to elaborate on the reasons for Lalumiere’s removal.  

“He had bigger issues than LH Housing when he left,” Holsapple said.

Another lawsuit against Lalumiere and his company Milk Street Capital offers some clues as to why LH Housing and Lalumiere may have parted ways. In a January 2020 federal whistleblower lawsuit, Erin Papkee, a former employee of Lalumiere’s, said she discovered that Lalumiere was defrauding his LH Housing partners. Lalumiere has denied the allegations.