If you want to do some serious math, don't bother tallying up how many millions of dollars the real estate development company Granada went through before declaring bankruptcy.
And skip the part where you try to figure out how many hundreds of Utahns invested in the company during its 15-year history.We've got a bigger and better brain-teaser: Try to figure out how many lawyers are working on the 50 felony counts against Granada's former president, C. Dean Larsen; the more than 20 civil suits against Larsen; the Granada bankruptcy with its 81 separate accounts; Larsen's personal bankruptcy; the dozens of bankrupt projects within Granada; and the dozens of adversary proceedings filed in the Larsen bankruptcy, the Granada bankruptcy and the project bankruptcies.
Wait. We're not done. You also have to include the lawyers who represent the estimated 900 creditors of both Larsen and Granada.
Granada may have been a financial blow to hundreds of doctors, dentists and medical clinics in Utah that invested in the company - but the lawyers aren't complaining.
While you're counting, we'll bring you up to speed on the case.
Criminal proceedings in Granada
The preliminary hearing for Larsen has been postponed until May 15. Larsen has been charged with 50 felonies in connection with his management of the real estate development company. The charges include securities fraud, theft, unlawful dealing with property and sale of unregistered securities.
The hearing was originally scheduled for Dec. 19, 1988. However, the Utah attorney general's office asked that the hearing be continued until Feb. 13 in order to provide Larsen's attorney with all of the documents the attorney wanted.
Now Larsen's attorney, Larry Keller, has had the preliminary hearing continued until May 15 because he hasn't finished going through the 10 boxes of papers the state has compiled to support its case, said Brian Adamson, investigator for the attorney general's office.
Adamson predicted the preliminary hearing could run two weeks. If Larsen is bound over for trial, a trial would go much longer, he said.
Larsen's personal bankruptcy
Larsen's civil attorneys have quietly negotiated a settlement with Zions First National Bank, one of Larsen's most aggressive creditors.
Zions was seeking $2.1 million from Larsen, plus interest, court costs and attorney fees. The bank loaned the money to three Granada partnerships on behalf of 77 investors. The partnerships are CFS Fox River, CFS White River and CFS Park North.
The bank has sought the money from Larsen personally. It claims Larsen, 186 Dorchester Drive, transferred nearly $1.4 million from two of the three partnerships to other properties in which Larsen had personal interest.
The bank has also asked the court not to discharge the $2.1 million debt or any of Larsen's other debts despite Larsen's declaration of bankruptcy. When a person declares bankruptcy, the court usually discharges his debts and he no longer owes money to his creditors. However, if the individual violates bankruptcy law, the court may refuse to discharge any or all of the debts.
Zions has alleged that Larsen violated several bankruptcy laws and his debts should not be discharged. The bank has cited willful and malicious injury, embezzlement, larceny, transfer of property to hinder, defraud and delay creditors and unexplained absence of records.
Transfer of property and unexplained absence would give the court grounds to refuse discharge of all of Larsen's debts.
A three-week trial in the case had been set in early March, but Zions has canceled the trial after negotiating the settlement with Larsen.
Larsen has apparently agreed to give Zions unspecified assets if Zions will drop its claim for $2.1 million and withdraw its request that the court not discharge Larsen's debts.
Larsen's attorney, Jeff Swinton, refused to say what assets Larsen used to negotiate with.
When Larsen filed for bankruptcy, he told the court he had no assets for distribution to his creditors. "That hasn't changed," Swinton said. But he added, "He does have friends, you know, who are willing to help him."
Swinton also noted that Larsen may negotiate with any assets he has acquired since taking out bankruptcy in May 1987.
Andres Diaz, attorney for Zions, said he could not discuss the settlement because it has a confidentiality stipulation in it.
While Larsen's attorneys seek to extricate him from his personal legal problems, a team of lawyers and accountants is trying to extract more money from Granada to give to the company's creditors.
They aren't having much luck. "We're hoping that after administrative expenses, we'll be able to net $1 million," said David Leta, attorney for the unsecured creditors committee.
A search of the 81 accounts in Granada has only confirmed the prevalent fear that Granada went through tens of millions of dollars in its 15-year history with nothing to show for it but a handful of sickly real estate projects.
"The tentative conclusion we've come to is that a lot of money was spent on hopeless projects," Leta said. "They were bottomless pits. They were never going to repay the money that was spent on them. A lot of these projects weren't worth as much as the debt against them."
The way it looks now, creditors will probably only get a few cents back for every dollar they gave Granada, Leta said. Granada's court-appointed trustee, Peter Billings, agreed.
The only profitable property - the Plumtree Shopping Mall in Orem - has been sold. Proceeds from the sale, over $2 million, are sitting in an escrow account.
Billings hopes to get the money for distribution to Granada creditors, but he's cautious. "There are various people who claim the money ought to be theirs," he said. "If the settlement doesn't go through, we'll have to litigate. That could be years."
Half of the $2 million will go to the lawyers and accountants sorting through Granada's finances. Administrative expenses have reached $1,072,000, Leta said.
Creditors - primarily investors who lost their investments - have complained that lawyer and accountant fees are eating up the scant assets remaining in Granada. "The unsecured creditors committee has been trying to keep a tighter rein on the administrative expenses," Leta said.
Leta believes $1,072,000 is reasonable for what amounts to nearly two years of work on the case by several lawyers and accountants.
Billings' team is now sorting through more than $100 million in claims against Granada to determine which claims are legitimate and which are not.
An exact accounting will take several months, but Billings and Leta estimated the legitimate claims will total between $20 million and $30 million.
"But those numbers are real rough," Billings cautioned.