Halsey Minor is the victor in his dispute with Lee Danielson over the Landmark Hotel, Rachana Dixit writes in the Progress. The former business partners took their dispute to arbitration, with Minor wanting $12M from Danielson, and Danielson wanting $6M from Minor. The arbitrator found that Danielson was guilty of “deliberative and reckless conduct” and “gross negligence,” and has ordered him to pay $6.4M to Minor. (A stunning $2.2M of that is in attorneys’ fees.) This tells us nothing about the future of the hotel. There’s still the matter of Minor’s lawsuit against Silverton Bank—and vice versa—the outcome of which may help figure out what’s going to happen to the big, empty tower.
By way of reminder, this whole thing started with Lee Danielson back in 2003, when he bought the Boxer Learning/Central Fidelity building for $3.3M. Three years later he hadn’t done a thing with it, and Oliver Kuttner bought it from him for $3.7M. Though he’d said he was thinking about turning it into affordable housing, he ultimately returned to Danielson’s plan to build a hotel, and sold the whole thing back to Danielson and Minor. Within months, Danielson and Minor couldn’t even agree as to whether they were still building a hotel, started squabbling publicly, and early last year the lawsuits started.
How many times do people have to learn not to do business with Lee Danielson?
I notice you didn’t link to any Hook stories! (C-Ville coverage has been more pro-Minor, the Hook pro-Danielson.)
I posted over there what may have happened, but I would like to see some stories that follow the money.
Lost money (or assets):
1. Minor, assuming his stake is worthless now.
2. Home owners foreclosed and small businesses closed. SPF/Silverton Bank hit many banks in the Southeast. SPF was a deal maker that sold stakes in hotel loans to actual banks. So $10m or $20m disbursed to this project is that many more lost homes or businesses. (As an example of small businesses stressed by the credit squeeze, the Vespa shop here lost all its inventory when GE pulled its credit, even though customers were still coming in wanting to buy bikes.)
3. Small bank shareholders.
Might have lost money, might have made money:
1. Insiders & investors in the banks, the pseudo-bank SPF, the construction contractors, etc.
2. Oliver Kuttner.
Made money:
1. Danielson, on the sale. As for the construction, it depends on how much he was paid and how much he paid his lawyers. The articles say he is not personally liable for the arbitration judgment, though.
2. Employees who were paid, though losing their jobs might not make up for it.
3. Reporters, inspectors, utility workers, etc.
4. Lawyers, the big winners if they were paid up front.
There’s a famous case of a lawsuit frenzy that became a company: SCO. When there was no juice left to pay for the lawsuits, the lawyers took an ownership stake instead!
That won’t happen here, since the FDIC is the big player in the case, but maybe we will get what happened to Silverton/SPF’s Staybridge hotel deal on Water Street in downtown Milwaukee. Conservatorship.
Lost money:
4. Federal taxpayers.
Scratch that on second thought, the FDIC is paid for by the banks I think.
I did in some of the older stories that I linked to here, but there’s only one external link here, and that’s to the Progress. When I checked The Hook, there was only a very brief mention of those, while the Progress had a relatively long article.
“How many times do people have to learn not to do business with Lee Danielson?” I’ve learned.
Is this a grammatical error?
I wish I could call it a mere grammatical error. Instead, it’s the sort of problem that results from an error in thinking. :) I’ve got it fixed now—thanks!
Though Danielson isn’t liable personally [yet], I believe its his company, Hotel llc (or something like that) that is responsible. One of the ways to become personally liable is to decapitalize or undercapitalize a legal entity. What exactly would be a proper capitalization for a company doing business on the level he was? Given the litigious nature of his newfound judgment creditor, I wouldn’t be surprised if we find out the hard way.