Ginn Sur Mer Property Owners: Beware of Replay Resorts’ Survey
GoToby.com thinks the survey is more about gathering declarations from potential future plaintiffs than about customer service. Read about why.
Palm Coast, FL – November 20, 2011 – [from the Epicenter of the GINNdom] Property owners of Ginn sur Mer (GSM) lots are finally receiving communications from their developer; two in fact within days of one another. These are very important documents, but not in the way you might think. GoToby.com received the following from GoToby.com readers:
A communication from Mark Cook, CPA and CFO of Bahama Sales Associates LLC, offering a discounted total payment of the balance of the 5-year balloon loan used to finance their GSM lot purchase.
A survey from Replay Resort Inc. purported requesting information to help "chart a course for the successful development of this resort community…"
My Opinion
Given the progress of a series of lawsuits against Credit Suisse, Cushman & Wakefield, Bobby Ginn, Lubert Adler and others, and considering the total lack of communications to GSM property owners over nearly five years, I would be skeptical of these communications. My mind runs wild with possible nefarious motives that might be lurking behind them.
Lawsuits
I refer to three separate legal challenges:
In a multi-billion dollar lawsuit filed in Federal Court in Idaho dubbed the "Loan to Own," Credit Suisse and Cushman & Wakefield are being sued on behalf of property owners from four luxury resorts (Ginn sur Mer, Lake Las Vegas, Tamarack Resort, and Yellowstone Club), all of which borrowed hundreds of millions from a lender group represented by Credit Suisse or their affiliates. The loans were supported by Cushman & Wakefield appraisals that allegedly did not conform to FIRREA and USPAP federal and state appraisal standards, most of which were designed to prevent fraudulent and inflated appraisals. Although numerous other claims are brought by Plaintiffs in the Gibson Federal Idaho case, the alleged claims of deliberately inflated appraisals are at the centerpiece of this suit.Florida Attorney and GSM property owner Dana Ballinger represents several individual GSM property owners in a handful of lawsuits against Ginn/Lubert-Adler entities. She also defends several in foreclosure actions brought against them. Her latest complaint filed in Flagler County alleges that Bahama Sales Associates, a Ginn-LA entity, used non-compliant appraisals to support lot prices and loans for lot purchases at GSM. The complaint states that the loans were not 80% loan to value. In fact, the loans averaged "286% more than market value for the mortgaged premises." The similarity between the Cushman & Wakefield appraisals and those used by BSA are not lost on me. The GSM lot appraisals seem to bring the Cushman & Wakefield tactics down to the individual lot level.Drew Dillworth, Bankruptcy Trustee for the consolidated Chapter 7 Bankruptcy of Ginn’s Tesoro and Quail West communities, sued Bobby Ginn and Lubert-Adler for Breach of Fiduciary Duty. The suit stems from the nearly $330 million Ginn-LA took as a distribution directly from a $675 million Credit Suisse loan. Tesoro and Quail West were used, along with Laurelmor (another Ginn-LA community in N.C.), to cross-collateralize the $675 million loan, which was supported by the Cushman & Wakefield appraisal of GSM. When the loan defaulted, Tesoro and Quail West assets were sold for pennies on the dollar at the foreclosure sale.
These are not frivolous lawsuits. They have passed many initial hurdles and still have traction. In fact, they are gathering momentum as more facts become known through the discovery process. They are all coalescing around appraisal fraud. Supporting loans with non-FIRREA compliant appraisals is a serious offense (both civil and criminal). The potential financial losses to the collective defendants is enormous (billions).
As a conditioned skeptic, GoToby.com suspects that the two communications might be driven by efforts to fortify defendants’ defense and/or minimize damages should their defense prove unsuccessful.
Alternate Hypothesis (ulterior motives)
BSA’s offer to accept a discounted amount as a final loan payout could have an ulterior motive. I suspect that a settlement agreement would contain a general release clause, prohibiting the property owner from participating in any current or future legal recourse. Any lot owner who signs a general release reduces the pool of present or future plaintiffs and monetary awards.
Further, in current litigation, BSA has refused to provide proof that they hold the note. They have also refused to provide any information about subsequent transfers of the notes. In fact, according to court documents, the notes were transferred at closing to Capital Source. Since then, Capital Source has come under FDIC receivership and sold off many of its low quality assets. These sales may have included all or some of the BSA notes.
Why the rush? Lot owners are given a very short time to respond to BSA’s offer. Yet many of the 5-year balloon notes do not mature until 2012.
Why is Replay Resorts asking questions about lot owner’s opinions of the value of their properties or their motives for purchasing their lots in the first place? These and many other questions on the survey appear to have no relevance to gaining information that would be useful for charting a course for successful development of the resort. Any information provided to the survey could be turned around and used to bolster the defendants’ defense.
I am not an attorney. These are legal matters and you should consult with an attorney. But here is what I would do if I were a GSM property owner in receipt of the two communications.
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I would not sign a general release
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I would require that BSA provide proof that they owned the note and would indemnify me against any future claims by a third party.
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I would not complete the survey because I am skeptical any data provided could be used to mitigate any future claims I may have against the defendants. I would want to preserve my options. If the Loan to Own lawsuit is granted class certification, I could become a plaintiff.
Note: I will be reporting this unfolding story in more depth soon but wanted to get this timely message out as soon as possible. Please feel free to contact me at 386-931-7124 or at Toby@GoToby.com
LOAN
Toby.
What is the discount being offered on the loans?
Good stuff Toby…
…in these times, and this specific situation, being a "conditioned skeptic" is the thing to do!
Keep up the good work.
Appraisals
Toby,
Ginn/LA worked the same misdeeds at other communities, specifically Cobblestone Park in SC. The over inflated lot and home prices were no where near the market value. Do you know the lenders/appraisers that were involved in this scam?
I would advise anyyone with a brain to stay away from Ginn/LA unless they want to throw their money down a deep dark hole.
Hopefully these crooks will get their come upins’ soon.
Reply to Bill
I’m afraid if I tell you the discount offered, I might reveal my source. But from those with whom I’ve talked, it’s ”negotiable.”
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