Mulvaney Borrowed $1.4M To Build A Mall. It Wasn't Built Nor The Loan Repaid.

Gage Skidmore/CC BY-SA 2.0/Flickr

Mick Mulvaney said the loan—now $2.5 million with interest—"will go unpaid".

Eleven years ago, Mick Mulvaney was the co-owner of a company that wanted to build a strip mall in an upscale Charlotte community.

To finance the project, they borrowed $1.4 million from a family firm owned by Charles Fonville Sr.

The project fell apart, the mall was never built, and Mulvaney adopted a political career, which has recently resulted in his becoming President Trump’s acting chief of staff.

And Fonville never got his money back.

A sum that has now reached $2.5 million with interest was brushed off by Mulvaney as a bad real estate deal. He said that the sum “will go unpaid.”

The political battle that now rages between Mulvaney and Fonville threatens to tarnish Mulvaney’s reputation as a fiscally responsible political actor.

Fonville is accusing Mulvaney’s two companies of “intent to deceive,” “fraudulent acts,” and “breach of contract” to avoid payment of the loan.

Mulvaney’s lawyer, John R. Buric says Mulvaney has done nothing wrong. Fonville & Co. may not be repaid because it was a secondary lender in a project that was worth less than originally anticipated. The primary lender has the first right of repayment if the property is foreclosed on.

Fonville may get little to none of his money back. Buric maintains that Fonville could get some or all of his money back if the property is sold for a high enough price.

Fonville alleges that Mulvaney’s web of transactions were designed to avoid repayment.

Lancaster Collins Road LLC, a company connected to Mulvaney, borrowed $3 million from Paragon Bank and $1.4 million from Fonville & Co. to fund their project. Paragon was the primary lender while Fonville was the secondary or “mezzanine” lender.

The shopping mall was never built and interest payments piled up, which Fonville allowed because he believed he would be paid eventually.

By the time Mulvaney was running for his fourth congressional term, Lancaster Collins owed the bank $2.1 million, and faced the prospect of foreclosure.

Mulvaney knew that a foreclosure would hurt his public image. To avoid foreclosure, Mulvaney and two of his relatives became part of a new company called Indian Land Ventures. Mulvaney borrowed between one and five million dollars to fund the company. The new company used the borrowed funds to buy the mortgage held by Paragon Bank.

Now, one of the companies that Mulvaney was connected to was the lender to the other company. Indian Land accused Lancaster Collins of failing to meet its debt obligations in 2016.

In Mulvaney’s explanation to congress, he said “A company in which I am a minority owner filed a foreclosure action against another company in which I am a minority.”

Mulvaney acknowledged another effect of the foreclosure: “As a result of that foreclosure, the mezzanine financing provided by the Fonville & Co. will go unpaid.”

The debt to Fonville would go unpaid because the value of the property had decreased.

Mulvaney never attempted to contact Fonville, and he ignored Fonville’s calls.

As of now, Fonville has spent $30,000 in legal fees during his court battles with Mulvaney. He says he is willing to spend more.

Comments
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henryfacosta
henryfacosta

Where did the money go if the mall wasn't built?? Whose pocket is it in? Was it spent on hookers and hoes????? That's what trumpsters spend their money on