WRONGDOING #8
Circle C Ranch Amenities Fund
Circle C Amenities Fund was originally called Circle C Development Center (CDC) Escrow Fund, and it was created by the Developer, Gary Bradley, for the facility of the Circle C Child Care Center. The source of the fund was a contribution of $1,000 for every new home built in the Circle C Ranch and was donated to the CDC?’s Escrow Fund through the builders. And of course, this $1,000 was added to the cost of every new home built, and it was collected by Terri Giles, Association?’s Bookkeeper, and deposited in a bank account which is totally controlled by the Developer.
When I examined the financial statements (Years 2001 ?– 2003) of the CDC in 2004, I saw large sum of money (six figures) was funneled from CDC?’s Escrow Fund into Phoenix Holdings every year since 1994 as the principal and interest payments. It looks like Phoenix Holdings was acting like a bank or a mortgage company to the CDC, and this ten-year loan was paid off in December 2003. Started from January 2004, this CDC Escrow Fund became Circle C Ranch Amenities Fund.
INVESTIGATOR:
Please pay special attention to the following information.
The following information was from Travis County Appraisal District?’s Property Information:
LAND
In 1994, CDC acquired a land of 9.184 acres (LOT 125 BLK RR) from the Developer?’s Circle C Land Corp. at the appraised value of $91,840. In the following year of 1995, the size of the land was reduced to 3.521 acres (LOT 125A BLK RR) and the appraised value of the land was reduced to $35,210.
I strongly suspected that CDC was being charged of $91,840 for the land of 9.184 acres, but ended up owning a land of 3.521 acres.
BUILDING
Based on the Travis County Appraisal District 1994 Property Information, the appraised value of this building was $608,160; this figure does not include the land.
Based on CDC?’s Balance Sheets and CDC?’s tax return Depreciation Report for Form 4562, the cost basis of the above building on 1/1/1994 was $1,005,985; this figure does not include the land. (This information was confirmed by Mickey Giles, CPA.)
I strongly suspected that CDC was being charged of $1,005,985 for a building which was only cost $608,160. Usually, the first year recorded value at the county tax office was the actual cost of the property acquired.
Gary Bradley had made a huge profit on this building at the expenses of the Circle C homeowners and he was NOT even the builder. I am 120% certain that this building was not built by Gary Bradley because I had spoken with the builder, but I forgot his name.
INTEREST RATE
Please verify and compare the interest rate charged by the Developer with the average market interest rate in 1994 for a ten-year loan.
I strongly suspected that Gary Bradley had charged CDC much higher interest rate. The overcharged interest rate should be considered as a ripped off if CDC was qualified for a loan at the market (lower) rate.
********************************************************************************
Circle C Ranch Amenities Fund
In the Circle C Ranch Newsletter of November 2004, our new Board said that it would ?…?…?…?…. ?“Detail the immediate steps in creating the comprehensive plan. These include: Enter into a letter of agreement with developers regarding administration and use of the amenities fund. On behalf of the developers, retain a land planner/landscape architect of our choosing to assist in the design and development of the comprehensive plan. Current plans call for interviewing those firms contacted last year during consideration of a possible pool remodeling project. Formation of a special board appointed task force to assist in interviewing land use planners and to oversee implementation of the plan.?”
Eight months have passed since, NOTHING happened!
So, where is the money? Let us ask Gary Bradley.
