Albuquerque Journal from Albuquerque, New Mexico • Page 39

BUSINESS Albuquerque Journal Saturday, June 10, 1989 Page 1, Section Authorities Say Gold-Coin Dealer Bilked Thousands By Bob Hagan JOURNAL STAFF WRITER Foreclosure Of Cavan Building Nets $24.5 Million By Susamje Burks JOURNAL STAFF WRITER The downtown Cavan office building was sold for $24.5 million Friday to the California-based firm that helped finance its development. The public foreclosure sale in front of the county courthouse means the deed will go to BA Mortgage and International Realty called BAMIRCO, the lender, and no money will be exchanged. BAMIRCO, represented by attorneys Janet McKay and Victor Ortega, was the lone bidder as about 25 people watched. Also Friday, the city filed a claim in state District Court against Cavan Associates the developer, to recover $848,283 allegedly owed the Metropolitan Development Agency, which held a third mortgage on the parking garage part of the building. Sandia Federal Savings and Loan Association held a second mortgage on the building.

The 15-story building, at Fifth and Marquette NW, was completed in 1986. Its cost was reported at $45 million when construction was announced. Friday's sale and the city claim were part of a lawsuit filed Feb. 7 1 JOURNAL FILE PHOTO Downtown Cavan office building sold for $24.5 million. by BAMIRCO seeking to recover more than $35 million in principal and interest on a promissory note executed by Cavan in 1984 and alleged to be in default.

State District Judge Frederick Mowrer on May 8 entered a judgment previously agreed to by the parties foreclosing the mortgage and ordering the sale. The judgment left the city, a defendant, free to pursue its claims against Cavan, an Arizona firm. Attorney John Myers, named to conduct the foreclosure sale, said Friday the transaction will be final as soon as Mowrer approves Myers' report. Ortega said later most of the building's tenants are expected to remain, and BAMIRCO will honor the leases. The city is involved because the City Council in 1984 deeded the land to Cavan for $758,430 in a long-term agreement allowing the city to lease more than 200 parking spaces.

The $848,283 sought by the city represents the original note plus interest at 3.2 percent a year, court costs and attorney fees. Assistant City Attorney Robert White said the parking space agreement was renegotiated last year. Parking Division Director Tony Martinez said the city now leases 175 spaces at $55 a month each for city and county vehicles and employees. He said the employees pay the city. residential area, where operators took phone orders for gold coins.

The orders were solicited through newspaper and television ads which offered 1-ounce U.S. Double Eagle gold coins for $379 plus $8 for shipping and handling. Monarch ads ran in both the Albuquerque Journal and the Tribune from March 21 through April 20, and the commercials appeared on the Financial News Network available locally through Jones In-tercable. Among those who called the company's 1-800 number was Albuquerque resident Ross Rigby, who sent Monarch a check for $387. "I thought it would make a nice birthday present for my wife," Rigby said.

"I know there's no such thing as a free lunch," he continued, "but they were offering the coins for very slightly above the price of gold, and I thought it was kind of a logical deal." Rigby's check was cashed April 17, the same day postal inspectors and FBI agents raided the company's headquarters in Connecticut. Based on information from records seized in that raid, a federal judge issued an order freezing all the company's assets May 5. "To all intents and purposes, they're out of business," Kerstein said. Since Monarch's phone was disconnected, the Better Business Bureau in Fairfield has been receiving an average of more than 50 calls a day from buyers waiting for their coins, Kerstein said. The bureau has been advising buyers to send a letter of complaint, including the date of their order and photocopies of any canceled checks or money orders, to Agent David Furtak, FBI, Federal Building, 915 Lafayette Bridgeport CT06604.

Kerstein said any possible refunds to customers are far in the future, however. "First they've got to find these guys, then they've got to bring them back, and then they've got to try them and convict them," he A Connecticut telemarketing firm that failed to deliver on its advertised offer of gold coins has been shut down by postal inspectors. But the Better Business Bureau says consumers who responded to the company's commercials may wait years for even partial refunds. In Europe, Interpol is seeking the two principal promoters of Monarch Group of Stamford, and a federal judge has frozen about $800,000 of the company's assets in the United States, according to Alvin Kerstein, president of the Fairfield, Better Business Bureau. Millions more may have already been siphoned off to bank accounts in Scotland and Switzerland, Kerstein said.

"We're talking multimillions of dollars from thousands of consumers across the U.S.," Kerstein said. "We've received complaints from Hawaii and Alaska to Key West, and just about every state in between." Some individual buyers ordered and paid for as many as 70 coins, Kerstein said. "According to testimony given in federal court by a former employee, only 500 orders were fulfilled out of five or ten thousand," Kerstein said. Interpol is looking for James Tucker, originally of Long Beach, N.Y., and Ulrich Wilbert, no address given, whom postal authorities identified as the two principals in Monarch. Arrest warrants for Tucker and Wilbert have been issued by U.S.

District Court in New Haven, according to Kerstein. Wilbert and Tucker "took off for Europe around the first week of May," Kerstein said, and federal investigators are attempting to trace "in excess of $1 million" that was transferred to Swiss bank accounts before the two men left the country. In what Kerstein called "a boiler room in reverse," he said Monarch operated a bank of telephones in a rented apartment in a Stamford Groups Debate Lower FHA Down Payments THE ASSOCIATED PRESS payment is the greatest obstacle to homeowner-ship for first-time buyers," she quoted the study as saying. That study concluded that 81 percent of potential first-time buyers identified as renters between the ages of 25 and 34 don't have the money to make a 20 percent down payment on a median-price starter home, which cost about $69,000 in 1986, she said. The two housing experts were among several taking part in a hearing on a bill sponsored by Sen.

Alan Cranston, chairman of the committee, and 40 other senators. Cranston said he expects the bill, aimed at making housing available to more Americans, to be approved by the committee next month although it likely will be sometime next year before it can clear Congress. The bill would: Lower the 5 percent minimum down payment on FHA-insured mortgages for most first home buyers to 3 percent. For all FHA loans, the down payment would be cut to 3 percent of the first $50,000 of value (up from $25,000) and 5 percent of the balance. Permit FHA to insure loans for homes worth up to 95 percent of local median sales prices, which would be as high as $180,000 in high-cost areas of New England and California.

The current limit is $101,250. Allow owners of Individual Retirement Account and 401(k) retirement plans to withdraw money from those accounts to buy a home. David Perel, housing finance officer for Los Angeles, said the IRA provision is highly desirable, although he predicted it would be of little benefit to younger families looking for their first home. Cincotta said the IRA proposal would not be equitable because it would represent a federal housing subsidy only to those fortunate enough to have a retirement account. WASHINGTON Home builders told Congress Friday that a bill lowering the minimum down payment on government-backed home loans would ease the nation's housing crisis, but a grass-roots group said it would actually make homes less affordable.

"The greatest impediment to homeownership is excessive monthly housing costs," not the down payment, Gale Cincotta of Chicago, chairman of National People's Action, told the Senate Banking Committee. In 12 years, she said, average costs for first-time buyers have soared from less than one-quarter of their income to more than one-third. Shirley McVay Wiseman of Lexington, president of the National Association of Home Builders, cited a Harvard University study as reaching a contrary conclusion. "Raising the cash necessary for a down USINESS DIGEST COMPILED FROM JOURNAL STAFF AND WIRE REPORTS Trammell Crow Chief Denies Fraud Allegation By Paul Logan JOURNAL STAFF WRITER C.C. Limited is a New Mexico partnership whose general partners are Rolfe Black and John Black, West Side developers.

"Neither John Black nor his attorney, Bruce Pasternack, gave us any indication that there was a pending or threatened lawsuit," Gomer said. Pasternack declined to comment. The lawsuit centers around a partnership between Crow and C.C. Limited that developed the River Walk at Puerta de Corrales, a 250-unit apartment complex at 3405 Calle Cuervo NW in Corrales. According to the complaint, C.C.

Limited contributed the land, worth $1,375 million, to the partnership while Crow provided expertise to develop the project. Crow put up $100 to capitalize the partnership and obtained financing for the project through the New Mexico Mortgage Finance Authority. C.C. Limited contends that Crow deliberately inflated the economic potential of the project in pre-development income projections. Crow then charged development, accounting, landscaping and insurance fees to the project that were excessive, according to the lawsuit.

Salaries, storage and other expenses were inappropriately charged to the project, the lawsuit claims, and cash dividends known as preference distributions also were paid from the project. As a result, the apartment was insolvent by June 1987, according to the lawsuit, despite a 90 percent occupancy rate. C.C. Limited seeks actual damages of at least $2.75 million. "The River Walk Apartments are not in default As of today all partnership responsibilities have been met," Gomer said.

The partnership, Crow-Black II, still owns the complex and Crow is currently meeting its financial obligations, according to a spokesman for the Federal National Mortgage Association, which holds the mortgage. However, Crow-Black II has entered a request with the New Mexico Mortgage Finance Authority to refinance the bonds issued in 1985 for' River Walk and several other apartment projects, the spokesman said. Fannie Mae is working with Crow-Black II and the MFA to avoid a potential loan problem by reissuing a new bonds by month's end. The new issue would carry a reduced interest rate in order to give the partnership the opportunity to make its mortgage payment, the spokesman said. The state MFA is designed to provide funds at below-market interest rates for multi-family and single family mortgage loans to assist low-income families and first-time home buyers.

The Albuquerque manager of Trammell Crow Residential vigorously denied Friday fraud allegations listed in a civil suit filed against the property development company earlier this week. Gary Gomer, who manages the Crow office at 4300 San Mateo Blvd. NE, said the suit "came as a complete surprise" when the company was served with the papers Thursday. Among the other defendants was the Dallas-based company's founder, Trammell Crow. But a Crow corporate spokesman said the company could not comment on the suit.

Gomer said the company's attorneys were going over the complaint filed Wednesday in federal district court by C.C. Limited. Gomer said he could not address the lawsuit's charges, but added "We welcome the opportunity to defend the case to its fullest and we're confident that we'll be absolved of any wrongdoing." C.C. Limited's civil lawsuit alleges that the Crow Co. generated income through a series of misrepresentations to potential investors dating back to the 1970s, in violation of federal racketeering laws and New Mexico and Texas securities laws.

Wholesale Prices Soar at 9.4 Rate Youth Leadership Seminar Under Way The eighth annual Hugh O'Brian Youth Foundation New Mexico Leadership Seminar is under way in Albuquerque. Corporations and civic groups are sponsoring the three-day seminar which brings 105 sophomores from as many high schools together at the Doubletree Hotel to meet with government and business leaders. "The seminar is designed to increase their understanding of the American incentive system and to further develop their leadership skills," said Carole Burton, the foundation's state chairman. mart Offers Double-Stamp Incentive DETROIT mart hoping to attract customers and rejuvenate sluggish sales, is borrowing a marketing tactic more common among supermarkets: a double-coupon day on Saturday at all of its 2,200 discount stores. mart normally accepts manufacturers' coupons for face value.

Saturday, coupons worth up to 50 cents will be doubled in value, said Teri Kula, senior marketing coordinator. The nation's second-largest retailer after Sears, Roebuck and is trying to jump-start sales after a disappointing first quarter in which profits slumped 22 percent. U.S., Japan Industry Officials To Confer TOKYO Japanese and U.S. semiconductor industry officials have agreed to meet on seeking better access for foreign companies to the Japanese semiconductor market, a Japanese official said Friday. The Electronic Industries Association of Japan and the U.S.

Semiconductor Industries Association decided Thursday to create a task force to improve links between foreign suppliers and Japanese companies that purchase semiconductors. EIAJ Chairman Toori Sato said the panel would contain five Japanese companies, including Sony Corp. and Matsushita Electric and a group of American companies to be designated by the U.S. association. The task force is to discuss how foreign producers can better meet the requirements of Japanese purchasers, and will exchange technical information, Sato said.

Bilzerian Convicted of Securities Fraud NEW YORK Singer Co. Chairman Paul A. Bilzerian was convicted Friday of fraud and tax violations in the first jury verdict in the government's three-year crackdown on Wall Street securities crime. The federal court jury returned its decision on the second day of deliberations. The Bilzerian case was the first prosecution of a corporate raider using information derived from the Ivan Boesky insider-trading scandal that broke in 1986.

Bilzerian, 38, a Tampa, investor who won control of Singer last year, was convicted of nine counts of breaking securities and tax laws and making false statements in connection with three failed takeover attempts and another stock transaction in 1985 and 1986. He faces a maximum penalty of 45 years in prison and $2.25 million in fines. Car-Seat Problem Prompts Chrysler Recall HIGHLAND PARK, Mich. Chrysler Corp. on Friday recalled about 60,000 1985 Dodge and Chrysler cars because of a seat problem.

Chrysler said one of the cushion frame attachments in the cars could fail, causing the back of the front seat to collapse. The recall affects 1985 Dodge 600, Daytona and Lancer cars and Chrysler Laser, LeBaron and LeBaron GTS models. 1 THE ASSOCIATED PRESS Producer Price Index For finished goods Seasonally adjusted change from prior month 1.0 0.5 higher interest rates. The central bank nudged a key interest rate the rate banks charge each other for overnight loans down early this week in the hope that slower economic growth would soon dampen price pressures. Financial markets had rallied in response to that move, but they dipped slightly in early trading Friday after traders interpreted the price report as an indication the Fed will hesitate before loosening again.

Stock prices generally recovered by midday. Prices at the wholesale level had risen at an annual rate of 0.4 percent in both April and March after rising 1.1 percent and 0.9 percent in January and February, the worst two-month performance in eight years. The Labor Department identified three factors as big contributors to the May price jump: gasoline, automobiles and vegetables. Gasoline prices rose 5.2 percent following an April climb of 13.4 percent, the steepest in more than two years. Energy prices overall rose 3.3 percent in May.

Natural gas prices increased 3.4 percent, but heating oil costs declined 7.7 percent. Food prices, which had posted a rare 0.6 percent decline in April, rebounded 0.8 percent in May. The price of vegetables skyrocketed 26.4 percent as celery and tomato prices doubled and cabbage prices rose by one-third. Craig Howell, a Labor Department analyst, said tomato prices rose strongly because of a temporary shortage after Florida growers finished shipping their crop. The price of goods excluding the volatile food and energy sectors, a figure often taken by analysts as a truer reflection of underlying inflationary pressures, rose 0.5 percent last month following an unusual 0.1 percent decline in April.

The increase in May was largely driven by a 1.8 percent rebound in auto prices following a 2.8 percent decline a month earlier. Howell said auto manufacturers rolled back some of the rebate programs they had been offering. Price gains also were posted for children's clothing, glassware, mobile homes, toilet paper and tires. The overall May increase left the Producer Price Index for finished WASHINGTON Wholesale inflation came roaring back in May after a two-month respite, as prices soared for gasoline, fresh vegetables and automobiles, the government reported Friday. The Labor Department's Producer Price Index jumped 0.9 percent last month and is up at an annual rate of 9.4 percent so far this year, more than double the 4 percent increase last year and quadruple the 2.2 percent gain in 1987.

However, Michael Boskin, President Bush's chief economic adviser, attributed most of the inflation this year to "special factors" and predicted better numbers ahead. He said food price increases will ease with the expected return to normal weather following last year's drought. He added that crude oil prices have stopped climbing and that should steady energy prices. Private economists said Friday's report means the Federal Reserve will wait at least a month before following up on its first tentative step to loosen credit after 15 ronths of fighting inflation with a A SON A 1988 1989 May '88 April '89 May '89 0.3 0.4l Uo.91 Stxroa: U.S. Dapt ot Labor AP goods at 114.2, meaning that a hypothetical selection of goods costing $100 in 1982 would have cost $114.20 last month, up from $113 in April, a.