Local developers face lawsuit | AspenTimes.com

Local developers face lawsuit

Joel Stonington

Aspen Sam Houston and Frank Goldsmith the subject of a lawsuit to recoup millions of dollars they allegedly borrowed to build a resort in Hawaii. The lawsuit claims Goldsmith protected himself from the debt by illegally transferring his multimillion-dollar house to his wife. Houston would not comment on the case, and Goldsmith was not available for comment by late Thursday afternoon. According to the lawsuit, filed Thursday in District Court, Houston and Goldsmith borrowed more than $9 million to complete construction on a development project on which they had already spent $11 million.The plaintiff in the case, Pauoa Bay Properties LLC, reportedly contracted with Goldsmith and Houston’s LLC – Resort Builders Islands – to build nine units of a resort called the Na Hale project. Part of the agreement was that the maximum price would be $11,114,331. The lawsuit claims that when Resort Builders had used up that money, it began borrowing and quickly used millions more. After an initial advance of $1.6 million, Pauoa claims to have loaned $2.5 million more in less than a year, then an additional $2 million in a matter of months. According to the lawsuit, those bills have come due but have not been paid. The lawsuit also claims that Goldsmith illegally transferred his house to Five Trees Lot 10 LLC, managed by his wife, in order to avoid having it be a liability in the event of bankruptcy.The Pitkin County assessor lists the 7,000-square-foot, five-bedroom house as worth $4.8 million.The lawsuit alleges that in May 2004, Five Trees transferred the property to Goldsmith and used it to secure loans of $2 million in May and $1.5 million in June. By the end of the summer, with money in hand, he allegedly transferred the property back to Five Trees. According to the lawsuit, he did not receive significant value in return for the transfer. Houston and Goldsmith are both longtime Aspen developers. Both were involved in redevelopment of the Isis Theatre in Aspen.Joel Stonington’s e-mail address is jstonington@aspentimes.comThe Aspen Times, Aspen, Colo.

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