Monday, 18 May 2009

Harcourt in Irish Press

More on Harcourt, this time reaching the Irish Press.
Note the second article states that:
"However, actions on breach of contract, breach of fiduciary responsibility, good faith and fair dealing, unjust enrichment and derivative claims have yet to be decided."
The States of Jersey are still on course for Harcourt developing the Waterfront, if they can come up with a bond. But should anything be decided with regard to Harcourt while these claims and counterclaims continue, and have done so for over a year, and Harcourt has still not cleared its name completely?
Sunday, May 17, 2009  By Ian Kehoe
Dublin property firm Harcourt Developments has said that it lost tens of millions of dollars on a US property deal after falling victim to an elaborate fraud involving ''sham condominium sales'' and fictitious front companies.

The Irish firm has also alleged that its former business partner in the US, Glen Smith &Glen (GSG), conspired to lie about the pace of a proposed $1 billion development in Las Vegas and made ''multiple poor decisions'' that resulted in Harcourt losing more than $20 million. The allegations are contained in court documents lodged with the Eighth Judicial District Court in Nevada last week, copies of which have been obtained by The Sunday Business Post.
Harcourt, headed by Irish businessman Pat Doherty, and GSG are involved in a long running dispute stemming from the proposed $1 billion development in Las Vegas called Sullivan Square. The two companies entered into a joint venture to build the development, but the deal has since collapsed.

GSG has launched a series of court proceedings against the Irish firm, large parts of which have since been thrown out of court. Last week, Harcourt lodged a counterclaim, and made a string of new allegations against its one-time business partner.

Harcourt is claiming that GSG entered into a exclusive agreement with a local property sales company. However, Harcourt alleges that this company never existed and was merely a false front for the president of GSG, Ken Smith, and his wife.

Harcourt states this relationship was never disclosed.

''These non-disclosures and false representations were made to obtain money from Sullivan Square and Harcourt Nevada based on sham sales," the counterclaim states.

Harcourt claims that GSG overpaid an earth removal contract by $9.5 million, and overspent its ''soft cost'' allowance by $15.5million.Harcourt said that GSG lied about the pace of condominium sales and failed to obtain risk insurance.

Harcourt said that GSG ''continued its incompetent and futile management efforts and exhausted the entire $41 million pre-construction budget for the project," according to the counterclaim.

The Sullivan Square project was to include 1,300 apartments, office buildings, a 1.5acre park and 25 shops just six miles from the Las Vegas strip.

The company behind the development, Sullivan Square Harcourt LLC, was a 60/40 joint-venture partnership between Harcourt and GSG.


Harcourt Developments, one of the largest property development companies in Ireland, has sensationally alleged that its partners in a $1bn Las Vegas development made false representations to persuade it that the scheme was viable.

Harcourt Developments is led by Pat Doherty.

In a counterclaim lawsuit filed at Nevada's Clark County District Court, Harcourt claims that Glen, Smith Glen Development (GSG), a US development company, knowingly misrepresented the pace of sales for a $1bn dollar condominium development at Sullivan Square in Las Vegas.

The lawsuit claims that GSG entered into an exclusive listing agreement with a company called Viridian Group, which it says never existed and was a "false front" for GSG founding partner Ken Smith and his wife.

Harcourt alleges that GSG and Viridian claimed to have sold 100 of the 1,300 condominiums planned but that in reality only 92 "hard contracts" were secured and that in some cases deposits taken on properties were as low as $100.

Sometimes brokers' fees paid exceeded the low deposits received and Smith and his wife were in receipt of such payments, it alleges.

The Sullivan Square development was to include two 20-storey towers and low-rise buildings with apartments selling for up to $1.8m (€1.3m).

In its suit, Harcourt says that bad decisions by GSG and pace of sales cost the project tens of millions of dollars. As a result, even if the first phase of the development went ahead and sold out at the prices advertised, it would not be profitable, the counter suit claims.

Saul Wolf of law firm Manly Stewart which represents GSG has strongly refuted the allegations and said that GSG intends to file a motion to dismiss the counterclaim at the earliest opportunity.

He said the Viridian Group was well established prior to the initiation of the deal, remains in existence under another name, and that Harcourt was aware of its relationship between the company and GSG.

All GSG budgetary decisions were signed off on by Harcourt representatives, he claimed.

"We believe that there is absolutely no merit to this counterclaim and that it is another delaying tactic... We intend to fight this claim and will seek to dismiss it as soon as we can," he said.

The claim is in response to a lawsuit initiated by GSG last December which alleged that Harcourt had never intended to follow through on the development deal and was conspiring to bankrupt its partners in order to assume full control of the project.

Much of that claim – including allegations of consumer fraud, negligence and intentional interference and conspiracy – was dismissed by Judge Mark Denton.

However, actions on breach of contract, breach of fiduciary responsibility, good faith and fair dealing, unjust enrichment and derivative claims have yet to be decided.

A spokesman for the Harcourt Group was unavailable for comment.

May 17, 2009

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