The gloves are off in the Perkins Rowe foreclosure lawsuit, more than 15 months after proceedings were initiated against the project’s developer, Tommy Spinosa. KeyBank National Association, which heads the consortium of banks that lent Spinosa $170 million for the mixed-use development, filed documents late Wednesday in federal court alleging that KeyBank has “unearthed some troubling facts” suggestive of “mismanagement (at the very least) and fraud (at the worst).” Throughout the foreclosure proceedings, the bank has tried, unsuccessfully, to gain access to Spinosa’s financial records. Previously, it alleged Spinosa was merely stalling. Now, it’s suggesting something more malign.
Specifically, the new filing cites a contract between Spinosa and MBD Construction, which built part of Perkins Rowe, as evidence of “wrongdoing.” The documents allege Spinosa did not disclose to KeyBank one of three contracts he had with MBD Construction to build Blocks M and N. “This contract bound Borrower to an additional $2 million liability regarding Block N, which Borrower had not revealed to KeyBank,” the documents allege. The documents go on to claim that the result of the deception “was to understate the budget for the loan by at least $2 million,” information the bank says it would have needed to make a lending decision regarding Perkins Rowe.
In a related allegation, the bank says Spinosa submitted draw requests to KeyBank to pay MBD, which KeyBank fulfilled, only to find out later that the company was never paid. MBD has been awarded judgments in excess of several hundred thousand dollars against Spinosa. “Clearly, defendants are hiding information from KeyBank,” the court filing says. “KeyBank asserts the evidence proves fraud, and there is more to come.” Mark Beebe, Spinosa’s attorney, released a statement saying that KeyBank was deflecting its own negligence. “The Perkins Rowe companies and Tommy Spinosa unequivocally deny that there was any fraud relating to Perkins Rowe or any other project for that matter,” he says. “What has become more evident as the litigation has progressed is that KeyBank is attempting to hide its defalcations and inappropriate loan administration, which gave rise to considerable damage to the Perkins Rowe project and to the defendants.” KeyBank’s attorney declined to comment.
Despite the protracted foreclosure proceedings and the allegations against Spinosa, Perkins Rowe is doing better than ever under the management of receiver Jones Lang LaSalle. Occupancy rates at the development’s apartment complex have increased from 45% early this year to 98%, and several new retailers have signed leases in recent months, according to Perkins Rowe manager Rick Blalow. Adding to the positive momentum surrounding the development is the viral buzz generated by sightings of Robert Pattinson and Kristen Stewart, who are in Baton Rouge filming the latest Twilight movies, Breaking Dawn parts one and two, and are said to be living in Perkins Rowe while here.
