The deal looked good, at least on paper.
Now, as many as 10 people say they’ve lost a total of more than $700,000. For some, it was their life savings.
They’re pointing the finger at the Macon company that arranged the transaction -- the purchase of a chain of convenience stores that dragged on for almost two years before it finally failed. Some of the would-be buyers have filed lawsuits demanding refunds and seeking damages.
Two have filed criminal complaints, including one that police have passed on to the FBI.
The Macon company, run by prominent developer Jeff Jones, faults the financier, a Las Vegas lender with a spotty track record, which took a $650,000 deposit but never delivered the $6 million in promised funding.
But at least part of the blame could lie with the flailing economy and its squeeze on the credit market, which has left banks leery of real estate deals, leading more developers to put their faith in fringe, non-traditional lenders.
“The bottom line is the lender just turned us upside-down, along with these other people,” says Jones. “I didn’t do anything wrong. I went by the book, and I got screwed.”
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Two years ago, Piedmont Fields, the Macon property management company run by Jones, held an option to buy a half-dozen convenience stores in north Georgia. The plan was to immediately resell the businesses, and buyers -- all Indian nationals -- were lined up, ready to step in and operate the stores the day the sale closed.
But with too many properties already on their books, local banks balked at the deal. So Piedmont Fields turned to the Las Vegas company, USA Global Holdings Business Trust. In April 2009, Jones said, Piedmont forked over $665,000 toward a loan for the stores and “other projects.”
A year later, things went sour. Closing dates came and went. Piedmont says it paid another $200,000 to extend its option on the properties, but the stores’ owners, tired of waiting, yanked the contract.
USA Global never delivered the financing, and the potential buyers began demanding -- sometimes angrily -- the return of their money, which totaled $700,000 in earnest money and lease deposits.
The deal that once seemed so promising imploded, triggering a nasty, ongoing court fight. Ten of the would-be buyers have filed a lawsuit in Bibb Superior Court and another filed in State Court against Piedmont Fields and affiliated companies, alleging breach of contract, fraud and other charges. They claim company officials failed to keep the earnest money in an escrow account and instead converted it to their own use.
A complaint filed with Macon police has been turned over to the FBI, though Jones says his attorney has been told by the FBI that the deal appears to be “on the up and up.”
“All my savings, my life savings, these guys took it, then sent me e-mails, ‘We’ll send your money back, we’ll send your money back, we’ll send your money back,’ and they never did,” said Sam Mohammad, a Texas man who paid a $50,000 deposit on a store.
Mohammad has not sued. He says he can’t afford an attorney. He has, however, filed a criminal complaint with the Bibb County Sheriff’s Office.
In the meantime, Piedmont officials have filed a countersuit in Superior Court, claiming some of the plaintiffs have slandered and libeled them -- and even threatened to kill them and their families. Jones and two employees who arranged the deal say they’ve received as many as 100 threatening phone calls, with some of them recorded on voice mail and played for police.
“I’m gonna (expletive) you up!” a caller, identified as one of the plaintiffs, said on one of several profanity-laced messages played for The Telegraph.
In the countersuit, Piedmont contends the contracts never required the earnest money to be held or returned should the sale fail. Jones, who serves on the NewTown Macon board of directors and is a former member of the Macon-Bibb County Industrial Authority, insists the deal was a legitimate transaction and not some “shell game.”
“We did everything by the book,” Jones said. “The money was used for business purposes. We didn’t get any gain from it personally. We’re in the same boat as they are. The lender has a good bit of our money and has caused us a great deal of harm.”
Jones points out that his company has invested more than $850,000 of its own money into the deal. The problem, he said, is that for the first time in his 30-year career, a lender failed to deliver.
“We’re just like 90 percent of the rest of real estate companies in this world. We’ve got a serious cash crunch, a serious problem,” Jones said. “We do owe these people their money. We’ve made efforts to put them in contact with our lender to assign the first proceeds to them.”
That lender, however, is mired in legal problems of its own. USA Global Holdings Business Trust has been named in a number of lawsuits dating back to at least 2005 that claim the company or its subsidiaries have promised funding that they did not produce.
Just two months ago, a judge ordered USA Global to pay $1.8 million in damages to a Nevada company that alleges USA Global left it holding the bag. Even as it negotiated with Piedmont Fields, USA Global Holdings was operating with a revoked license, according to records from the Nevada Secretary of State’s office.
‘I wanted to be part of something big’
Sam Mohammad came to America from India because he wanted to “be part of something big.” Last July, he sent $50,000 by FedEx to Piedmont Fields to buy a convenience store business in Blue Ridge. Just months later Mohammad was close to losing his home.
“I couldn’t make any payments. If my brother hadn’t (helped), I would have killed myself or something,” Mohammad said.
Just days after sending the deposit, Mohammad says, he sent a letter, called and e-mailed to ask out of the contract under an included exit clause. He later learned the same convenience store was leased to someone else after he tried to back out.
“I said, ‘Look we’re not interested in this. I want to get out,’” Mohammad said. “I was like, ‘What the hell is going on?’”
Piedmont officials explained that once buyers backed out of the deal, they had to look for new owners. The company “carefully worded” the contracts so that the earnest money was not to be held in a legal trust, and therefore it became Piedmont and Woodland South’s once a period of due diligence passed, said Will Harrelson, the companies’ chief financial officer.
In February, 10 individuals and companies -- all either Indian immigrants or owned by Indian immigrants -- filed a lawsuit in Superior Court against Piedmont Fields, along with affiliated companies Woodland South Properties and Piedmont Fields Holdings -- claiming they had been defrauded of more than $600,000. According to the lawsuit, police reports and interviews with alleged victims, the Macon companies brokered the sale of a chain of convenience stores in north Georgia, even though the companies did not own the stores.
The lawsuit accuses the companies, along with Harrelson, Jones and employee Randall “Randy” White of breach of contract, conversion, fraud, conspiracy to defraud and other claims.
In some instances, the same store was leased or sold to multiple buyers, though Piedmont officials say that was only to find a new buyer when another backed out.
Questionable lenders stepping in for banks
With banks still cautious of the commercial market, more real estate companies such as Piedmont Fields are turning to non-conventional lenders for financing, said Lucian Dhooge, Georgia Tech professor of law and ethics.
“Smaller lenders are very leery of making these types of loans. They have too many properties on their books now,” Dhooge said. “They’re lenders, they’re not real estate agents, They’re looking at the books and they have properties that they’ve had to foreclose on, so they’re leery.”
As a result, borrowers such as Piedmont Fields can be “subject to the vicissitudes” of the private market, Dhooge said, adding that he’s not familiar with the Macon case. “You can have people out there who can be predatory. You just don’t know perhaps who you’re dealing with.”
The problem, Dhooge said, is that something has to replace banks.
“And some of these people out there purporting to be stepping in for banks and making loans on real estate, they’re not governed by the same laws banks are governed by. Unless you do your homework, you can find yourself in this type of situation.
“That is kind of a trend in this day and age,” he said. “I’m hoping that goes away and banks start loaning money again.”
For earlier projects, Piedmont Fields and its sister company, Woodland South Properties, had used mostly local banks, Security Bank and Atlantic Southern, both of which have since failed.
“None of us have ever been in a situation like this,” said White, the Piedmont employee who served as point man on the transactions. “As the economy changed, our local lenders dried up and couldn’t loan any money anymore due to their own problems. We went to a private placement lender. Having never done any of that before, maybe we were a little naive in how we went into that. I don’t know.”
Jones, who was a co-developer of the $11 million Gateway Plaza building in downtown Macon, said a financial broker in Dallas hooked the company up with the Las Vegas company, USA Global Holdings Business Trust.
“We didn’t just Google it,” he said.
Perhaps if they had, they might have turned up some of USA Global’s unfavorable history, including its “F” rating from the Better Business Bureau and numerous negative comments on complaint boards.
“It sounds to me like somebody didn’t do some due diligence,” Dhooge said.
Piedmont Fields has stayed in touch with USA Global Holdings on an almost weekly basis, said Harrelson, Piedmont’s CFO. The Macon company remains cautiously optimistic that despite the delays and legal issues, the loan still will happen.
“We’re just walking a tight wire,” said Jones. “Do you go in there and sue them, get a judgment and not get any money, or do you work with them? We’ve decided to work with them. ... It’s just a question of how much more time.”
Lender’s questionable track record
Brenda Ramsey also decided to give USA Global Business Trust more time.
After negotiations with attorneys, she dropped a $2 billion breach of contract lawsuit against the Las Vegas company in U.S. District Court, believing that a settlement was in the works.
She now says she plans to refile.
Ramsey, the CEO of Texas-based Starlite Funding, says she has been “blacklisted” as a result of her dealings with USA Global. Her company, which had been generating 200 loans a year, “crashed,” she said.
“It took me years to get that type of relationship. It caused my company to go under. It caused me to lose my reputation,” Ramsey said.
“You Google my name, and you have nothing but negative things to say about me. It destroyed me.”
Ramsey said she spent two years working with USA Global trustees and operating partners Sidney Tarrant and Izhar Syed and never saw them actually close a deal and deliver bonds or letters of credit with any value.
“In the end, there were none of them (bonds, letters of credit) that actually performed,” she said. “I do know that a lot of investors gave them money. ... The worst thing about it is they are all attorneys, so they know how to manipulate the system.”
In April, a Nevada state court judge ordered USA Global, its affiliated company, United Strategic Alliance, and, individually, Tarrant and Syed, to pay $1.8 million in another breach of contract case. That lawsuit, however, also alleges misrepresentation, fraud, conversion and “tortious interference with prospective economic advantage,” a count that accuses USA Global of intentionally damaging the plaintiff’s business relationships.
The case has similarities to the Piedmont Fields deal. The plaintiff, AZ Holdings Group, claimed that in March 2009 it paid USA Global a $465,000 deposit to secure $40 million in funding that it never received.
Court documents in the Starlite case include copies of corporate bonds for $200 million that Ramsey claims went to a partner in the venture, Global Green Holdings, a Florida company owned by a former business partner of Tarrant’s. Tarrant, however, swore in an affidavit that the bonds were issued but had no value.
Attempts during the past several months to contact Syed, who served as the point of contact for the Macon companies in the Georgia real estate deal, were unsuccessful. He did not return numerous calls from The Telegraph to his cell phone. A company phone number listed with the Better Business Bureau was no longer in service.
In a March 2010 letter, Syed wrote Jones and Harrelson, assuring them the loan had been approved and would be funded by May 31, 2010. After one would-be buyer filed a criminal complaint with Macon police in December, Jones and Harrelson offered the letter and other correspondence to an investigator as evidence they were still working on the deal. They said the investigator also subpoenaed bank records.
In 2006, in a PR Newswire release about another USA Global affiliate, USA Global Development and Property, planning to build 360 homes in New Orleans, the company claimed to have $1 billion in assets.
According to the Nevada Secretary of State’s website, the licenses for USA Global Development and Humanna, the non-profit entity Tarrant created for the deal, were revoked as of 2007.
The secretary of state’s site also shows Tarrant as director, president or officer of at least 26 companies in Nevada. All are either in default or had their license revoked.
We’re not stealing anybody’s money’
Jones says pre-selling or pre-leasing properties is a common -- and legal practice. When Woodland South developed the six-story, $11 million Gateway Plaza office building, it was reported to have been 70 percent leased almost a year before it opened.
“We did nothing differently on this than we did on this building,” Jones said during an interview at his Gateway Plaza office. “This is standard. The difference in this one deal and my 30 years of doing this, is the lender did not have the funds at closing. Never happened to me before.”
In one count, the Superior Court lawsuit accuses the companies, Jones, Harrelson, White and an Atlanta-area real estate company and employee of “civil RICO,” claiming the defendants “systematically engaged in an enterprise that perpetrated an ongoing pattern of fraud and misrepresentation ... which demonstrate a pattern of racketeering activity.”
The Bibb County Sheriff’s Office has an active investigation into a complaint filed by Mohammad. The Macon Police Department investigated a complaint filed by a 27-year-old Kennesaw State University student, Jasmeen Singh Nanda, who also paid $50,000. That case has been sent to the FBI in Atlanta upon the advice of the Bibb County District Attorney’s Office, said police spokeswoman Jami Gaudet.
“The DA’s office said the police department doesn’t have the resources to follow up and that we should pass it along to the GBI or the FBI,” said Gaudet. “It wasn’t a question of competence or anything. It was just a bigger case than we had the resources to handle.”
Special Agent Stephen Emmett, spokesman for the FBI in Atlanta, declined to comment on the case.
Jones, Harrelson and White vehemently deny there was ever any criminal intent or actions on their parts.
“They are quite frankly upset and impatient, and I don’t necessarily blame them,” said Harrelson. “But we’re not stealing anybody’s money. We’re not saying that we don’t owe them the money back. We’ve just got to get the money back from our lender to get the funds to them.”
A lawsuit filed by the college student, Jasmeen Singh Nanda, in October is pending in Bibb State Court. Another filed in Superior Court last year by another would-be buyer was dismissed voluntarily after he was reimbursed.
Nanda filed his complaint with Macon police in December, alleging theft by deception. His father, Jaspal Nanda, claims he and his son answered an advertisement in an Indian-themed magazine placed by Duluth real estate agent Mumtaz Paroo. She hooked them up with Piedmont Properties, and they were shown several properties.
“When they took the money from us, they were giving us closing dates,” Jaspal Nanda said. “It never happened. After that day, they disappeared.”
Jones, Harrelson and White say they had a prior working relationship with Paroo, who also has filed a countersuit in the Superior Court case claiming the plaintiffs have harmed her reputation and business. They deny there was any intent to exploit a certain culture.
“I think most anybody that goes into a convenience store nowadays sees that is the predominant type person that’s pursuing these businesses, that are running them now,” said Harrelson. “It’s not that we’re trying to take advantage of any type of culture or nationality. Those are the customers that came to us when we had convenience stores available.”
Mohammad, who has not sued, claims to have sent certified letters and e-mails and left phone messages but has yet to hear from company officials since he demanded his money back a year ago.
“I live in Texas. It’s not like I can drive over there,” he said.
Buyer says ‘whole transaction was bogus’
Jaspal Nanda says his son worked at Best Buy, Office Depot and Nanda’s gas station to save up the $50,000 he paid to Piedmont Fields.
“He was helping me,” Jaspal Nanda said. “That was his only money. He was trying to start his career.”
Nanda says a $50,000 check written from his son’s Bank of America account was cashed by Piedmont. When the sale never closed, he and his son demanded the money back but claim they have been unable to get White, Harrelson or Jones to answer phone calls, e-mails or knocks on their door.
“The whole transaction was bogus,” Jaspal Nanda said.
He is puzzled that no criminal charges have been filed.
“There are so many claims, I don’t know what they’re looking for.”
The Nandas originally filed a criminal complaint in Suwanee, where White was handed the check, but information from that investigation was forwarded to Macon police, said Capt. Clyde Byers, Suwanee police public information officer.
“The money was deposited in Macon, so at that point in time both parties were trying to fulfill the contract. We didn’t feel like we had any crime committed here,” said Byers. “In other words, had the man taken the money from here and left with it, and absconded with it, we felt like that might give us jurisdiction. He didn’t. He took it and put it in the bank there in Macon.”
Byers said police looked at a timeline in which Piedmont’s representative, White, apparently continued to try to fulfill the contract for “four or five or six months after taking the money.” State law, he said, allows that an action becomes a civil process if steps are taken toward fulfilling a contract.
“Looking into it, we have a hard time finding (White) committed a crime here in Suwanee. The gentleman (Nanda) met with deposited the money. He’s not the gentleman who removed the money from the bank at a later date. If anybody committed any kind of crime, I’d say it was the person who removed the money.”
Jones and Harrelson say the money was deposited into an account under the name of Piedmont Fields Holding LLC and later used for operating expenses for Piedmont Fields and Woodland South.
Mohammad filed his complaint with the Bibb County Sheriff’s Office. Investigator Capt. Mike Smallwood forwarded the case to the Bibb County District Attorneys’ Office several months ago to determine if charges should be filed, but the DA’s office said then that the case had been sent back to the sheriff’s office for more investigation.
“We wrote it up, got statements as to what was going on and sent it over there to see if they want to make an arrest or send it to the grand jury,” Smallwood said at the time.
The case, he said recently, is still active.
Before setting out on his own, Jones worked with his late father, influential developer Charlie Jones, on numerous developments with Ocmulgee Fields, the family business, including hotels and shopping centers in Macon, until starting his own businesses in the mid-1990s.
He and former partner, Clay Murphey IV, started Woodland South Properties and several other real estate-related companies. They also formed a gasoline-supply company that would have served the north Georgia convenience stores had the deal gone through.
Jones recently attended a Macon-Bibb County Urban Development Authority meeting with former Mercer University President Kirby Godsey to pitch a project called the Renaissance on the River -- a proposed $60 million hotel, residential and office space development on land owned by the Macon-Bibb County Urban Development Authority.
Jones proposed a similar plan to the authority in 2005. Kevin Brown, the attorney for Renaissance on the River LLC, said Godsey is sole owner and that Jones is acting as a consultant because of his expertise as a developer, particularly with hotels.
Court records show Jones faces more legal issues than the Piedmont Fields lawsuits.
He filed bankruptcy in September, listing more than $31.2 million in liabilities -- including $29.7 million in unsecured claims -- and $5.4 million in assets. Initially, he was not named individually as a defendant in the Superior Court lawsuit, but in May the plaintiffs filed a motion in U.S. Bankruptcy Court, seeking and receiving permission to add him as a defendant.
According to documents filed in bankruptcy court, Jones owns more than 60 percent of the three companies named in the lawsuit over the failed real estate deal -- Piedmont Fields, Piedmont Fields Holdings and Woodland South Properties.
Jones said his personal bankruptcy was irrelevant to the real estate deal and was caused by a lender demanding $1.5 million when a balloon note matured.
Brown, the Renaissance project attorney, downplayed Jones’ bankruptcy as another byproduct of the struggling economy, as more lenders are calling for cash when notes mature. He said he has clients worth $50 million filing for bankruptcy for the same reason.
“It’s not about making payments. It’s about money,” Brown said. “You’re seeing people who have the ability to pay, but they’re not being given that opportunity.”
‘Wonderful plan’ turned ugly
Jones, Harrelson and White’s countersuit charges, among other things, that they have been slandered and libeled, and their “personal and business reputations have been irreparably harmed as a result of plaintiffs’ defamatory statements.”
The countersuit also accuses the plaintiffs of civil RICO, claiming the threats against defendants’ lives, health, family and property constitute “racketeering activity.” It also contends the plaintiffs legally are not entitled to the earnest money and resorted to intimidation to seek its refund.
White, who represented the Macon companies at meetings when the money was collected, said he’s received “terroristic threats” from some of the would-be buyers. Despite that, he, Jones and Harrelson all say they want to either deliver the stores as planned or repay the buyers.
“Again, we owe them the money, but I’m getting phone calls in the middle of the night threatening me, my family, my mother,” he said. “I’ve got them on my voice mail. ... Mr. Harrelson’s getting them. They’re coming and taping signs on our office building windows over the weekend.”
Piedmont officials say some prospective buyers, who are not involved in the lawsuits, were refunded their money. Another, Joe Hasan, sued the company in Superior Court in June 2010 but dropped the case after he was refunded the $50,000 he paid in October 2009.
As an act of good faith, the Piedmont officials said, they gave Ayman Akroush, a plaintiff, $5,000 last Christmas when he called in need of money. Akroush paid $100,000 down toward the purchase of one of the stores in July 2009.
“There are a couple of folks who backed out earlier that we did refund money to,” said White. “But all of them coming at one time and with today’s economy, there wasn’t the funds to be able to do that.”
In the countersuit, Jones contends the “defendants did not perpetrate fraud on the plantiffs in any way or commit any crime.” The countersuit also contends the would-be buyers were aware “at all relevant times” that Piedmont Holdings and Woodland South had invested $650,000 toward the properties but did not yet have the authority to sell the stores.
“They’re claiming all sorts of fraud and deception and a lot of far-reaching remarks,” said Harrelson. “Everything they signed made it clear we did not own the property, we were under contract.”
The countersuit asks for punitive damages and “three times actual damages” to be proven at trial.
According to the lawsuits, from October 2009 to October 2010, Piedmont Fields and Woodland South entered into purchase agreements with 15 different buyers for six gas station-convenience stores in the Blue Ridge area.
Piedmont Fields had a contract to purchase the six stores owned by Rebel Pantry Inc. of Blue Ridge. The lawsuits allege the company collected earnest money from two different buyers for five of the stores and from three on another store.
According to court documents, Piedmont arranged some of the contracts after the Macon company’s option to buy the stores was terminated.
Rebel Pantry officials say they granted several extensions to Piedmont Fields on the option to buy the stores.
“They were supposed to buy the stores. They were going to lease them out to these Indian people. They collected money and told them that it was a done deal. (White) led them to believe it was a done deal,” said Dot Bruce, district manager for Rebel Pantry.
“Finally we told them the contract’s dead.”
Bruce said the convenience store company has received numerous calls from at least 15 different would-be buyers wanting their money refunded.
“They’re blaming us,” she said. “They’re coming to us for the money. Well, it wasn’t us who did the deal to them. It wasn’t us who promised them anything. The only contract and agreement we had was Randy (White) with Piedmont Fields, and he said he wanted to buy them.”
White and Harrelson said the plan was to have the stores’ actual operating businesses sold or leased before Piedmont Fields closed on the purchase of the stores to allow for a seamless transition.
“It was all going to be a wonderful plan,” said White. “We were going to buy the stores, lease to them and sell them fuel, and lease them the businesses. And, lo and behold, the lender couldn’t deliver on the closing date.”
For Sam Mohammad, the plan was to buy into the proverbial American dream.
“I’m a foreigner who came here, who saw our country growing and wanted to be part of something big. That’s what I did,” said Mohammad.
“Foreigners, they come in and work 17 hours a day, 18 hours a day, trying to survive so they can give their kids a better life, better than what I had. That’s what every father, every good parent’s dream is.”