What is Manchin hiding?
As more information comes to light regarding Joe Manchin’s shady hotel investment with a Mylan lobbyist, Manchin is still refusing to clarify his involvement.
Manchin, through a spokesman initially told reporters that he was not an investor in AA Property, despite listing the company on his personal financial disclosure forms. After being caught in that lie, Manchin admitted that he was actually an investor, but denied having interest in the Hilton Garden Inn. But, as West Virginia Metro News points out, loan documents contradict this position, and Manchin is refusing to answer reporters’ requests to clarify. So what exactly is Joe Manchin trying to hide?
In case you missed it…
Are Manchin and Puccio still investors in tanking hotel deal? That’s clear as mud
West Virginia Metro News
August 23, 2017
CHARLESTON, W.Va. — Senator Joe Manchin and longtime aide Larry Puccio are listed among the borrowers in the original $15,470,000 loan for Hilton Garden Inn Morgantown at Sun Crest Town Center that is now going bad.
A lawsuit filed August 8 on behalf of the original lender continues to list Manchin and Puccio as if they remain investors.
But Manchin’s staff and Puccio have said repeatedly that they are not investors in the hotel.
So what happened? Was there a mistake on the front end? Did they pull their investments along the way?
So far, no one is clearing up that mystery.
The original lender, UBS Real Estate Securities, is being represented by trustee U.S. National Bank Association. Its lawyers Christopher P. Schueller and Timothy P. Palmer were contacted this week by telephone and email in an attempt to clarify the status of the original 2013 Manchin and Puccio investment.
“Hi Brad, We cannot comment,” Schueller wrote back.
Manchin’s congressional office was emailed by MetroNews on Monday afternoon and then sent a followup email on Wednesday morning.
The questions were: “Is there any update on the role of AA Properties in the Mountain Blue hotel investment? I see that Senator Manchin and Mr. Puccio are listed as investors in AA, which is listed as an investor in Mountain Blue in the original loan document. Was there some original mistake in the loan document? Was AA withdrawn as an investor in Mountain Blue?”
So far, there has not been a response.
Puccio, a lobbyist and former state Democratic chairman, was also asked about the investment’s status this week during a short telephone call.
On Monday afternoon he was asked specifically about the original loan agreement listing his name and Manchin’s. He was asked if the original loan was false or if the original investment was somehow withdrawn — or if the link was severed some other way.
Puccio wouldn’t elaborate.
“I’ve made it clear as I could that we have no ownership, and I think if you’re patient you’ll see I was right and no ownership,” Puccio said. “I’m not going to keep doing this. I’m out, bud.”
The lawsuit filed August 8 in federal court in Clarksburg lists Manchin and Puccio as investors in AA Property. The lawsuit, in turn, lists AA as an investor in Mountain Blue Hotel Group, the corporation that borrowed the money for the hotel.
The original loan document also lists AA with a 12 percent interest in Mountain Blue Hotel Group — and Manchin and Puccio with a 50-50 investment in AA. Their names were also on a 2013 facility letter for the Hilton project that’s now the subject of the lawsuit.
Manchin and Puccio initially said they are not investors in AA but then revised their positions to acknowledge investment in AA but to say they are not investors in the hotel.
“Senator Manchin has part ownership in AA Property, but AA Property has no ownership or affiliation with the hotels,” Manchin spokesman Jonathan Kott stated in an email to MetroNews a week ago.
Those who filed the lawsuit seem to believe Manchin and Puccio remain investors in the hotel project. Here’s how the lawsuit identifies them:
“Upon information and belief, AA Property, LLC is a West Virginia limited liability company whose members are Larry Puccio and Joe Manchin III. Upon information and belief, Larry Puccio and Joe Manchin III are each domiciled in West Virginia.”
The investors borrowed the money for the Hilton in 2013. But the project quickly went south. The lawsuit says the hotel hasn’t kept up with its Hilton franchise agreement royalties or its local taxes.
Mountain Blue also hasn’t kept up with its required annual updates on its financial situation. For example, it hasn’t yet provided year-to-date actual expenses and payables.
UBS Real Estate Securities is asking that the hotel property be moved to receivership to ensure the property is properly maintained and that revenues are properly applied to expenses.
The principal balance due on the loan is $14,559,226.84, according to the lawsuit. The plaintiff also wants interest at the default rate, costs, fees, legal fees, expenses and other amounts recoverable.
So could Manchin and Puccio potentially be on the hook?
Or are they somehow in the clear?
The loan agreement specifies how minority investors could get out of the deal without notifying the lender.
“Lender’s consent shall not be required in connection with one or a series of transfers, of not more than forty-nine percent in the aggregate of the direct of indirect ownership interests in any restricted property,” according to Section 8.2 of the loan, which has to do with transfers by borrowers.
Such transfers may happen, the loan document goes on to say, as long as default or an event of default has not occurred. That’s key in this case because the lawsuit is all about the hotel currently defaulting.
With a 12 percent total investment, Manchin and Puccio would fall within that range where consent of the lender to transfer ownership interests is not required.
Another section of the loan deals with the use of proceeds.
Borrowers were to use the $15 million to acquire the property and pay off any other existing loans, pay any past due costs on the property, deposit the reserve funds, pay costs and expenses related to the closing of the loan, fund any working capital requirements and “distribute the balance of the proceeds, if any, to the borrower.”
That seems to allow the possibility that, in a $15 million deal, there might have been cash left over after other expenses to be distributed among the original investors.
All indications are the lawyers for Mountain Blue are trying to figure out many of the connections in the deal.
Mountain Blue is being represented by Charleston attorneys Michael J. Del Giudice and Timothy J. LaFon. In legal filings, they said they weren’t retained until August 14, a little more than a week after the lawsuit was filed.
On August 15, they filed a motion to continue an evidentiary hearing originally scheduled for Aug. 18 — in part because they need to familiarize themselves with who they’re representing and what their interests actually are.
“This the first time this law firm has represented the Defendant and it will take a considerable amount of time to become acquainted with the business and review the Complaint, attachments, Emergency Motion for Appointment of Receiver and Memorandum,” the attorneys wrote.
U.S. District Judge Irene M. Keeley granted the motion to continue. She then set an evidentiary hearing date for 9 a.m. Oct. 5.
By Sept. 14, the lawyers for Mountain Blue are supposed to file a brief in response to the original lawsuit. The lawyers for the lender are supposed to file a response to that by Sept. 21.
By Sept. 28, both sides are supposed to file a list of exhibits and witnesses.
Looks like New Jersey will be down a Senator in September.
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