Aspen Walk project on east side receives one-year extension
October 14, 2009
ASPEN – Aspen City Council on Tuesday granted a one-year extension to a development firm to build condos and affordable housing units on the city’s east side. The extension allows the company time to sort out a legal mess with two of its investors – one of whom was indicted in a Ponzi scheme.
That investor, Tom Petters of Minnetonka, Minn., has been in jail since September 2008 for his alleged involvement in a Ponzi scheme in which he’s accused of pocketing $3.5 billion. He has pleaded not guilty and is awaiting trial.
Another Aspen Walk investor, James Wehmhoff, of Plymouth, Minn., pleaded guilty in December to two felony counts connected to tax evasion and filing false tax returns. He was Petters’ finance director.
The two were part of PFG Aspen Walk LLC, which was given conceptual approval by the Aspen City Council in October 2008 to build a multifamily complex with 18 affordable housing units and 14 free-market condos on Park Avenue and Park Circle. The joint project would be done with the Aspen/Pitkin County Housing Authority.
Tom Klassen, a principal with PFG Aspen Walk, told the council that the embattled investors “have nothing to do” with the project. Petters’ firm, Petters Group Worldwide, which had controlled PFG Aspen Walk, is under a court-appointed receivership. It will be up to a receiver to remove the interests of Petters and Wehmhoff from PFG Aspen Walk LLC for the project to clear the city approval process, City Attorney John Worcester told the council.
“I got hit with double jeopardy: Tom Petters and a capital market that went into the tank,” Klassen told the council, when asking for the extension.
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Planner Stan Clauson told the council that the project’s biggest challenge in moving forward is to secure financing.
The council’s conceptual approval was due to expire in less than two weeks, and would have become void unless an extension was granted. The council blessed the extension by a 5-0 tally.