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Mile High CEO steps down
Sep 23, 2005 12:00 am
September 16, 2005
A Colorado company mired in legal problems that wants to build a 287-acre residential development in Lebanon has changed its leadership again.
After acquiring the company from its embattled founder for a reported $100 million in July, Colorado-based Mile High Capital Group Chief Executive Officer Andrew McFaul has stepped down from his post with the company.
Mile High Capital has touted plans for a 287-acre "mixed residential and retail" development in Lebanon in recent weeks, although the company has yet to submit any formal documents to city officials.
Announced in a company-generated press release Sept. 14, McFaul's departure coincided with Mile High Capital President Jeffrey Dietz's decision to leave the company.
The release notes Dietz chose to leave his post because of "a pressing family situation," adding, "the company appreciates, supports and stands by" its former president's decision.
"Following Mr. Dietz decision, Andrew McFaul has chosen to step down as CEO of the company to focus his energies as CEO of Aspen Home Builders, a sister company of MHCG (Mile High Capital Group) which he currently owns," the statement reads. "As MHCG's building needs accelerate, Aspen will need his increased attention."
McFaul's decision to leave the company came less than a week after he penned a letter to The Lebanon Democrat protesting an article published in the Sept. 1 edition of the newspaper.
The story was largely based upon a report published in The Denver Business Journal – an article which chronicled the development company's history of legal woes in Colorado and elsewhere.
The Denver article noted former MHCG CEO and founder Rick Dryer, who sold the company to McFaul in July, was involved in more than two dozen Colorado legal actions dating back to the mid-1980s. In 1987, Dryer pleaded no contest to 10 counts of fraud in connection with the sale of promissory notes and was ordered to pay more than $89,000 in restitution.
More than 30 lawsuits have been filed against MHCG over the past five years. At least a dozen of those suits were filed by investors or subcontractors, the article noted.
In his letter to The Democrat, a copy of which was also sent to Lebanon Mayor Don Fox, McFaul said the company's legal history did not make it "unique" in the development business.
"MHCG finds itself in the courts as do numerous developers and builders," McFaul wrote in the Sept. 8 letter. "Unfortunately in today's environment the courts are forced to make decisions that often times should be handled as business matters."
McFaul also protested the newspaper's description of the proposed Lebanon development as consisting of mostly rental properties. However, in his letter, the former MHCG CEO states, "Based upon our research and discussion with local officials, it appears Lebanon is experiencing a shortage of rental properties."
He adds the Lebanon project, known as the Cedar Knolls Master Planned Community, would include "a variety of housing types, both owner occupied and rental properties."
The original Democrat article cited the company's own website, a press release on the proposed Lebanon development and comments from a company attorney. All three sources described MHCG's business as building rental properties.
Asked whether the Lebanon project would largely consist of non-owner-occupied structures, MHCG attorney Jeff Keiffer said, "Mile High sells these to other individual purchasers that sell them. If the individuals rent them (or) own them, that's kind of up to the individual."
The Denver Business Journal has since published a second article regarding MHCG, and Business Journal writer Tom Locke further details the company's business model.
On Aug. 1, Locke reported, "in a number of cases," the developments promoted by Dryer at real estate seminars around the country aren't yet owned by the company and have yet to be zoned, platted or approved by local authorities.
McFaul's letter to the Democrat noted MHCG has had "introductory conversations with the city staff" and plans to have its "initial meeting" with Lebanon officials in late September with an application submission expected for mid-autumn.
According to numbers The Denver Business Journal obtained from MHCG, the company has sold at least 10 times more contracts for proposed duplex rental properties than it has built and maybe more.
Dietz told the Denver newspaper presales of real estate were not unusual and noted "lots of builders" were "doing it."
Though preconstruction real estate sales are not out of the ordinary, soliciting investments from individuals prior to local government zoning and permitting processes do carry risks, MHCG Director of Land Planning Thomas Vickery told The Denver Business Journal.
"We have had to scrub a couple (of projects)," he said in the Aug. 1 article. It "puts the whole company into a spin."
Staff Writer Brian Harville can be reached at 444-3952 ext. 16 or by e-mail at email@example.com.