By Robin Fornoff
The scandal that rocked Clovis, costing politicians their jobs and prompting a $20,000 independent investigation, is expected to come to a sad and inglorious end next week at a public auction on the front steps of the Curry County Courthouse.
The auction, a foreclosure, is 10 a.m. Tuesday, according to Shaun Burns, the attorney representing a family business that sold the old Froz Fruit building to BHSI and its CEO Brian Sperber.
The auction has almost nothing to do with the city and the more than $2 million it lost in the BHSI deal that went south within the first seven months. It will, however, be another painful reminder of the failed venture that promised to bring more than 300 new jobs to the city and ended in financial disaster.
Burns represents Clov-Lease. He is quick to point out “ My client had nothing to do with BHSI.”
“My client had nothing to do any of the stuff that happened,” said Burns. “My client is the one who owned the building for 30-plus years. My client sold it based on the recommendation of the city.”
If that last sentence sounds like a hint or a threat of a pending lawsuit by Clov-Lease against the city, Burns said, “No. It isn’t.
“The purpose of the foreclosure auction,” said Burns, “is to establish my client’s right to get the property back and to foreclose the other liens.”
This is the part where the city comes in. It has a lien, what amounts to a second mortgage, on the BHSI building. It was part of the security city officials and Clovis Industrial Development Corp. Executive Director Chase Gentry promised would enable the city to recoup its money if something went wrong.
The problem is Clov-Lease is entitled to all it is owed — more than $1.3 million, said Burns. The city is only entitled to any cash over and above that amount, he said. And no one, according to City Attorney David Richards, expects anyone to bid the more than $1.3 million Clov-Lease is owed.
“I haven’t kept up on the real estate market lately,” said Richards, “but I don’t necessarily expect that there will be a bidder in excess of the $1.3 million.”
Burns said Clov-Lease could either settle for less or take the property back with a clean title and try to market it elsewhere.
Richards said the last time the city received any repayment on the $1.8 million BHSI and Sperber owe the city was “in June or July of last year … and as I recall, it was either $50,000 or $60,000.”
Richards said there are no plans for the city to sue BHSI or Sperber, last known to be living in Guatemala.
Court records note neither Sperber no BHSI responded to any of Burn’s attempts to serve notice of foreclosure. His last known attorney, Jaime Ramon of Dallas, didn’t respond to a phone call.
The $1.3 million auction figure is what BHSI and Sperber owe Clov-Lease from the initial $1.25 million purchase of the building and 77 acres of land in December 2011, plus interest, according to court documents.
Burns said BHSI made a $150,000 down payment and hasn’t paid a dime more in the last three years.
The city isn’t the only entity on the hook. Snelling Employment has a lien against the property of $65,905.52 and All About Roofing filed an $80,000 lien.
Snelling provided temporary workers who tried to get the plant that was to make beauty products up and running. It would later be disclosed the equipment was dilapidated and aging , not the all new machinery Sperber was given a $350,000 check by the city to purchase.
All About Roofing installed a new roof on the building. Owner Mike Urioste Jr.’s attorney Michael Garrett said his client didn’t get paid, costing him his business.