A bankruptcy trustee is asking for approval to sell a Palm Springs hotel and related condominiums, starting the dismantling and liquidation of a real estate development company affiliated with failed private lender USA Capital.
The private lender filed for bankruptcy in April 2006, causing grief for 6,000 investors who entrusted USA Capital with $962 million in assets.
USA Capital and related companies solicited money from individual investors and made loans to developers and real estate owners, including Tom Hantges and Joe Milanowski, the majority owners of USA Capital.
Hantges and Milanowski also owned USA Investment Partners and used it for real estate investments.
In bankruptcy proceedings, attorneys have alleged money from USA Capital was diverted to USA Investment Partners.
In April, USA Investment Partners was forced into bankruptcy. Affiliates of USA Investment Partners now are asking bankruptcy Judge Linda Riegle to approve on July 27 a bidding process or possibly an auction of the Hotel Zoso and 63 condos nearby in the Palm Springs Marquis Villas.
Gordon & Silver Ltd., the law firm that represents USA Investment Partners trustee Lisa Poulin, filed a motion that calls for setting the minimum sales price at $25 million for Hotel Zoso and $11 million for the units of the Marquis Villas.
American Property Hospitality Management LLC, a so-called stalking horse bidder, agreed to pay the minimum bids.
The hotel and condo sales will be the first major action taken by the trustee.
Poulin said she has identified more than 75 separate investments or legal entities owned by USA Investment Partners. Greg Garman, an attorney for the trustee, said it is too early to estimate how much the trustee may recover for investors and creditors of USA Capital.
The 163-room hotel was refurbished and reopened in December 2005, complete with an “elegant marble entry way,” Poulin said.
Another affiliate of USA Investment Partners owns 63 of 101 condo units.
Salvatore Reale, a former associate of reputed mob boss John Gotti, had a claim against the hotel, but Reale agreed to a settlement and released his lien on the hotel.
Garman expects the direct lenders, who own fractional interests in the loan on the hotel, to recover all of their principal and interest from the hotel sale.
USA Capital Diversified Trust Deed Fund, one of two loan investment funds operated by USA Capital also may get some of the hotel proceeds.
Marc Levinson, an attorney representing the fund, Levinson expects the fund to obtain a substantial amount from the condo sales.