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Founders defaults on $3 million loan
Separate, $120,000 collection suit filed Friday
By MARY EVA CASSADA
Special to The News & Record
Founders College has defaulted on a $3 million loan from the former
owner of the Berry Hill Estate, a partnership which still goes by
the
name Berry Hill Hotel Associates. According to papers from
Montgomery
County, Md., Circuit Court, Founders owes the principal plus $5,000
in
legal fees.
The court filing, from this past October, shows that Tamara Fuller,
Founders’ chairman and CEO, personally secured the $3 million loan
last
April to help purchase the property as part of an owner-financing
plan
from Berry Hill Associates, with Ryan Hill as its managing partner.
Fuller pre-paid the six months of interest at a 16 percent rate, but
a
default interest rate of 24 percent was to have begun accruing Nov.
1.
There is no court filing from Founders, and Fuller did not answer an
e-mail seeking comment.
Berry Hill Associates’ lawyer, Thomas Murphy, of Washington, D.C.,
confirmed the filings, but declined to discuss specifics or his
clients’ next step.
The suit was filed in October, and the court awarded judgment in
November.
At issue are actually two separate pieces of litigation, one against
Founders and one against Fuller.
According to the lawsuits, as part of the loan agreement Fuller was
to
have supplied her creditor with highly detailed monthly financial
reports accompanied by an affidavit, which she never did.
“Fuller failed to provide the first required reports in May 2007 and
has consistently failed to do so every month thereafter,” the
complaint
reads. “Moreover, she has refused repeated demands from Berry Hill
[Associates] that she provide the required reports and affidavit.”
Hill and his partners also complained that she did not deliver
certificates for 12,152 shares in Maryland’s Howard Bank (on whose
board she formerly sat), as required by the loan agreement.
The deal was that, in the breach of the agreement, the full sum of
the
loan would be due immediately rather than at its maturation in April
2008.
No payments of principal have been made, according to court papers.
Court papers show Fuller secured the loan with about $4.1 million in
her own holdings, primarily property but also her personal
residence,
jewelry and artwork. (Documents break down the security as of March,
2007, into $2 million in personal assets and $7.4 million in her
Symphony Homes rental properties. Liabilities were $560,000
personally
and $4.7 million against Symphony Homes.)
Founders and its sister entity, Berry Hill Estate resort, on whose
land
it sits, have come under local scrutiny for widespread managerial
defections, faculty departures, unpaid bills and having only five
college students, down from 12 in September. The college opened in
the
fall as a liberal arts, for-profit institution with promises to
shake
up the higher education establishment.
The resort has had a tumultuous ownership history since AXA, the
Paris-based international insurance giant, sold the property after
the
terrorist attacks of September 11, 2001, saying it no longer wanted
to
bring in its employees from around the globe to train at the site. (AXA
had restored the 1840s mansion and built the resort complex behind
it
in 1997.)
In quick succession, the antebellum plantation was then owned by
Marriott, Benchmark and the aforementioned Hill Associates, all of
which focused on the resort aspect of the estate.
Insiders have said the resort (with hotel rooms, restaurant, pool
and
spa) has consistently failed to turn a profit.
Fuller came on the scene in late 2006 with plans to start up the
college, hoping for an inaugural class of 100, while running the
resort
concurrently. She has also announced plans for the addition of a
retirement village, conference center, golf course, dorms, classroom
buildings and shopping area at Berry Hill.
In addition to the $3 million judgment, a collection lawsuit was
filed
this past Friday against Founders by Manning, Selvage & Lee, an
international public-relations firm, for $120,000.
The filing, in the U.S. District Court of Western Virginia, alleges
that Founders failed to pay for p.r. services between November 2006
and
July 2007.
Deeter Associates, the Pennsylvania-based public-relations firm
brought
in as a replacement for Manning, Selvage & Lee, also has claimed to
remain unpaid for work done this past summer.