Tuesday, December 27, 2011

Bank Foreclosure Fraud - Exhibit II - Evidence of Spencer C. Young’s Good Faith & Strong Business Acumen And Paragon's Sudden Bad Faith

The table below reflects just a few of the actions undertaken by Spencer C. Young to create substantial value at the Subject Collateral Properties; however, Paragon undermined all such efforts, evidencing an agenda intentionally detrimental to Mr. Young interests.
In reviewing this table, bear in mind the following:
  • Mr. Young had a strong banking relationship with Paragon for the prior four years, and all loans were performing, never in default and always paid prior to their monthly payment date
  • Mr.Young had closed, or was otherwise responsible for over $30 Billion in commercial real estate related transactions over his career, which in aggregate was a larger experience base than ALL Paragon lending officers COMBINED
  • Mr. Young is considered an expert in commercial mortgage backed securities ("CMBS") and related capital markets lending and is credited with developing the industry's initial lending and capital markets pricing standards through the JPMorgan Black Box, which he personally wrote the computer code for
  • Mr. Young founded the CMBS business at JPMorgan, built Morgan Stanley's CMBS conduit into a market leader (#1 in CMBS underwriting for 3 consecutive years), and created the highly successful proprietary CMBS franchise (the "IQ® Institutional Quality" brand).  These franchises today are worth $ Billions.
  • Since Mr. Young effectively wrote the book on commercial real estate lending, was intimately familiar with Paragon's lending parameters, he would typically sketch out the loan size and terms, which his personal banker and Paragon's head of real estate lending would always sign off on.  And so much mutual trust was built between the two that terms of financing were agreed upon up front based on a handshake, and memorialized with no changes at closing.
  • Notwithstanding the aforementioned, Mr. Young was deliberately set up in a financing ruse, as noted below 

Instances of Mr. Young’s Good Faith & Business Acumen
Reference / Response
Recruited Top Flight Tenants at Substantially Higher Rents  -- For example,  Bonne Soiree was selected as Restaurant of the Year in the Triangle (per News & Observer food critic), and one of the 10 best small restaurants in the U.S. (per Bonne Appetit)
 Click here for some of the magazine and newspaper restaurant reviews of Bonne Soiree
Candor & Transparency – Mr. Young openly and candidly shared information concerning of key matters and events (business and personal) with Martin Borden, his relationship banker at Paragon since 2004 – including the twists and turns of his pending divorce, and settlement negotiations.   He even provided Mr. Borden with a complete copy of the executed Divorce Settlement Agreement (“DSA”), going so far as highlighting the key provisions in this document, as well as provide him with a 3 page summary. 
Martin Borden had been involved in and was kept apprised of the DSA, and signed off on the final provisions before Mr. Young entered into the DSA.  In failing to provide the previously agreed-upon financing caused Mr. Young to immediately default of the DSA provisions.  This was deliberate, and intended to create divisiveness within the family. Click Here   for details evidencing Paragon’s involvement.
Sound & Conservative Deal Structure for Recapitalization – Mr. Young developed a Cross-Collateralized Recapitalization Structure for all five of his NC properties, which Mr. Borden (“MB”) verbally agreed to, as he had done with all four of the completed financings. In fact, their relationship had developed to the point of Mr. Borden providing Paragon’s then current underwriting parameters and financing terms to Mr. Young, so he could structure each loan, which Paragon ALWAYS concurred with.
Paragon abruptly reneged on terms it had previously agreed to – no reason specified – Click Here for details that would comfortably support the recapitalization structure on an earn-out basis based on Paragon’s lending parameters and leasing rates based on the most recently executed leases.
Acquired Land Parcels to Resolve Parking Impasse – Mr. Young completed the acquisition of two adjacent land parcels to be used for valet parking at The Courtyard of Chapel Hill, which was to be a two part financing, and permanently resolved a   issue that was a substantial drag on the fair market value of the property. 
Paragon financed Phase I (Acquisition), but abruptly reneged without warning on  Phase II (Build-out) – Click Here for details on Project Lemonade.

Made Liquidity Arrangements Well In Advance of Need
Worked out terms of a full-recourse $500,000 Credit Facility with MB.
Paragon reneged in May 2008 on short term financing arrangements agreed to in October 2007 – no reason specified (Click here for relevant correspondence).
Responded in Good Faith to Paragon’s Delays & Changing Feedback  – Mr. Young put up investment assets equal to $332,000 at the time in order to establish a fully-collateralized Credit Facility for this amount.  When Paragon reneged, Mr. Young proposed terms for an over-collateralized Credit Facility of $250,000 with Mr. Borden, who indicated such a sound credit structure would probably work, but once again Paragon dragged their feet on a decision and issued a terse response that was scripted and delivered in a “corporate-speak” manner as:  Based upon our credit evaluation, Paragon has no interest in extending additional credit to you, or your entities”.
Paragon reneged – no reason specified.  Paragon had deliberately strung Mr. Young along for 3 months, until Wachovia had sufficient time to accelerate their $2.6 million loan on The Courtyard of Chapel Hill.  This was deliberate and coordinated between these two banks with close organization ties (e.g., most Paragon executives had a prior career at Wachovia).  (Click here for correspondence just before Paragon officially reneged.)

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.