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HEBER CITY -- The auction of one of Utah's fanciest resorts has drawn a furious response from investors. But the attorney representing the company that bought Wasatch County's Zermatt Resort says everything about the auction was perfectly legal.
"I don't see how it could be legal. I know it's not moral, and it certainly isn't ethical." Jaren Davis, Zermatt managing member-investor
The transactions leading to Monday's auction are complicated, but simply put: The company that sold the resort is the same company that bought it; and in doing so, they wiped out as much as $20 million in debt.
Zermatt is an award-winning resort for the wealthy; a touch of Switzerland in the Heber Valley. The resort is in its fourth year, trying to build an international clientele.
"It was building; but as it's building, we're just stuck with this debt and obligation that are very critical," says Jaren Davis, managing member-investor in Zermatt.
Davis is one of two managing member-investors. He's angry about the auction on the courthouse steps. He claims it's a scheme cooked up by the other managing investor, Bob Fuller, who did not attend the auction. In fact, the only bidder was a new company Fuller is associated with -- Legacy Resorts, LLC -- which bid $16.5 million.
Legacy Resorts made an earlier deal -- terms unknown -- with the principal lender, taking over the mortgage from America First Credit Union. Then Legacy foreclosed on it and auctioned off the property to itself.
"It was a public proceeding. The entire public, the entire world, was invited to bring their money," says attorney Kim Wilson, who is representing Legacy Resorts.
But other lenders and member-investors say their millions in investments are left out in the cold by the deal.
"I don't see how it could be legal. I know it's not moral, and it certainly isn't ethical," Davis says.
"There's a lot of debt that's been wiped out with this proceeding; and it might be legal, but it doesn't seem right," says Zermatt member-investor Tom Whitaker.
"That is the system," Wilson counters, "and one would expect that any junior lien holder with interest to do so would bring money to protect their interest."
The biggest loser is apparently philanthropist millionaire Jennifer Speers. KSL News couldn't reach her for comment, but other investors say Zermatt owed her about $15 million -- a debt that's now wiped out. Disgruntled investors hope to recruit Speers for a lawsuit.
The key player on the other side, Bob Fuller, told KSL News the accusations of unethical behavior are "hogwash." He promised a detailed statement in about a week.
E-mail: jhollenhorst@ksl.com
