Township Committee OK’s Fulton Suit, Looks to Recover $4 Million
West Deptford is taking legal action to try to recoup money spent beyond the scope of construction costs in the RiverWinds golf and tennis project.
West Deptford is suing Fulton Bank to try to recoup millions of dollars from the RiverWinds golf and tennis loan, after the township committee unanimously approved Thursday allowing redevelopment counsel Mark Cimino to take legal action against the bank for approving payments beyond what the township guaranteed.
The township could potentially be in line to take back as much as $4 million from the nearly $10 million, township-guaranteed loan, thanks to a tight legal reading of the loan’s terms, Cimino said in a presentation to the committee.
After a nearly month-long look into about 130 page of loan documents from Fulton Bank, Cimino outlined dozens of disbursements from the loan—everything from $1,200 in K-Swiss shoes to $9,000 in printing and letterhead to hundreds of thousands in payroll payments—all well outside the scope of the township’s guaranty for the construction costs of the loan, Cimino said.
“If it’s not construction, in my legal opinion, it’s not the responsibility of the township,” he said. “That’s on the bank…that’s not something the township signed up for.”
The terms of the loan spell out the township standing behind the construction of the entire complex—the golf course and tennis center, as well as several pieces that never came together, including a driving range, clubhouse, golf learning center, an outdoor tennis area and an ice cream stand—and Cimino said anything aside from labor, materials, equipment and tools is not part of the guaranty.
What fell beyond that were four areas of concern Cimino highlighted—$740,000 in payroll and miscellaneous costs, $992,000 in interest payments, $1,096,000 in an umbrella “other” column and $749,000 in costs with no invoice attached.
Given that represents about a third of the original, $9.945 million loan, Cimino also argued the township could save another $500,000 off about $1.5 million in interest payments on the loan.
It didn’t take long for the township committee to go along with that assessment; after a brief closed session on the proposed suit, they immediately voted to let Cimino go ahead.
“We don’t have a clubhouse, we don’t have all those other things…all we have is a golf course and a tennis center for $9.9 million,” Mayor Ray Chintall said. “If we can get anything either back or credited, it’s a plus for the township.”
The process could start as early as Friday; Cimino said he’ll be in contact with Fulton officials and see where things progress from there.
“We’re going to move on dual tracks,” Cimino said. “If they don’t want to negotiate, we’ll litigate.”
It was only two-and-a-half months ago Cimino first broached the news $4.5 million was unaccounted for in the loan, and while the $3.58 million in those four areas of concern—plus some overruns and closing costs—close that hole, Cimino still raised issues beyond the township’s responsibility as guarantor.
Numerous payroll payments, all on what Cimino pointed out were strangely round numbers, came out of the loan—anywhere for $25,000 to $60,000 over a 10-month period in 2001 and 2002—which he also said had no backing documentation.
That raised suspicion on Chintall’s part.
“How do you pay somebody on even amounts?” he said. “It never comes out to $25,000, $30,000.”
Many of those payroll payments came in on disbursement requests that amounted to nothing but handwritten sheets faxed to the bank, Cimino said. While the initial few requests had invoices attached and broke down costs specifically, that didn’t last long.
“By the time you get out to the third one, you get these one-page sheets,” Cimino said.
Payroll numbers were never specified beyond the dollar amounts on those faxes, either, he said.
“It was just a number on a sheet,” Cimino said.
And $766,000 from a debt service reserve fund—money that was set aside, similar to an escrow account—was released by the authority of former township administrator Gerald White after the project was deemed substantially complete, which Cimino said wasn’t kosher without the approval of the township committee.
Meeting minutes and the resolutions approved by the committee during that period don’t show any such approval, Cimino said.
White, who is now the deputy county administrator, was in attendance, declined to respond to that claim during the public session when the committee asked him to give his input, but said he’d offer his help in going through the loan—something he said he hadn’t been asked to do previously.
“I would be happy to work with the current board, if you’re asking sincerely,” White said.
Both White and the former Democratic administration caught flak from Chintall and committeeman Sam Cianfarini, among others, who questioned why the township wouldn’t have kept its own set of records to track the loan.
“It’s unconscionable there’s no documents,” Chintall said. “I think we…failed on that responsibility.”
One township resident and professional auditor, Eric Wyzykowski, said it looked like the township had a good case against the bank, given some of the issues Cimino said.
“To be honest with you, those handwritten sheets there…that would never fly,” he said, motioning to Cimino’s present