Ginn, Lubert-Adler, Ordered to Release Credit Suisse Loan Documents

Tesoro bankruptcy trustee wins discovery battle for documents related to the alleged fraudulent distribution to Ginn and Lubert-Adler of $325M from a $675M Credit Suisse Loan.

Palm Coast, FL – November 10, 2010Bobby Ginn and Lubert-Adler (Ginn-LA) lost a legal battle yesterday in a continuation of the Chapter 7 bankruptcy case of two of Ginn-LA’s communities; Tesoro, in Port St. Lucie and Quail West, near Naples. The stakes are high as Bankruptcy Trustee Drew Dillworth tries to recover $148.8M of an allegedly fraudulent transfer of $325M made directly to Ginn-LA from the proceeds of a $675M Credit Suisse loan. Tesoro and Quail West are two of four Ginn-LA communities pledged as collateral for the loan. Their bankruptcy was triggered by the default on the CS loan.
Ginn-LA had attempted to block discovery of a vast number of documents related to the Credit Suisse transaction. Ginn-LA claimed attorney/client privilege stemming from a Joint Defense Agreement (JDA) between the parent company and its subsidiaries. The parent and subsidiaries are now in an adversarial relationship. Chief Bankruptcy Judge Paul Hyman ruled against the JDA claim. Defendants now have 30 days to turn over the requested documents.
The Dillworth case has far reaching implications; first, because Dillworth has named Lubert-Adler Fund II and Fund IV investors as defendants. The investors may have received distributions from the alleged fraudulent transfers. The impressive investor list includes some high-profile institutions and individuals that are likely not pleased with the unwanted attention. The list of LA investors/defendants includes:
  • The President and Fellows of Harvard College
  • The Regents of the University of Michigan
  • The John D and Catherine T MacArthur Foundation
  • The Maryland State Retirement & Pension System
  • The Ohio Police & Fire Pension Fund
  • The Pennsylvania Public School Employees’ Retirement System
  • The Commonwealth of Pennsylvania State Employees’ Retirement System
  • Edward R. (Bobby) Ginn III
  • Ira M. Lubert
  • Dean S. Adler
  • City of Philadelphia Sinking Fund Commission, as Trustee for the Philadelphia Gas Works Retirement Reserve Fund
  • Employees Retirement Plan of Duke University
  • Garfield Refining Company Profit Sharing Plan
  • Jewish Federation of Greater Philadelphia
  • Johns Hopkins University
  • Kodak Retirement Income Plan Trust
  • Lawrence S. Smith Profit Sharing Plan
  • Northwest University
  • Peacock Productions
  • Philadelphia Health and Education Corporation
  • Prince Georges County Police Pension Plan
  • Prince Georges County Fire Service Pension Plan
  • Teachers Insurance and Annuity Assn of America
  • The Washington University
  • The Vanderbilt University
  • The Trustees of Princeton University
  • The Catholic Bishop of Chicago Endowment Fund
  • The Metropolitan Museum of Art
  • The Rockefeller University
  • The President and Trustees of Williams College
  • Thomas Jefferson University Endowment Fund
  • UNC Investment Fund, UR
  • Unisys Master Trust
  • United National Insurance Company
  • University of Southern California
  • University of Virginia Investment Management Company
  • University of Oregon Foundation
  • Wellesley College
  • William Marsh Rice University
  • Yale University
  • Yale University Retiree Health Benefits Coverage Trust
The suit also has far reaching implications because the Credit Suisse loan to Ginn-LA was only one of several similar loans CS made to luxury resort developers such as Lake Las Vegas, Tamarack, and Yellowstone Club. In nearly all cases, large "advanced profit distributions" were taken by the developers based on allegedly illegally inflated appraisals. The distributions left the resorts with massive debts they could not repay. In each case, the CS loans defaulted, forcing the indebted developments into bankruptcy.
The lawsuit is also significant because it highlights a certain pattern. There is evidence that indicates Ginn-LA and other developers noticed the real estate downturn well before it was noticed by the marketplace. It appears that they took advantage of opportunities to strip out "equity" before it was earned, knowing the collapse was imminent, thus saddling their developments with massive debt at the expense of property owners and unsecured creditors. The recently filed lawsuit by Crescent Resources against Duke Energy is grounded on that exact premise. That contested transaction netted Duke Energy $1.2B and doomed Crescent to bankruptcy.

8 replies
  1. Frank
    Frank says:


    Kudos for the judge. Hopefully the crooks are scrambling, but dishonest deeds eventually become uncovered. It should be a criminal case not a civil one, but if they are finally "caught" and thrown behind bars, then many innocent people will be able to cheer!

  2. John
    John says:

    Surprise surprise…..

    Look for Mr. Ginn to show up locally once again very soon. Now Bobby has joined forces with Gridiron Capital out of the Northeast. Now how did this happen? Well what local company does Gridiron capital own? Yeah the local landscape company Ausutin Outdoor. Austin is owned my Yellowstone who is owned by Gridiron. Gridiron is now looking to get into development and has asked Bobby Ginn to be a consultant/investor. Bobby and Michele have their primary residence here in the Hammock. Now with all of his previous lots going for next to nothing, Gridiron is going to pick these up(Conservatory is top on list) and it’ll be off and running again.
    Just watch how this happens and it won’t shock anyone.

  3. Jeff weston
    Jeff weston says:

    No no no…..

    Who ever started that rumor that Bobby owned any of Austin Outdoor is wrong, completely wrong. In the early 2000’s Bobby and Eddie started working together here in PC at The Beach Club. After that build, the relationship was developed. At the time Austin Outdoor didn’t have a maintenance side to their company. Bobby asked that Eddie’s company start taking care of his properties so thus the maintenance side was developed. Bobby then moved around the state(reunion,tesoro,ect…) and Eddie built offices for Bobby’s new builds. Around 2006 Bobby extended 10 million to Eddie to help cover the costs of having 4 big builds(now Boone was starting to come on line) going on at the same time. In early 2008 the loan was paid off and Bobby was on his way downhill. Never did Bobby own any of Austin. Austin is actually multiple different companies that are under the Shatz umbrella. Eddie’s wife owns Verdego, Austin is under a few different LLC’s for tax and liability purposes(hispanic labor is paid from a different LLC). Of the 100+ laborers that Austin has less than 10% are legal and the one’s that are, are the drivers and of Cuban decent. They run SS #’s and as long as they pass the screening they can be hired.
    Bobby is going to be involved again with Gridiron capital in first qtr of 2011. Watch.

  4. Toby
    Toby says:

    Reply to Jeff weston

    From Dillworth (Tesoro and Quail West Bankruptcy Trustee) lawsuit against Austin Outdoor to recover funds allegedly transferred fruadulentl:

    18. In or around 2005, The Ginn Companies, LLC, acquired a 55% interest in Austin
    Outdoor. The Ginn Companies, LLC marketed this acquisition as a means of strictly managing its cost center with respect to its real estate projects.
    19. Therefore, as of 2005 and through the Petition Date, the same people who owned,
    operated and controlled the Debtors – Ginn, Lubert and Adler – owned, operated and controlled Austin Outdoor. Thus, the Debtors and Austin Outdoor not only shared the same ownership and control, but also an identity of economic interests.
    20. As a direct result of their close relationship, the Debtors and Austin Outdoor
    entered into a number of landscape management agreements and other transactions. However, and also as a direct result of their close relationship, these agreements were not made upon an arm’s-length basis.

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