Dozens of professional retirement plans and scores of Utah physicians are seeking $48 million they claim to have lost by investing in a now-bankrupt Utah company.
Nearly $48 million in claims have been filed in U.S. Bankruptcy Court by more than 1,000 creditors and investors of Granada Inc.The Utah Attorney General's Office is investigating Granada Inc., and its president, C. Dean Larsen, for possible fraudulent use of investors' money.
Court records make reference to a criminal investigation by the attorney general's office; however, Chief Deputy Attorney General Paul Warner refused to comment on the case.
The bankruptcy of Granada is possibly the most damaging bankruptcy in Utah history. While Triad America's financial woes spread across the nation and overseas, Granada's stayed close to home, swallowing the savings and retirement funds of hundreds of Utahns.
Granada declared bankruptcy in February 1987, said Peter Billings Jr., an attorney who is the court-appointed trustee of Granada.
No one is sure what Granada's actual debts are, however. At the time it filed bankruptcy, Granada submitted a list of debts to U.S. Bankruptcy court that totaled $100 million.
"I think that figure is inflated," Billings said. "A lot of those scheduled claims are not real. It's a very complex, confusing thing to describe very succinctly. It's a mess."
He thinks even the $48 million in claims may be too high.
Granada is a general partnership specializing in real estate development. Scores of professionals in Utah - most of them doctors - bought limited partnerships with Granada.
"The individuals got tax write-offs, or tax advantages, for buying the limited partnership interests," said David Leta, attorney for the Granada Creditors Committee.
Retirement funds were invested in what Granada officials called "liquid mortgages," Leta said.
"They didn't turn out to be either liquid or mortgages," he said.
The state's criminal investigation apparently centers around claims that Granada failed to used the money of investors and creditors in the manner it agreed to.
Creditors will get back little - if any - of the money they lost. After over a year of searching, Billings has been able to find only $3 million in assets, he said. Worse, he has been able to take control of only $500,000.
"We got $2 million from a Plumtree Shopping Center near Brigham Young University that we sold," he said. However, other creditors have attached liens against the proceeds of the sale, so Billings hasn't been able to get hold of them yet for distribution to Granada creditors.
"We have another $500,000 we have our sights on," he said.
The outlook is not bright for creditors, he said. "I hope to make some kind of distribution (of money to creditors), but that will depend on the resolution of this $2 million fight."
Billings has spent months sorting out just who and what Granada is. The company's dealings are vast and complex, he said. He has a list of over 80 bank accounts related to Granada, he said. He has compiled 41 pages of charts to illustrate the flow of among Granada and its dozens of developments.
Apparently most of the money was lost on sickly development projects. "They took money from healthy entities to keep the unhealthy entities alive. I think they kept some of those properties alive too long."
The cash flow charts show millions of dollars spent on the purchase and development of real estate. Granada holdings on which over $1 million was spent are listed alphabetically as follows: Ashley Creek Estates Ltd., $5.9 million; Avion Vista, $3 million; Barbimed Enterprises, $6.6 million; Boston Building, $11.6 million; Cinnamon Ridge Mobile Home Park, $1.6 million; Colonial West, $1.9 million; Commercial Club Ltd., $9.7 million; Cown West Valley Estates, $2.3 million; EFF Inc., $25.8 million; Exchange Place Associates, $3.1 million; Exchange Place Garage, $1 million; Foxfire Ltd., $5.9 million; Granada Interoffice Accounts, $28.9 million; Granada Real Estate Trust Account, $3 million; Greenville Ltd., $4.9 million; Hillgate Park Partnership, $4 million; Hillgate Terrace, $1.4 million; Judge Building, $14 million; King Village, $1 million; Lakeside Village Ltd., $8.6 million; Layton Industrial Park, $4.5 million; Maple Cove Investments Ltd., $16.9 million; Oakview Limited, $1.6 million; Oquirrh Land Ltd., $9.8 million; Pembroke Building, $1.7 million; Plumtree Ltd. Partnership, $9.5 million; Shenandoah Investments, $6.7 million; Three Crowns Ltd., $4 million; Westwood Hills, $9.9 million.