East Lake Redevelopment LP and East Lake Redevelopment II LP filed the suit in federal court in Atlanta on Aug. 12, naming Mercy Housing Management Group Inc. as the defendant, according to SaportaReport.com, which first reported about the filing.
In the lawsuit, plaintiffs allege that the problems go back to 2010 and that Mercy Housing employees spent more than $54,000 at Publix Super Markets Inc. and gave rent concessions of more than $434,000 to residents at the 542-unit complex.
Greg Giornelli, president of the East Lake Foundation and an integral part of the community's redevelopment, declined to comment, citing the pending lawsuit, SaportaReport.com said.
A Mercy Housing spokeswoman also told the publication it could comment at length because of the litigation.
But Barbara Faulhaber, the spokeswoman, said the company denies willful wrongdoing.
"Because the case is in active litigation, we cannot comment on any specific details, but we do deny any intentional fraud and wrong-doing," she told SaportaReport.com.
"The actions of two former employees do not represent the values of Mercy Housing, and we did everything possible to resolve the issue once it was discovered."
Read the full story on SaportaReport.com here.