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HEBER -- A land deal in Heber Valley has melted down in a firestorm of accusations and court battles.
The deal was supposed to lead to a big commercial and residential development on a ranch at the edge of Heber City. Instead, former partners have gone to war.
It's a sign of the times in real estate. Market conditions in recent years knocked the legs out from under many projects. When there are no profits to share, let the blame game begin.
It's a beautiful chunk of land, 159 acres of the Buffalo Ranch. Gary Willey bought it with a dream of turning it into a residential and commercial development.
It's against the law. It's not an arm's-length transaction. It's fraudulent.
–Gary Willey
"I've developed 26 hotels and 5,000 apartments in seven states," he says. "But I've never developed a subdivision."
He did a series of complex deals with Salt Lake developers Armand Johansen and John Thackeray.
"In 2006 the market was very hot, housing was very strong," says Thackeray.
But four years later, the property remains undeveloped.
"Things went sour and lenders quit making loans on this type of project," Thackeray says.
Willey contends Johansen and Thackeray improperly took full control of the land, cheating him out of millions.
I think clearly there were claims of misrepresentations on both sides. But had the market stayed what it was in 2006, they would have all solved themselves.
–John Thackeray
"They created a new company called Cardinal Finance and foreclosed themselves and me out," he says.
Johansen and Thackeray's Cardinal Finance lent $4.5 million to their joint venture with Willey. It was to help cover an existing mortgage with Key Bank.
"It was the only solution, and everybody agreed it was the only solution, to come up with capital to pay off Key Bank," Thackeray says.
But a few months later, Thackeray and Johansen declared their loan in default and took full control.
"It's against the law," says Willey. "It's not an arm's-length transaction. It's fraudulent."
But Thackeray says Willey's claims are simply untrue. "That's false," he says. "The gap loan was specifically to keep Key Bank from closing on the property."
Thackeray says Willey himself agreed to the loan to save the property. Then he couldn't deliver on promises to line up new investors.
"Well I did sign on the dotted line," says Willey. "But they used a new company to foreclose everyone out except themselves."
Thackeray disagrees. "I think clearly there were claims of misrepresentations on both sides," he says. "But had the market stayed what it was in 2006, they would have all solved themselves."
Willey is pursuing his interests in civil court and has spoken with prosecutors and the FBI. Johansen and Thackeray have obtained a restraining order to stop Willey from making statements which could possibly interfere with a new deal they are working on to save the project.
E-mail: hollenhorst@ksl.com
