Resort developer under fire
September 24, 2007
MINTURN, Colo. ” Seven lawsuits filed this year against companies associated with Chief Executive Officer Bobby Ginn have Ginn Resorts defending its credibility.
Ginn won a key endorsement from the Minturn Planning and Zoning Commissioners in May to build a private golf course and ski resort with 1,700 homes and condominiums south of Minturn, near Vail. Town councilors are in their fourth month of hearing Ginn’s proposal.
The lawsuits have not distracted Ginn during those hearings, said Ginn Spokesman Ryan Julison.
“We will certainly aggressively defend ourselves and our reputation in these lawsuits,” Julison said.
Ginn has broken the law and has damaged its credibility, say attorneys whose clients are suing Ginn.
“I think they’ve ruined their name on their own,” said John Hindo, an attorney and plaintiff in a lawsuit filed against Ginn in a Michigan federal court in May.
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Julison balked at the suggestion.
“The company is strong and our future is bright,” he said.
A New Jersey couple, Albertino and Fabiana Jorge, recently filed a lawsuit alleging deceptive and unfair trade practices in a Ginn property-selling scheme, said Damon Chase, the Jorges’ attorney.
Since the Jorges filed their lawsuit in a Florida court, about 10 other people have talked to Chase, who plans to file more lawsuits, he said.
People like the Jorges bought lots at Ginn’s Florida resorts, such as Bella Collina, at inflated values, he said.
Ginn bought property and financed its second mortgages on the lots through Ginn Financial Services, its mortgage company, he said.
Those second mortgages inflated values of the lots by about three times more than they were worth as Ginn realtors sold them to unsuspecting buyers, Chase said.
His clients hoped to sell them quickly to make a profit, but then the lots’ values went down with the real estate market, Chase said.
“All the sudden they are stuck with mortgage payments where they owe hundreds of thousands of dollars,” Chase said.
Julison called the Jorges “disgruntled” and compared the lawsuit to a similar lawsuit filed in a Michigan court in May.
The Michigan lawsuit contends Ginn sold individual properties at four of its Florida resorts multiple times for investment purposes without registering investment contracts with the Securities and Exchange Commission, in violation of federal law.
Ginn real estate agents told the plaintiffs that “as soon as the property was purchased, the agents could immediately sell the properties at a substantial profit,” the lawsuit says.
“We don’t sell that way,” Julison said. “We never would and we never have.”
These types of investments were popular in Miami, Los Angeles, Denver, Las Vegas and other large real estate markets up until one-and-a-half years ago when the market turned, said Led Gardner, owner of Vail real estate firm Led Gardner and Associates.
“That investment model has by and large dried up,” he said.
In Vail, people still like to buy and sell quickly in places such as Gore Creek Place and Village Walk because the values of the homes grow substantially each year, Gardner said.
“We’re still a very, very strong market,”
However, Gardner tells people to buy a home that they will love and enjoy and does not tell people to buy homes as investments ” that’s illegal, he said.
Julison said the “close-knit” group of Michigan investors were looking to sell the properties quickly ” they were not serious home buyers, Julison said.
“We don’t ever guarantee any sort of profit-taking,” Julison said. “That’s an absolute no.”
Ginn should not take the blame for the group of investors’ losses, Julison said.
Hindo said Ginn was trying to make the situation seem unique.
“We’ve gotten calls from people all over the country,” since the Michigan lawsuit was filed, Hindo said.
In September, NASCAR drivers Joe Nemechek and Sterling Marlin and two crew chiefs filed separate lawsuits against Ginn Racing for failing to pay their salaries, according to http://www.scenedaily.com, a Web site devoted to covering NASCAR.
The four men lost their jobs when Ginn Racing merged with Dale Earnhardt Inc., news reports say.
J. Merritt White, an attorney representing the former employees, the article says, did not respond to a message requesting comment Thursday.
Bobby Ginn is “surprised” by the lawsuits because he has paid the men and will continue to pay them until their contracts expire, Julison said.
Bobby Ginn started Ginn Racing as a “personal decision” and the company is “separate from Ginn Resorts,” Julison said.
“He’s been a NASCAR fan his entire life,” he said.
The companies merged because some sponsorships fell through, he said.
Meanwhile, Ginn Racing failed to pay a $320,000 commission to Media Brokers International Inc., a Georgia advertising agency, according to another lawsuit filed in June in a Georgia court.
Ginn Racing worked with Media Brokers to get CertainTeed, a building materials manufacturer, to sponsor Ginn’s No. 13 Chevrolet car, the lawsuit says. CertainTeed paid Ginn $400,000 for each race, totaling $3.2 million dollars, out of which Media Brokers did not get its commission, the lawsuit says.
Julison did not respond to a message requesting comment on the Media Brokers lawsuit.