Cliffs Sues its Old Bank and New “Partners”

The suit alleges that NBSC (National Bank of South Carolina) deceived The Cliffs and Federal regulators.

Palm Coast, FL – June 14, 2011 – The saga of The Cliffs Communities is starting to read like the plotline from the former TV series “Dallas,” with Texas-size deception and intrigue. The South Carolina potboiler even involves a Texas company now. The latest chapter in the story: Cliffs founder and developer Jim Anthony is suing the Urbana Communities and the South Carolina bank that formerly held the note on hundreds of acres of Cliffs land. Anthony is alleging a fraud designed not only to cheat him out of his land but also to deceive Federal regulators insisting the bank reduce its loan portfolio.
The crux of the lawsuit is this, with language below excerpted directly from the complaint (the “Plaintiffs” are Jim Anthony and Cliffs entities):
“On the eve of the closing scheduled for December 31,2010, the Urbana Defendants notified NBSC (but not the Plaintiffs) that they did not have the required approximately $12 million in cash to put into the deal because an equity partner who was to provide the majority of the funding had withdrawn its support of the deal.
“On information and belief, the Urbana Defendants never had that equity partner needed to fund the $12 million.
“Unbeknownst to the Plaintiffs, the Bank and the Urbana Defendants surreptitiously agreed that, simultaneously with the Urbana Defendants gaining control over Longview II, the Urbana Defendants would cause a mortgage of $17 million (rather than the agreed upon $8.6 million) to be placed upon the Longview II property in favor of NBSC. [Editor’s Note: Longview II is the limited liability corporation that owned The Cliffs land in question].
“The Bank and the Urbana Defendants also agreed that all of the Longview II property would also be used as additional collateral for the $50,880,000 financed portion of the purchase price of the Cliffs Debt, without the knowledge or consent of the Plaintiffs, most particularly the members of Longview II.”
The complaint goes on to argue that “Ultimately, and unbeknownst to the Plaintiffs, the Bank and the Urbana Defendants carried out their secret plan to fund the Urbana Defendants’ purchase of the Cliffs Debt, allowing it to make the purchase and seize control of a major portion of the Plaintiffs’ properties, including the Longview II property, all worth in excess of $300 million, for relatively little investment, and thus fulfilling the Urbana Defendants’ goal of essentially stealing the Plaintiffs’ property and the Bank’s goal of removing the Cliffs Debt from its books and avoiding further condemnation by federal regulatory authorities by simply substituting borrowers.
“On information and belief, this artifice and scheme was designed to defraud not only the Plaintiffs but also federal bank regulators.”
As we have reported previously, ClubCo, an entity composed of some Cliffs owners, had loaned to Anthony more than $60 million to complete promised amenities, including a new Gary Player designed golf course and, eventually, Tiger Woods’ first American golf course design. These "in-house" lenders cannot be happy about this latest turn of events as it may make additional property sales even tougher, a property sales are what Anthony needs to pay off their note.  Like the stock market, the high-end leisure residential market abhors uncertainty.
This latest chapter in The Cliffs saga makes it that much harder for Jim Anthony to turn the page on his financial troubles.
© Copyright 2007 – 2011 HomeOnTheCourse, LLC – Reprinted w/permission

1 reply
  1. John
    John says:


    If these allegations are true then these conspirators should be locked up. The trickle down effect of this fraud could be enormous to the obvious players mentioned in this article but also to every single home owner in the area. A developer who gets land for almost free can afford to sell at any price pushing the values way down. This is terrible.

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply