Henderson stadium promoter has history of legal, financial problems

In Henderson, aspiring stadium developer Chris Milam is known as the man seeking the city's help to bring major league sports to Southern Nevada.

But in court documents detailing a business deal gone sour, Milam is portrayed as a developer whose misleading financial statements and double-dealing torpedoed a $1.2 billion proposal to build a high-rise condominium project near the Strip in 2005.

The documents detail accusations that Milam lied about where he got the money to partner with former Hard Rock Hotel owner Peter Morton on the failed condo project. The dispute led to a $1.1 million fraud judgment against Milam, which is under appeal to the Nevada Supreme Court.

And it's not the only financial dispute involving Milam disclosed in court records, just the messiest.

Another case filed in 2010 sought the repossession of Milam's 2005 Mercedes sedan, alleging he failed to repay more than $40,000 he owed on a car loan.

The court record also includes allegations from others who claim to have lost money doing business with Milam, such as the law firm of Kummer Kaempfer Bonner Renshaw & Ferrario, which dropped Milam as a client in the Hard Rock case after he failed to pay his legal bills.

"Milam was supposed to be this hotshot developer, and he got into this deal with Morton by portraying himself as this experienced developer," said Todd Bice, who represented Morton during the litigation. "Little did Morton know Milam didn't have his own money."

Milam refused multiple requests to talk about business disputes and unpaid debts.

But he has hired prominent attorney Pat Lundvall, also a member of the Nevada State Athletic Commission, to handle the Hard Rock appeal.

He's also hired former Rogich Communications Vice President Lee Haney as a spokesman.

Haney said the fact the Nevada Supreme Court has agreed to hear the appeal suggests there are holes in the allegations against Milam.

"They must feel there was some information that either wasn't considered or wasn't in the initial case," Haney said.

The case has dogged Milam since 2006, even as he makes stadium proposals to one local government after another in an attempt to kick start another big development deal.

The 5-year-old Hard Rock case and other unpaid debt disputes are important today because Milam is seeking support for a major stadium development in Henderson that would leverage public land, bonds backed by tax revenue and private investment.

If the project were to unravel, it could leave the city of Henderson with a partially built or underused sports facility.

Haney says failure is unlikely and wouldn't require city taxpayers to repay bond debt. She also said the Hard Rock dispute and court records detailing unpaid debts are anomalies in an otherwise good track record.

"He spent the time and effort and money to appeal that decision because he obviously believes it is not correct," Haney said. "He has an extensive background of experience developing projects, successful projects."

TROUBLED BUSINESS DEAL

Yet testimony in hundreds of pages of trial transcripts and court documents describe Milam as a man who was willing to mislead business partners to keep a deal alive rather than admit he didn't have his own money to put up.

The lawsuit was brought by investors in the project against Morton and Milam. A jury absolved Morton of responsibility, and a judge subsequently issued the summary judgment against Milam.

"Obviously, he has made a living proposing real estate developments," said Harry DeHaan, the attorney who won the District Court judgment against Milam. "It is interesting he continues to come forward with projects, ... I would think that he would try and clean up with me before he went on to the next one."

The Hard Rock case stems from a partnership Morton and Milam formed in 2005 to develop a condo tower project with 1,420 units priced $500,000 and up.

The plan called for Morton to contribute land near the Hard Rock Hotel purchased for $86 million and Milam to coordinate development and condo sales.

Construction was supposed to begin in 2006 and be complete by 2008. The Nov. 29, 2005, press release announcing the plan reported celebrities from supermodel Claudia Schiffer to former National League Hockey star Sergei Federov would buy units.

The announcement crowed: "Even with a number of competing condominium projects popping up in Las Vegas, the Bungalows Residences Flats at the Hard Rock Hotel and Casino in Las Vegas surpassed the competition with record-breaking sales statistics."

It referred to Morton and Milam as "visionaries behind these exquisite condominiums" and claimed to have already attained a $1.25 billion loan, making the project "one of the largest residential construction financings in U.S. history."

Behind the scenes, however, the deal was already unraveling.

According to testimony from Brian Ogaz, a vice president for Morton's holding company, certified public accountant and longtime Morton associate, the press release came just over a week after Ogaz learned that Milam raised more than $10 million from outside investors to fund his part of the deal.

The revelation, according to testimony from Ogaz, was a shock.

"Peter felt he had been deceived," Ogaz, who did not respond to interview requests, told the court, describing Morton's reaction to news that Milam had recruited outside investors. "Because we had told Chris up front, 'We want your capital to be at risk in the deal.' And then to find out that he had not put a penny of his into the deal, that this has all been raised by the third party."

Ogaz said not only did Milam give his word, he submitted a personal financial statement that included $10 million in "real estate interests" in the condominium project.

They weren't the only ones surprised by the revelation, according to testimony.

The personal financial statement was submitted to Credit Suisse as part of the documentation for the $1.25 billion construction loan.

Michael May, a Credit Suisse banker at the time who worked on the loan, said the news threatened to undermine the entire deal.

May's reaction was recorded in a deposition Dec. 19, 2007, that was included in the court files.

"I asked Mr. Milam if the money was his or it had come from investors," May said, according to the deposition transcript. "He said that the money was all his."

May, who declined an interview request but stood by his testimony, said during the deposition that if Milam had lied about the source of the funds, it threatened the Credit Suisse loan.

"Because as a credit issue, we want to have our sponsors have a stake in the projects that we're lending money on," May stated in the transcript. "Because we don't want the sponsor to use our money, and if the project fails, walk away and have nothing to lose."

According to testimony from Ogaz, Morton decided to call a meeting with Milam to tell him he was out of the deal.

He described Morton as furious at Milam.

"Peter confronted Chris and Peter was probably as angry as I'd ever seen Peter before," Ogaz stated in court documents, describing Morton as red-faced with veins bulging. "Basically he, he told (Milam), 'Chris, you know, you're out of my deal. You know, I trusted you, you've lied to me.' "

According to testimony from Ogaz, Morton agreed to repay the outside investors if the project came to fruition.

But the partners didn't complete the project, as Morton sold the Hard Rock in May 2006 to Morgans Hotel Group, netting $770 million, according to reports of the sale.

MORTON, NOT MILAM, BLAMED

The new ownership, Morgans Hotel Group, did complete a $750 million expansion of the Hard Rock. But by then Milam was not involved with the project.

The sale to Morgans rankled people involved with the condo project who blamed Morton, not Milam, for the failure and subsequent lawsuits.

Morton "was negotiating the whole time to sell the project. We certainly didn't know about that," said Chad Ackerley, who said he helped Milam raise money from outside investors and was brought in to sell the condos. "At the end of the day, people were trying to get paid from the one guy who did get paid, and that was Morton."

Ogaz also testified Ackerley said Milam raised $13.5 million from investors, although just $10 million is on record going into the condo deal. In an interview, Ackerley said he does not know what happened to the money, saying the investment and financing side of the deal was between Morton and Milam.

For his part, Milam continues to fight his appeal of the $1.1 million judgment. In court documents Milam argues that after Morton was let off the hook DeHaan took advantage of the situation by abruptly asking for a summary judgment against Milam, knowing Milam was out of money and no longer had a lawyer to oppose the motion.

"Because this happened so quickly and informally, Milam, although he was present in the courtroom, was not aware of the legal consequences of what had just occurred," the appeal states.

The appeal arguments, however, don't address the allegations Milam lied about the source of his money. They focus on the argument that the judgment came down when Milam didn't have an attorney to represent him.

MORE DEALS GONE BAD

The judgment, filed Dec. 1, 2010, wasn't Milam's only financial problem working its way through court.

On Aug. 13, 2010, DCFS U.SA. LLC., a financing company for Mercedes-Benz, filed suit against the developer claiming he had stopped making payments on a 2005 Mercedes S600V sedan.

According to the case documents, Milam stopped making payments on the approximately $80,000 car in July 2009, when he still owed more than $40,000 at an interest rate of 15.75 percent. The car was repossessed in November 2009, according to court records.

Another transaction Milam failed to close was with the Las Vegas 51s minor league baseball team.

In May, Milam agreed to purchase the team for more than $20 million. The plan was to seek approval from the Nevada Legislature for a tax-based financing deal for a stadium near Russell Road and Interstate 15. (The Review-Journal holds an option to acquire a 10 percent interest in the 51s.)

Milam, who a baseball source said paid less than $20,000 in earnest money, traveled to Carson City to lobby for the legislation needed to finance the stadium.

But his arrival was late into the 120-day session, and lawmakers weren't impressed with the sales pitch.

"I just remember him talking a big game," said a legislative source who discussed the proposal in private with leading lawmakers. "If he could get the legislation, he had his bankers and everybody in line. He was ready to go."

However, the source said Milam was vague when it came to specifics on the financing plan, which gave lawmakers pause.

"It kind of felt like a dog-and-pony show," the source said. "Everything was looking toward him making money off it and taxpayers paying for it."

The legislation, which included proposals that might have helped two other potential stadium projects, died in committee.

It didn't help that neither Milam nor other would-be developers showed up with bond experts to delve into details for the Assembly Taxation Committee chaired by Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas.

"That puts a real damper on the bill," Kirkpatrick said at the time.

MILAM'S FINANCES

Whether the business disputes and unpaid bills are anomalies in an otherwise strong development record or indicative of a businessman who fails to deliver on promises is difficult to tell.

Milam, 50, avoids the spotlight, rarely gives interviews and provides sparse detail on previous projects.

On the personal finance statement included in the Hard Rock case documents he lists several airplanes, including a 1982 Boeing 737-200, among his assets. Also listed were real estate projects in Austin, Texas, Scottsdale, Ariz., office buildings in Warsaw, Poland and St. Petersburg, Russia, and a ranch in Comal County, Texas. The real estate, which also included the Hard Rock project, was valued at almost $21.3 million in total. At the time Milam listed his net worth at nearly $33 million.

The Nevada secretary of state's office lists Milam as an officer in seven companies, but the status of every company is listed as dissolved, canceled or revoked.

Clark County property records show no homes or commercial properties listed under Milam's name.

Ackerley said he met Milam in Austin, Texas, working near Hill Country Galleria, a shopping mall in which Milam held a 3.2 percent ownership interest, according to news reports, as well as developing. The mall was foreclosed upon in 2009 and Opus West, the company with the biggest ownership stake, filed for Chapter 11 bankruptcy.

The website for Milam's primary company, IDM, which stands for International Development Management, describes a firm with "a global history and depth of experience" and offices in Austin and Dubai.

It offers potential clients development management, construction management, labor management, property management and leasing and sales services.

But few details are provided on many of the developments listed among its projects in places like Warsaw, Prague and Budapest.

In Las Vegas the site lists a project called "Las Vegas Towers," which is billed as having "the two tallest all-hotel buildings in the world" as being "under development."

Milam's tower plan, however, was to be a partnership with Australian gambling company Crown Ltd. But Crown pulled out of the project in 2008, losing $44 million in the process, according to news reports and company filings.

The partnership between Milam and Crown, LVTI, LLC, is listed as "canceled" in the Nevada secretary of state's business directory.

Haney said the Las Vegas towers were still listed because Milam "is still interested in doing it at some point."

She said the inclusion of Las Vegas Towers on the website as a project under development isn't misleading, because "there is no investor who is going to invest based on that."

Despite court battles and unfinished business elsewhere, Milam continues to push the Henderson City Council to help him cut deals to buy public land and get tax-backed revenue bonds to partially fund his latest stadium dream, using the promise of construction jobs, tourism and the prospect of Major League Soccer and National Basketball Association teams moving to Southern Nevada as lures.

Haney said the developer is using his own money to keep the project moving until a combination of bonds and private equity funding of more than $400 million is in place.

"I can tell you he has his own money into the Las Vegas National Sports Center; he has funded it with his own money up until this point," Haney said, although she didn't say how much.

"He has had a project that has developed over time which he has continued to look for and he is not giving up," she said.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-229-6435.