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Colorado developer's past marred by legal woes
Sep 06, 2005 12:00 am
September 1, 2005
A Colorado company with plans for a 287-acre development of mostly rental property in the Callis Road area and its founder have faced numerous legal battles in recent years, including at least one set of criminal charges, The Lebanon Democrat has learned.
Mile High Capital Group, headquartered in Englewood, Colo., had yet to close on property in Wilson County as of Wednesday or begin the development process with local planning offices, city officials said.
However, the prospective development has been touted by Lebanon Mayor Don Fox in statements released by the company and in campaign literature released by Fox's re-election campaign this week.
Fox appeared to dismiss the legal troubles Mile High Capital has had in the past, saying simply the company would succeed or fail based on its performance in the local real estate market.
A history in the courts
Less than three weeks after selling the company to Chief Operating Officer Andrew McFaul on July 1, Mile High Capital Group's founder and former chief executive officer Rick Dryer filed a defamation lawsuit against nine former employees of Mile High Capital and companies providing services for the firm, according to a July 22 article published in the Denver Business Journal.
The lawsuit claimed the former employees made derogatory public statements about Mile High Capital's operations and Dryer.
According to the suit, Mile High Capital purchases tracts of land, develops and subdivides them, and sells the plots and structures to "investor-owners who usually rent them out to obtain a stream of income."
A press release issued by the company Aug. 17 announcing its plans for Lebanon stated Mile High Capital develops subdivisions in areas identified as "possible high-growth areas with a rental need and sells its products usually to non-owner-occupied purchasers."
The company's products include condominium complexes and single-family homes, the release noted. The Denver Business Journal reported the company markets the units at sales seminars across the United States, where investors put down 5 to 10 percent as an initial investment.
Dryer's suit against the former employees was, however, the latest in a long line of legal actions involving the company and its founder. Citing court records in Colorado, the Denver newspaper reported Mile High Capital has been involved in more than 30 lawsuits over the past five years.
At least a dozen of the suits were filed by investors or subcontractors, the article noted.
Dryer himself was involved in more than two dozen Colorado legal actions dating back to the mid-1980s. In 1987, The Denver Business Journal reported he pleaded no contest to 10 counts of fraud in connection with the sale of promissory notes. He was ultimately ordered to pay more than $89,000 in restitution.
In February, the estate of Alfred Bernhardt sued Mile High Capital, Dryer and a related company alleging fraud, breach of contract and other charges. The ongoing lawsuit pertains to a $95,000 promissory note from Mile High Capital to Bernhardt.
In a press release issued July 21, Mile High Capital announced Dryer sold the company to McFaul, who now serves as the firm's chief executive officer.
Promises and Plans
While Fox and Mile High Capital have released statements indicating the Lebanon development would include residential and retail developments as well as a park and bike trails, no such plans have been filed with the city's planning department.
"Developments such as these are so vitally important to the welfare and prosperity of our city," Fox said in the company's Aug. 17 press release. "Not only do they enhance our quality of life, they also help ensure our city is sound financially."
A news report of the company's plans to locate in Lebanon was also featured prominently in campaign literature Fox's re-election campaign disseminated Wednesday.
As of Wednesday, Fox said the firm had yet to close on the 287-acre property located between Safari Camp and Callis roads. A search of records in the Wilson County Register of Deeds office also turned up no purchases in Wilson County by the company as of press time Wednesday.
Lebanon City Planner Magi Tilton added Mile High Capital has yet to submit any formal planning documents to her department.
The property, she continued, is under county zoning, as it has not yet been annexed into Lebanon.
"They've not submitted anything from an application standpoint," Tilton said. "They're going to have to request annexation and zoning in order to have our sewer. Then, they'll have to come back with a proposal, whether it be a subdivision with site plans for commercial or a planned unit development. We've had a couple of conference calls with them."
Colorado attorney Jeff Keiffer, who represents Mile High Capital in its quest to locate in Lebanon, said Wednesday he had not had time to "dig into" the finite details of the project.
Asked whether the development would largely consist of "non-owner-occupied" structures, he replied: "Mile High sells these to other individual purchasers that sell them. If the individuals rent them (or) own them, that's kind of up to the individual."
Fox said the company would likely lease some parcels to retail developers. The residential portion of the development would consist of "condos and apartments" that would be offered as rental properties, he said.
On its corporate website at www.milehighcapital.com, the company states it is building "turnkey income properties as investment properties," further described as "duplexes in growing communities nationwide."
Fox said Wednesday he was not troubled by Mile High Capital's recent legal woes, noting the firm's success would ultimately depend on its ability to compete in the local real estate market.
And while the Lebanon Planning Commission will review the company's financial status once a preliminary plan is submitted, Fox said past legal troubles would not necessarily destroy the project's chances of approval.
"The City of Lebanon between 2000 and 2005 has probably been sued eight or 10 times," he said. "You're going to have disagreements with that number of developments they've got. That doesn't seem like much to me. You take disgruntled contractors, disgruntled investors – that goes on all of the time."
Instead of legal history, Fox said city planners will examine how many of the company's developments have failed.
"We're not concerned with their relationship with investors or their relationship with contractors," the mayor said. "It's how successful have they been? And then, only if it requires infrastructure on our part. Otherwise, you can come in and fail all you want."
Staff Writer Brian Harville can be reached at 444-3952 ext. 16 or by e-mail at email@example.com.