May 25's Weather
HI: 80.1 LOW: 52
Full Forecast via Forecast.io
A bankruptcy court ruling improved prospects for a new restaurant in the former Flight Wood Grill property and may have dashed restitution hopes for a victim of attorney Sam Neill's trust embezzlements.
No money for trust
The trustee's proposed sale doles out the proceeds among the bank ($284,000), routine closing costs ($5,000), real estate commission ($32,000), property taxes ($15,000), condominium association dues ($16,000), and the trustee for the attorney's work on behalf of the estate ($44,000). None would go to the Meinke estate, one of five estates or trusts that state prosecutors said Neill stole from to pay debts and support a standard of living that exceeded his income. Neill has pleaded guilty to the state charges and to one count of tax fraud in a federal case and awaits sentencing in both courts.
Prosecutors say Neill embezzled $900,000 from the estate of Irene Meinke; he had granted the estate a $330,000 promissory note against the value of the 401 N. Main St. property. Asked whether the court-approved sale of the Flight property would leave out the Meinke heirs, attorney Charles Waters said it appeared so.
"I haven't seen the figures but it's my impression that it would as far as getting any money out of the restaurant," said Waters, the estate's court-appointed attorney. "If there's any other money to pay my (Meinke) estate I don't know about it. I don't think there is. When it's all said and done, there wasn't any money left to pay for Mr. Neill's behavior."
The Meinke heirs include her church, Mount Pisgah Lutheran Church, and 10 individual beneficiaries.
Waters objected to the sale price as too low and said a $32,000 real estate commission "is inappropriate under these circumstances."
Neill objected to the sale price, too, citing a bank appraisal in 2006 of $870,000.
"That assumed there are no encroachments and there are," said Cooper, the bankruptcy trustee. "It was unreasonable then and it's certainly unreasonable today."
Neill said after the hearing the sale price the judge tentatively approved was too low.
"It's not an appropriate sale price," he said. "The property's worth a lot more. If that's what this is worth, what is property worth on Main Street. It's a fire sale."
In his motion objecting to the sale, Mascral's attorney said that the property is encumbered by liens totaling $944,000 and that the corporation has another $160,000 in unsecured debt for a total of $1.1 million.
Demand for records
Cooper told the judge that he and TD Bank's attorney, Lance Martin, were awaiting consent of the short sale by bank executives.
"We've got this ironed out to about a $22,000 difference," Cooper said. "We are close on a short sale number to which the bank would consent.... As a practical matter, Mr. Fazio is the only person in the world who would buy this property. It's just a perfect situation."
Miami businessman Renzo Maietto has offered to pay rent plus taxes, insurance and maintenance for the Flight property. Maietto plans an upscale restaurant, he told the Hendersonville Lightning last month. An earlier court filing said Maietto's offer was $6,500 a month but that was not mentioned in court last week.
The trustee had been trying without success to get the records of Flight Wood Grill and the real estate that Neill owns as the sole owner of Mascral (which is the backward spelling of the original chef, Larc Lindsey, and Sam Neill; the restaurant was Lark's before it was Flight).
Neill agreed to meet the trustee at the building last Tuesday.
"Mr. Neill shows up, ostensibly to help us," Cooper told the judge. "He didn't know the password of the business computer. He couldn't remember the name of his bookkeeper. Then he remembered but didn't know her phone number. He showed us a snapshot of two tons of paper he destroyed when he closed his law practice, and he said that perhaps the Mascral records were there."
"Without the records," Cooper said in court documents, "the trustee is not able to determine for example what, if any, fraudulent transfer or other improper disposition of assets the debtor (Neill) may have made."
In an interview after the hearing, Cooper said he had gotten nothing from Neill. "He's stonewalling me," he said.
Rodney Kight, the attorney who represents Mascral, said that Neill did not think the records were among the old law practice records that he shredded. "Since the trustee was appointed he has not had access to the premises," he said. "It has been a little difficult for Mr. Neill to track things down."
"It's more than a year," Cooper responded. "He's had more than a year to obtain these records."
Neill, seated in a back row of the courtroom, was not called to testify.
Asheville attorney Edwin Hayes appeared at the hearing representing Neill individually, not the corporation.
Prosecutors had thoroughly investigated Neill's finances and indicted him, Hayes told the judge, "but one thing that the U.S. attorney didn't find was any criminal action on his part with respect to this transfer" of a deed of trust to the Meinke estate.
In one other action in the Mascral bankruptcy, Judge Hodges approved a request from Kight, the debtor's attorney, for $10,775 for work on the case. The attorney said in a motion that $10,000 had been paid to him "by an individual," which the motion did not identify. The payment from the court would cover the cost advanced, Kight said. The bill was for 29.6 hours of work by the attorney at $325 an hour and 11.55 hours of paralegal work at $100 an hour.