Colt developer insists a $29 million judgment won't affect the historic factory's chances of becoming a national park
December 08, 2009
California businessman Frank Gamwell says he won't rest until he collects the $29 million Lance Robbins owes him.
Robbins, also from California, is the developer who now controls the fate of the Colt complex in Hartford's South Meadows, and along with it the city's dreams of creating a national park at the historic factory that would draw visitors from around the country.
"I'm going to hunt him down," said Gamwell of Robbins in a recent interview. "We are in pursuit of everything we think is ours."
Gamwell won the gigantic award in arbitration sessions held in November 2008 and March 2009 in Santa Monica, Calif., and confirmed by the California Superior Court in May 2009. The $29-million total includes $15.9 million in compensatory damages and $10 million in punitive damages, plus $1 million in attorney's fees, for losses associated with a failed condominium project in Los Angeles in which Gamwell and Robbins were partners.
Robbins says the damages awarded in the arbitration aren't against him, however, but against two companies: one — Rehabilitation Associates, LLC — for which he acted only as an attorney and the other — Fedora Investment Corporation — which was his, but that is now without value as a result of the severe economic downturn still gripping the nation.
"There's no judgment against me," said Robbins. "Like many real estate companies, Rehab and Fedora are both broke. Their assets are under water."
Furthermore, says Robbins, Gamwell is putting Colt's chances of becoming a national park at risk by going public with his story.
"It's all about pressuring me to find a way to get paid a judgment he can't collect," said Robbins. "I am a critical part of getting Colt done and in the next month Colt either rises or falls as a national park."
Just how critical Robbins is to the future of Colt was made clear in a special resources study on Coltsville released by the National Park Service on Nov. 23. Coltsville is the name given to the entire Colt complex, consisting of the factory, nearby worker housing and Armsmear, the gunmaker's mansion on Wethersfield Avenue.
The study, compiled by the Division of Park Planning and Special Studies, acknowledges that Coltsville meets the criteria for national significance, "and is suitable for inclusion in the National Park system." But the study indicates it's unclear if the project is feasible or requires National Park Service management.
As Terry Moore, chief of planning in the northeast region for the Park Service, explained in a recent interview, the problem is simple. The fate of the Colt factory has been, and remains, in limbo, with no clear picture of how or when it will be renovated, therefore the Park Service is unable to commit to creating a national park there.
"It's just a situation where we don't know what the visitor experience would be," said Moore. "We don't know anything about the space or what access we would have. The study left the door open but we had to bring it to a close at this point in time."
Moore said there's a lot of uncertainty created by the "changing ownership" of Colt — Robbins took over from Robert MacFarlane of Homes for America Holdings, based in Yonkers, N.Y., just last year after MacFarlane's house of financial cards collapsed.
MacFarlane's main lender on Colt, USA Capital of Las Vegas, went bankrupt following a fraud investigation launched by the Securities and Exchange Commission. MacFarlane melted away from Hartford, having done nothing with Colt for more than a year.
The Park Service has scheduled a public meeting on the Coltsville study for Monday, Dec. 14, at 5:30 p.m. in Gray Hall at the South Congregational Church, 277 Main St., in Hartford.
A Visitor Experience Study on Colt completed last November for the Connecticut Trust for Historic Preservation did lay out in detail several options for a National Park based in the East Armory. The East Armory is the most important building in the complex — topped by the famed blue onion dome.
Moore said the proposals in the study are "interesting" but don't change the basic problem.
"Without knowing what space would be available for public access or even park administration we couldn't determine how a visitor experience would unfold," he said.
Robbins is well aware that a national park depends on his ability to put together a financial deal for Colt that assures permanent access for the NPS to the East Armory.
"I have worked on this for two years in February, thus far with no compensation, to try to put this dream together to have a national park there, so the feasibility rests on my finally putting together all the financial pieces," said Robbins.
The problem, according to Robbins, is that literally 15 people have to agree to a deal on Colt. One of the main players, Sovereign Bank, has been "busting their ass" to get a deal done, he said, and Robbins is optimistic there could be an agreement by the end of the year.
"Only Congress can create a national park. We are in a race to demonstrate to the National Park Service [by the new year] that this is a feasible project," said Robbins.
Frank Gamwell says the project with Robbins that broke him, destroyed his business and nearly cost him his family involved converting the Main Mercantile Building, a historic 1905 building in downtown Los Angeles with 100,000 square feet of space, into lofts where residents could both live and work.
Gamwell's Oxford Street Properties, LLC, formed an equal partnership with Rehabilitation Associates, LLC, the company for which Robbins says he was only the attorney, to develop the project, Downtown Lofts. Later Fedora Investment, which Robbins acknowledges was his company, got involved as well in the financing for the project.
Things were bad from the start, according to Gamwell. First, he says Robbins maneuvered him into taking sole responsibility for the initial $4.6-million construction loan to start the project.
"The reason Robbins said Rehab should not go on the loan was the existence of certain (unspecified) credit issues which made it uncreditworthy," states Arbitrator Richard Chernick in the arbitration award. "Robbins also stated that because Gamwell's company would be responsible for the construction, it should be the sole borrower and the sole general partner."
Construction on the project, beginning in late 2003 or early 2004, took longer and cost more than planned, according to Chernick. There were "additional and unexpected" requirements from the city of Los Angeles that drove costs up and caused delays. In addition, Robbins suggested changes to the bathroom and kitchens in the condos to make them more salable, and that required more time and money.
According to Chernick, Robbins promised to provide skilled and semi-skilled labor for the project at $8 per hour through another of his companies, Brick Maintenance Corp. But in the end those workers were paid two to three times that rate, according to Chernick. Robbins also frequently pulled his crews from the project to work on his own properties, a fact he did not dispute, except that he maintained it didn't happen as often as Gamwell alleged.
"It is clear the magnitude and frequency of the diversion of labor from the project for Robbins' personal benefit adversely affected the progress and cost of the construction," states Chernick.
Soon Gamwell was borrowing more money, first an additional $1.9 million for a total of $6.5 million, then, in a third modification, an additional $1 million to push the total to $7.5 million. Rehab failed to make its required contributions of capital for the loan, according to Chernick, putting extreme pressure on Gamwell. Meanwhile, Robbins demanded and got the authority to review and approve all draw requests on the construction loan and "habitually delayed signing the checks."
"The effect of these delays was to squeeze Oxford's cash flows and to require Gamwell ... to advance funds on behalf of Oxford to vendors and consultants in order to keep the job going," states Chernick.
Finally, to fund the project Gamwell refinanced his home, sold all of his assets and took out a $1 million personal loan at 15 percent interest. He was in a "precarious financial posture" as the project neared completion in the spring of 2007, according to Chernick.
Then came the coup de grace, when Robbins refused to sign the last draw request on the construction loan, an action "without any lawful basis," according to Chernick. That was the final straw for Gamwell, who negotiated to sell out to Rehab for as little as $3 million before changing his mind in late July 2007, telling Robbins he intended to stay in the deal and not sell his interest.
"Robbins became angry and stated (or by Gamwell's account, screamed) in a telephone conversation that he would not consent to ... any further loan disbursements and would make his (Gamwell's) life a 'living fucking hell,'" states Chernick.
Robbins and an assistant disputed this version of the negotiation of a proposed buy-out. There are other examples of Robbins' temper cited by Chernick, including threats of physical violence. Chernick states that Robbins threatened a bank employee who had failed to give him a copy of a construction loan draw request with "bodily injury if he ever did that again."
"Robbins also threatened a job superintendent (Peter Gregory) who left the job as a result," states Chernick. "Robbins was also involved in a physical altercation with Lew Merrifield, an associate of Robbins' in Gamwell's presence."
Chernick also states that "Robbins spontaneously offered testimony on more than one occasion about his considerable physical strength."
In the end, Gamwell won big in the arbitration, with Chernick finding that Rehab, Fedora and Robbins, as "their agent," acted fraudulently and maliciously toward Oxford and Gamwell, "scheming to acquire the property by financial oppression and a course of malicious dealings intended to so weaken Oxford and Gamwell that they were unable to protect their interest in the property."
Chernick also doubted Robbins' assertion that Rehab wasn't his company, writing "The role of Robbins himself is problematic in that he stated he had no ownership interest in Rehab, but his conduct throughout appears to be as a principal rather than as a lawyer."
Robbins says Chernick had it in for him because of the political battles Robbins fought with the city of Los Angeles over the various properties he owned in the city. Robbins was convicted eight times of criminal slum violations, the last conviction coming in February 2001 — "far more" convictions than any other Los Angeles landlord, according to the city attorney.
In March 2002, the city attorney announced a $1.2 million settlement with Robbins to cover water and electricity bills going back 10 years at a dozen buildings where he was the landlord, and a $200,000 payment to settle a dispute with a tenants' rights group.
Robbins told the Advocate in April 2009 that his problems in Los Angeles amounted to "retaliation against him for his strategy of bringing private investment into depressed areas of the city by weakening rent controls — essentially gentrification."
The arbitration with Robbins has been a pyrrhic victory for Gamwell, who says he has not been able to collect a dime of the judgment he was awarded.
"Basically I'm on the verge of personal bankruptcy and he knows it," said Gamwell.
Robbins has quite a different take on events. He says he's "really confident" he'll get the arbitration overturned and has already filed a notice of appeal. And he says it was Gamwell himself who created the disaster the Main Mercantile project turned into, resulting ultimately in foreclosure.
"I have no trouble telling the truth," said Robbins. "I made a big mistake with [Gamwell]. My clients and I invested millions with this guy and lost millions more based on a project he designed, built and represented and ultimately got flushed down the toilet. It was his project, his numbers, his defective construction."
The arbitration in Los Angeles will have no effect on Colt, says Robbins, because Colt is "a totally separate entity."
"I don't own any of Colt, so there is no financial bleed-over," said Robbins. "What this really is is a character assault on me to get entities no longer in business to pay a judgment I believe is going to be overturned anyway."
Who does own Colt? Robbins says he can't disclose that information because in addition to being the manager of the project, he is also its attorney.