The future of Frisco’s $2 billion Wade Park project could be more uncertain after a bankruptcy case containing fraud allegations was filed last week – and it could take years in court to untangle.
Atlanta developer Stan Thomas, the original developer behind Wade Park, claimed in a petition filed Aug. 27 in U.S. Bankruptcy Court in Georgia that his company was defrauded out of the high-profile Frisco development project.
The petition alleges that New York-based Gamma Real Estate, its president, Jonathan Kalikow, and others wrongfully schemed to get control from Thomas of the stalled development in Frisco.
“It’s like they’re writing a novel,” said Sid Scheinberg, a Dallas bankruptcy attorney who reviewed the filing at the request of the Dallas Business Journal. “I’ve never seen one written quite like this. It’s fascinating.”
Scheinberg noted that the petition has wide-ranging allegations, including money laundering, theft of trade secrets and racketeering. He speculated that it’s likely to drag out for years.
The complaint accuses Gamma of a “loan to own” scheme.
“Basically, they’re alleging that these people created this scheme that made it impossible for them to pay off a loan, and then ‘ha, ha, ha, it’s ours,” said Scheinberg, chairman of the bankruptcy/creditors rights section at Godwin Bowman. Scheinberg is not involved in the Wade Park case.
Kalikow and Gamma did not return messages from the Business Journal requesting comment on the allegations or the status of the project. Thomas also did not return calls.
The city of Frisco, which approved $122 million in economic incentives for the massive project more than five years ago, is working with Gamma now on the property — not with Thomas, according to an email to the Business Journal.
”To our knowledge the property is now wholly owned and controlled Gamma Realty,” the email said. “We have been working with Gamma representatives to keep the site maintained and continue an open dialogue with them about potential future uses.”
Asked what involvement Thomas had in the project, the city replied via email, “None that we are aware of.”
All incentive agreements involving Wade Park are “now null and void due to nonperformance,” the city said.
“All of the incentive agreements were performance based therefore no incentives have ever been paid on this project,” the email said.
Two of Thomas’s business entities involved in the project, Wade Park Land Holdings LLC and Wade Park Land LLC, filed Aug. 26 for Chapter 11 bankruptcy reorganization.
Those two entities had borrowed about $82.75 million from Gamma Real Estate Capital LLC V as a temporary bridge loan to help finance construction while Thomas continued his work to close a permanent financing deal with other investors, the Aug. 27 complaint says.
According to the complaint, Kalikow’s and Gamma’s real goal from the beginning “was to take Wade Park.” It alleges that Kalikow and Gamma “improperly and tortiously interfered with Thomas’s efforts to obtain permanent financing.” The complaint claims their actions caused potential development partners who otherwise were willing to invest in the Wade Park Project to walk away.
Thomas is seeking a jury trail over his claims.
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