Riverhead Resorts cancels check, looks to wire money instead

11/09/2010 6:03 PM |

TIM GANNON PHOTO Representatives from Riverhead Resorts and Riverhead Town posed with the check delivered by the company Wednesday for the $3.9 million it owes the town in extension fees. From left are Resorts' attorney Mort Weber, town special counsel Frank Isler, Councilman Jim Wooten, Supervisor Sean Walter and Councilman John Dunleavy.

The handwritten check that Riverhead Resorts attorneys presented to Riverhead Town Board members during an impromptu press event in Town Hall last week has been canceled by the London-based bank that issued the check after a closeup photo of it appeared on the News-Review website.
Citing security concerns, Barclays bank officials will instead seek to wire the money to Riverhead Resorts’ attorney Mitch Pally and said the money should clear by the end of the week.
But Riverhead Supervisor Sean Walter said they better move quickly. He’s calling a special Town Board meeting for 10 a.m. Friday to vote on a resolution to cancel the contract with Riverhead Resorts.
Mr. Walter, who figures to be the swing vote on whether the deal lives or dies, is not even certain if he will vote to continue the contract even if Resorts does get the money in on time.
“I couldn’t even tell you if I’d vote for it at this point,” he said. “I have no doubt in my mind that they will try every trick in the book to show that they have money.”
The Resorts group was faced with a Nov. 3 deadline by which to pay the town $3.9 million in extension fees on its contract to buy 755 acres of town-owned land in Calverton for $155 million. The company, headed by a Scottish residential developer, John Niven, hopes to build eight theme resorts at the Enterprise Park at Calverton including one with an indoor ski mountain.
The Resorts group actually owes close to $6 million, as it has missed three extension payments of about $1.9 million each, but the two sides worked out an agreement by which Riverhead Resorts would pay two of the payments by Nov. 3, and two more in January, in return for the Town Board adopting a resolution agreeing to lower the land’s sale price to $108 million from $155 million.
Having repeatedly promised to come up with the money it owes — only to miss deadline after deadline — Riverhead Resorts attorneys Mort Weber and Mr. Pally arrived with the check in hand at last Wednesday’s Town Board meeting and even posed for pictures with the check in the Town Hall meeting room. RiverheadNewsReview.com ran a picture of the check presentation with the involved parties and also shot a closeup of the check. That second picture revealed the check was made out for 2.4 million English pounds, rather than $3.875 million in U.S. dollars. It also showed it was a handwritten check, and not an official bank check. But it also showed routing and account numbers, which worried the bankers.
Mr. Pally said Monday that Barclay’s had placed a stop order on the check and will set up a new account for Solutio Finance Limited, which is financing this portion of the project, through which the money will instead be wired to the town.
Mr. Walter said this week that he didn’t think the photo incident should hold up the payment.
“If an account is locked up, you can get it unlocked pretty quickly and wire the money if you really had it,” he said in an interview. “It shouldn’t take a long time. They really have until Wednesday, because Thursday is not a banking day. If it’s not there, in [an escrow] account, they are done.”
Mr. Walter figures to be the swing vote, as Councilmembers John Dunleavy and Jim Wooten have supported giving Resorts further extensions, while Jodi Giglio and George Gabrielsen say they will not support such a move.
tgannon@timesreview.com