CHARLESTON, W.Va. — Senator Joe Manchin is among those named in a lawsuit over $14,559,226.84 remaining on a loan for a hotel investment, but Manchin’s staff says he is not actually an investor.
The lawsuit against Mountain Blue Hotel Group of Fairmont was filed August 8 in U.S. District Court for the Northern District of West Virginia.
Manchin, along with longtime aide Larry Puccio, is named as an investor in a company called AA Properties.
AA Properties is named as an investor in Mountain Blue Hotel Group.
Manchin’s staff agrees that he is an investor in AA Properties but says that company is not invested in the hotels. Manchin’s 2016 Senate financial disclosure form lists AA Properties and says he made $11,200.18 off the partnership during the reporting year.
“Senator Manchin has part ownership in AA Property, but AA Property has no ownership or affiliation with the hotels,” Manchin spokesman Jonathan Kott stated in an email Wednesday.
Manchin’s staff initially told newspapers that he was not an investor at AA at all but revised the status to acknowledge that he is.
Puccio, in a telephone interview, agreed that AA is not involved with the hotel investment: “Most certainly, take it to the bank, AA is not a stockholder and has no affiliation nor ownership with the hotel company, nor does Manchin or Puccio.”
The lawsuit, filed by trustee U.S. National Bank Association, alleges a commercial breach of contract over a loan for Hilton Garden Inn at Sun Crest Town Center in Morgantown. The lawsuit states default actions have occurred, endangering the property.
MORE: Read the lawsuit against Mountain Blue Hotel Group.
Mountain Blue Hotel Group is listed in the lawsuit with an address of 205 Marion Square Plaza, Fairmont, the same address where Puccio has had other investment properties.
Among the investors in Mountain Blue Hotel Group, the lawsuit alleges, is AA Properties. Here’s how the lawsuit states that matter:
“Upon information and belief, AA Property, LLC is a West Virginia limited liability company whose members are Larry Puccio and Joe Manchin III. Upon information and belief, Larry Puccio and Joe Manchin III are each domiciled in West Virginia.”
Puccio said his lawyers have interpreted that he, Manchin and AA are not actually being sued — that Mountain Blue is the defendant and that he, Manchin and AA have been listed falsely as investors in the hotel property.
“They were naming just who they thought owned stock. They didn’t sue us. There’s nothing to file other than saying they gave inactive information,” Puccio said.
A loan document filed along with the lawsuit also lists AA Property LLC among the investors in Mountain Blue Hotel Group as the company sought money for the hotel investment.
AA Property was a 12 percent investor, according to the loan document. Of that portion, Puccio had a 50 percent share and Manchin had a 50 percent share, according to the loan document.
MORE: AA Property, Manchin and Puccio are listed on pages 58 and 59 of this loan document
Puccio said he didn’t want to get into the details of his private investments. He didn’t expand on the nature of any prior relationship between AA Property and Mountain Blue Hotel Group. He was asked if AA had invested early on but then removed its investment, but he declined to elaborate.
Puccio reiterated, though, that he, Manchin and AA Property are not investors in the hotel group.
“AA Property has no affiliation, no stock, no ownership with the hotels,” Puccio said.
Puccio said he originally thought AA had dissolved.
“I thought AA had been dissolved. AA had not been dissolved.”
AA has continued to have updated filings with the Business and Licensing Division at the West Virginia Secretary of State’s Office since its inception in 2008. The most recent filing was June 15, 2017.
Puccio’s name is listed multiple places on the document, including as the company’s manager on the authorization line and with a Yahoo account under Puccio’s name listed for the company’s email address.
MORE: Read the most recent AA Property filing with the Secretary of State’s office.
The lawsuit in U.S. District court names several investors in Mountain Blue Hotel Group, including William A. Abruzzino, Rebecca A. Abruzzino, Martha Hughes, Martha Hughes, as Trustee of the William A. Abruzzino and Rebecca A. Abruzzino Generation Skipping Trust, Judy Nunnally, Jaron Smalley, AA Property, LLC, Peachtree Village Partners, LLC, Rebecca A. Abruzzino, as trustee of the Robert A. Abruzzino Irrevocable Trust, and Mark A. Abruzzino.
William Abruzzino scrawled his signature on both the promissory note and the deed for the Mountain Blue investment in the Morgantown hotel — as well as the original loan document.
In a separate but similar case, Abruzzino was the major investor in the Crossings Mall project in Elkview that wound up in bankruptcy court after a lengthy delay in fixing an access bridge following the summer 2016 floods.
His partnerships over the years with Puccio have sometimes drawn scrutiny. In the Crossings Mall case, Abruzzino was listed as manager of Tara Retail Group, which names its main address as 205 Marion Square, the same address listed for Mountain Blue Hotel Group in the federal court filing.
That’s the same address — 205 Marion Square — listed for Puccio & York Realty, where Larry Puccio is listed as the manager, according to the business licensing listing at the West Virginia Secretary of State’s office.
Mountain Blue Hotel Group, in a 2013 filing with the Secretary of State’s office, was listed with the same 205 Marion Square address.
Puccio has another incorporated business, Larry Puccio LLC, also listed in the development, although this one is at 420 Marion Square.
Puccio and Abruzzino were listed as officers starting in 2009 in A & P LLC, a Fairmont-based real estate, rental and leasing company. That business is also licensed with the Secretary of State’s office. A & P LLC also has a 205 Marion Square address.
Asked about the Crossings Mall situation and his business relationship with Abruzzino back in January, Puccio said he’d worked with Abruzzino in the past but that it was no longer active.
“I used to be in some business with him but not at this time. That’s probably where that got started,” Puccio said in January.
In the hotel case, the plaintiff alleges that on Sept. 17, 2013, UBS Real Estate Securities Inc. made a loan of $15,470,000 for Hilton Garden Inn Morgantown at Sun Crest Town Center.
But shortly after that, events leading to default began to occur, according to the lawsuit.
The lawsuit alleges Mountain Blue failed to pay franchise agreement royalties to Hilton amounting to $235,671.23, “which triggered defaults under the Franchise Agreement and nearly cost Borrower the use of the valuable Hilton flag.”
“Upon termination, Borrower would be required to cease all operations under the Hilton name,” the lawsuit stated. “The right to operate under the Hilton name is essential to preserve the value of the Property. The loss of the Hilton flag would cause irreparable harm to the value of the Property.”
To keep that from happening, the lawsuit states, the lender advanced $235,671.13 to pay Hilton. UBS Real Estate Securities then sent two letters in May demanding repayment of the advanced amount. At the time of the lawsuit, the amount had not yet been repaid.
Moreover, Mountain Blue got into tax trouble. The lawsuit notes that failure to pay taxes is yet another trigger of default.
Between June 2015 and May 2017, the state of West Virginia filed tax liens against the property totaling $437,878.42, according to the lawsuit.
This past April, the Monongalia County Commission filed suit against Borrower for its failure to pay hotel taxes.
According to the tax complaint, Mountain Blue entered into a repayment plan with the city, but did not comply with that agreement. At the time of the agreement, delinquent taxes totaling almost $150,000 had accrued.
The county has requested, among other remedies, the imposition of liens on the property and the sale of the hotel Property to satisfy the unpaid taxes.
The lawsuit contends that Mountain Blue also has not kept up with its required annual updates on its financial situation. For example, it hasn’t yet provided year-to-date actual expenses and payables.
Worse, Mountain Blue projected a cash shortfall of $158,362.32 for this year.
All the default conditions added together meant that UBS Real Estate Securities demanded payment in full this past June 14. “To date, the Loan has not been repaid.”
The principal balance due is $14,559,226.84, according to the lawsuit. The plaintiff also wants interest at the default rate, costs, fees, legal fees, expenses and other amounts recoverable.
UBS Real Estate Securities is also asking that the hotel property be moved to receivership to ensure the property is properly maintained and that revenues are properly applied to expenses.
Mountain Blue is being represented by Charleston attorneys Michael J. Del Giudice and Timothy J. LaFon. They said they weren’t retained until just this Monday.
On Tuesday, they filed a motion to continue an evidentiary hearing originally scheduled for Aug. 18 in part because they need to familiarize themselves with who they’re representing and what their interests actually are.
“This the first time this law firm has represented the Defendant and it will take a considerable amount of time to become acquainted with the business and review the Complaint, attachments, Emergency Motion for Appointment of Receiver and Memorandum,” the attorneys wrote.
The process will still get underway as a joint motion for a telephonic hearing conference was filed to set a new date for an evidentiary hearing and other deadlines. The judge is the Honorable Irene M. Keeley.
Puccio says his attorneys have told him he’s not actually a party to the lawsuit though. Again, he said, AA isn’t an investor in Mountain Blue anyway.
“The attorneys inform me we’re not named in the suit,” he said.