Saga of H's Resort nears end in North Myrtle Beach
Willie C
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Posted on the Sun, May. 09, 2010
Felled by greed: Saga of H's Resort nears end in North Myrtle BeachBy David Wrendw...@thesunnews.com The legal wrangling appears to be drawing to a close for hundreds of investors in H's Resort and Beach Club, a condominium project that was supposed to have been the state's largest but instead wound up being one of this area's biggest examples of developer greed during the overheated real estate boom. Expected rulings next week in federal bankruptcy court could put an end to the nearly five-year legal battle between condo investors and Harvey Graham Jr., the failed developer of H's Resort here. The rulings also could effectively put a radio station Graham owns - WVCO FM-94.9 - out of business. But while the condo lawsuit might be coming to a close, financial resolution of other disputes tied to the H's Resort property are in doubt as lawyers fight in bankruptcy court over Graham's personal assets and his interests in a half-dozen businesses. Next week's rulings, scheduled for May 20, would let the condo investors sell 8.27 acres of property Graham owns in Loris to help settle a judgment that, with accrued interest, amounts to $856,540.92 to be split among the roughly 385 investors. A ruling on the matter could come sooner if a judge agrees to allow the sale without a hearing. Graham's lawyer has agreed to let the sale happen, but the judge has not yet signed an order. Graham valued the Loris property at $200,000 in court documents, so it is not clear whether the sale will completely pay off the judgment. The property includes the transmitter tower for the radio station Graham owns, which broadcasts oldies and beach music and is better known as "The Surf." That tower is considered a fixture on the property and will transfer to the new owners. Gene Connell, a Surfside Beach lawyer who represents the condo investors, said he might consider allowing the radio station to pay rent for use of the tower while a sale is pending. The use of the tower might be a moot point, however, because BB&T also will ask the bankruptcy court next week for permission to repossess the radio station's equipment. That equipment is part of the collateral Graham pledged for $4.1 million in loans from the bank. Graham and his lawyer, William McCarthy, did not return telephone calls. The property sale was supposed to take place last year but was halted when Graham filed for personal bankruptcy protection in November. The group of condo investors are among 23 creditors who have filed claims against Graham totaling $26.6 million. The creditors include O.D. Pavilion operator H. Lee Brown - a former business partner with Graham - and County Councilman Harold Worley. Brown and Worley say Graham owes them a combined $4.9 million on deals with ties to the failed H's Resort's property, which is separate from the Loris land and located near this city's oceanfront. Another creditor, Joseph McMillan, says Graham owes him $500,000 because he illegally terminated McMillan's long-term lease on the resort property in 2005 so he could market the condos. McMillan's lease was supposed to run through next year. McMillan declined to comment because the claim still is in litigation. Horry County State Bank, which is owed nearly $3.3 million for various loans, alleges that there are missing assets and discrepancies in some of the financial reports related to Graham's bankruptcy. The bank is expected to file documents outlining its findings later this month, according to court documents. Tara Nauful, a Columbia lawyer who represents the bank, did not respond to a request for comments. The bank and Graham have been "in extensive settlement negotiations" regarding the discrepancies, according to court documents. Sterling Bryson, a Surf City, N.C., business owner who placed deposits on two condos at H's Resort, said news of next week's hearing is encouraging but he isn't counting his money yet. "It's been so long that whatever happens, happens," Bryson said. "There's nothing we can do about it now, but it would be nice to see people recoup something soon." Brought down by greed H's Resort, which was never built, has been called a prime example of developer greed by Connell, the condo investors' lawyer. Investors originally agreed in 2004-05 to pay between $260,000 and $305,000 per unit at the 18-story H's Resort, which was to be built on the second row at Second Avenue North and Ocean Boulevard. The resort was never built and the land remains vacant. Graham ran into trouble in late 2005 when he canceled all of the buyers' original contracts and told them they would have to sign new contracts and pay as much as 51 percent more for their units if they wanted to go through with their purchases. Connell said Graham canceled the contracts because he wanted to capitalize on rising real estate prices. The higher condo prices would have meant an additional $40 million for the developer. Graham's lawyer at the time, however, said the higher prices were necessary because of rising construction costs. Buyers balked at the higher prices and H's Resort eventually failed as the condo market collapsed. "He [Graham] had half the condos sold and then he got greedy and lost the whole deal," said Brown, who was a partner with Graham in a business that owned H's Nightclub. Brown was not a partner in the condo development. Bryson and other buyers say they felt betrayed by Graham. "H's seemed like such a strong, straight-up deal and everyone expected it to be successful," Bryson said. By the time Graham canceled the contracts, "we had missed out on some other good deals in the Ocean Drive area." "If we had known what would happen, we would have invested our money in some other places," Bryson said. Although Graham returned all of the condo deposits, albeit without interest, Connell filed a lawsuit alleging breach of contract and claiming that buyers should be compensated for the missed investment opportunity. The two sides reached a financial settlement in 2007, but it wasn't until last year that they agreed on the Loris property sale as a way to satisfy Graham's debt to the buyers. The November bankruptcy filing then derailed that sale. Who needs to be paid While other creditors with ties to H's Resort are trying to recoup their money, Graham's bankruptcy filings don't offer them much hope. Graham lists assets totaling nearly $13 million and debts totaling $18.3 million. Graham - whose father built a family fortune on tobacco in the 1960s, when the crop was Horry County's key economic force - says in court documents that many of his real estate assets may be overvalued because they are based on old appraisals. Graham's partial ownership of Graham Family Limited Partnership accounts for half of his assets, with the rest spread among real and personal property, life insurance polices, checking and savings accounts, and shares of company stock. Most of the other businesses Graham is associated with have little to no value, according to court documents. For example, Graham's half-ownership of Graham Brothers Farm Supply in Loris is valued at $74,200, according to court documents. However, the business had a net operating loss of $101,000 last year. Graham owns 12 percent of Carolina Linen Systems, a Loris business that cleans linens for area resorts. However, the future of that business is unclear following an April 2 fire that destroyed its building and $2 million worth of machinery and inventory. The rest of Graham's businesses, including the radio station, have no value because they owe more than they are worth, court documents show. "The chances of getting any money are very slim," said Brown, who filed a $4.6 million claim against Graham. That claim stems from a 2004 contract in which Graham agreed to pay $5 million to buy out Brown's interest in their partnership, which had owned H's Nightclub and the property where H's Resort was to be built. Graham made just two payments to Brown. "That was my little kitty that I was going to put away for my children and grandchildren," Brown said. "Instead, I'm 62 years old and I'm still working." Worley said he doubts he'll be able to collect the $300,000 he is owed as part of a settlement agreement Graham signed in 2008 to end a breach of contract lawsuit. "That money is a lost cause," Worley said. Worley is in better shape than many creditors, however, because that settlement agreement gives him the first right of refusal if the H's Resort property near the oceanfront ever is sold. Worley said the bankruptcy judge has indicated he will uphold that part of the settlement agreement. Worley said he would be interested in the property if the price is right because it is adjacent to land he already owns. The resort property, which stretches from Ocean Boulevard to Hillside Drive, has a fair market value of about $1.3 million, according to the Horry County assessor's office, and Worley said if it were auctioned today "you'd be lucky if you got $1.5 million." Graham, however, took out two mortgages on the property that now total $8.8 million with interest and fees. Horry County State Bank holds the first mortgage, an October 2005 loan for $2.4 million. The now-defunct Beach First had the second mortgage, a November 2005 loan now totaling $6.4 million, but it is not clear whether the bank's claim will be allowed by the bankruptcy court. Beach First executives sent the claim by overnight delivery three days before the court's deadline. Three weeks later, bank officials realized the delivery service had lost the package. Beach First - which was shut down by regulators last month and taken over by Bank of North Carolina - has asked the bankruptcy judge for permission to file a late claim. The H's Resort property near the oceanfront likely will be sold at auction to help satisfy at least one of the mortgages. Depending on how that auction goes, Worley said he might exercise his right to buy the property at the auctioned price. While a payback for soured land deals and investments appears to be on the horizon for some people, those who have watched the H's Resort saga since the beginning say they have learned to be skeptical. "This thing never seems to end," said Ann Britt, one of the investors who sued Graham when condo buyers filed their original lawsuit in 2005. "Whether this will finally be the end or not, I have no idea." | |||
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Ginny Maynard
Willie C
| Earlier today I sent out an article that appeared in today's addition of the Sun news. My intent was to inform and gain support for Harvey, Selene, the Surf and the Surf staff. I feel that it is most import with these troubling times and news that we rally around the Surf and what they stand for. It is one of the few stations that play the music we all love. We cannot allow this station to go off the air in its present form. I ask all to be supportive of the Surf and pray that all turns out well for Harvey, the Surf and their staff.
Best Regards,
Willie C. See the Cafe at: www.BeachMusicCafe.com Listen to the Cafe at: www.live365.com/stations/williecs Join the Cafe Discussion Group at: www.groups.google.com/group/BeachMusicCafe See the Cafe's Videos on YouTube at:
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See the Cafe's Videos on Google at: www.video.google.com/videoplay?docid=7375354202324320038 Shop at the Cafe Company Store: www.cafepress.com/williecs Visit Willie Cs FaceBook at:
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James "Foxx" Reddish
FOXX-WORKS MEDIA
2511 Tara Dr.
Monroe, NC 28112
----- Original Message -----From: Willie CTo: Beach Music Cafe
ming...@comcast.net
Hit our web site .
piecesofeight.org.
Genny we now have a 7 piece horn section like tower of power .
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