Shakedown in Show Low

Allegations of fraud swirl around a White Mountain RV resort, and the Baptist Foundation of Arizona is right in the middle of it

According to their lawsuit, Friend and BFA then concocted a plan to defraud them.

First, Northroup sold an option to buy his interests in the Juniper Ridge deal to H and S, a Friend company, for $200,000.

Next, Friend sold all his stock in H and S, and the Northroup option, to EVIG, whose portfolio manager was BFA attorney Grabinski.

Then, the three developers say, Northroup went behind their backs and secretly withdrew the federal lawsuit against WCLF, the partnership that then owned Juniper Ridge. The dismissal of the lawsuit freed up Juniper Ridge for sale. In September, EVIG then borrowed $1.7 million from BFA to buy the property. The sales price was $1.42 million; records do not say what EVIG did with the remaining $280,000 it had borrowed.

Once EVIG owned the RV resort, it transferred it to a wholly owned subsidiary, Juniper Ridge Management Inc., also managed by Grabinski.

Friend scored big. Three of his companies got $4 million worth of contracts to manage and market Juniper Ridge, court documents say.

McRae, Stuckey and Holmes sued Northroup for breach of fiduciary duty to the partnership because he dropped the lawsuit without telling them.

Northroup answered in court that he did nothing wrong because McRae, Stuckey and Holmes weren't really his partners. What's more, his company had a legal right to drop the federal lawsuit, he said.

In December 1997, the three developers sued Friend, Kuhn, their companies and their lawyers for fraudulent transfer of property, among other things. (Now they seek to add Grabinski and BFA to that case.)

"This is crazy," Friend said in a recent deposition.
"All of this is insane."
In court records, Friend says McRae, Stuckey and Holmes are engaging in a "hodgepodge of baseless allegations."

"Plaintiffs allege some fraudulent transfer or some conspiracy to commit a fraudulent transfer, but fail to set forth exactly what transfer they refer to," Friend says in court records ". . . The property was not transferred to Friend, nor was it transferred by Friend. Friend never had any interest in the real property at issue."

Which is true.
But the former BFA director ended up reaping multimillion-dollar contracts on a transaction financed by BFA.

Barbara and Ed Gritsko bought into Juniper Ridge RV resort in 1989, when they were still in their 50s. The Gritskos retired from Los Alamos lab in New Mexico, bought a winter place in Tucson and a summer idyll at Juniper Ridge.

The Gritskos have become somewhat cynical, after living through the RTC, the WCLF period, and now the litigation and bankruptcy.

When Juniper Ridge Marketing bought the place in late 1997, most homeowners were delighted, says Ed Gritsko. Like others interviewed for this story, however, Gritsko seems confused over who, exactly, owns the resort.

Mostly, residents say, they've been communicating with representatives of Friend's companies.

Earlier this year, the new owners gave the swimming pool a face-lift and fixed the dance floor in the lodge. The folks at Juniper Ridge thought their troubles were finally over.

But in April, Juniper Ridge Marketing filed for Chapter 11 bankruptcy in Phoenix. The same company that promised the homeowners the resort would be developed and fixed up now can't pay a penny of June's maintenance expenses, which are $25,000 to $30,000, according to Gritsko.

"What now? Will they shut the place down?" Ed Gritsko asks.
Gritsko says the new owners have explained that the bankruptcy was filed "in order to get rid of lawsuits."

(In bankruptcy papers, Juniper Ridge claimed assets of $1.7 million and liabilities of $3.2 million. It owes more than $1.7 million to BFA, plus an additional $50,000 in accrued interest. BFA holds the first deed of trust on the property.)

A bankruptcy judge has scheduled a sale of Juniper Ridge on July 13. If the sale takes place, it is likely that BFA will gain control of the property.

But the proposed sale is being vigorously contested.
McRae, Stuckey and Holmes have asked the judge to halt the sale and appoint a trustee to look into irregularities in bankruptcy. Among other things, the three developers claim in June 19 filings that Juniper Ridge Marketing has concocted a bogus plan that would allow BFA to whisk the RV resort into a brand-new BFA company, to "render the estate with no property and no funds for its creditors."

Judge George Neilson, the same judge presiding over the bankruptcy of convicted felon J. Fife Symington III, has yet to say whether he will halt the proposed sale.

"The stress," says Gritsko, "is not knowing what happens next. And wondering if our investment is protected."

The Gritskos plan to tough it out at Juniper Ridge.
"Each year we say we're going to put blinders on and we're not going to listen," Gritsko says. "But it's pretty difficult not to talk about it."

Contact Terry Greene Sterling at 229-8437, or online at tgreene@newtimes.com

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