Brian Cason & Alta Construction Info and Links

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http://www.madison.com/archives/read.php?ref=/wsj/2008/06/10/0806100150.php

Brian Cason's Claim Against Bank Tossed\ Verona Developer Brian Cason Had Claimed Wisconsin Community Bank Had Cost Him Millions Of Dollars.

Wisconsin State Journal :: LOCAL :: B1

Tuesday, June 10, 2008
By DEE J. HALL dhall@madison.com 608-252-6132

A Verona developer who alleged that a local bank ruined his businesses with false promises of a multimillion-dollar loan will not get his day in court, a Dane County judge ruled last week.

Brian Cason, president of Alta Construction Co., had alleged that Wisconsin Community Bank caused millions of dollars in losses when one of its officials promised - then withdrew the promise - to loan the company money for an Arlington manufacturing plant.

Friday's decision by Dane County Circuit Judge Michael Nowakowski came one day after Alta's attorneys filed a motion to withdraw as counsel for the company, citing their inability to work with Cason. The trial, which was to have begun Monday, was pushed back to June 25 and will now focus only on the bank's claim that Cason and his companies defaulted on $6 million in loans.

Nowakowski threw out Cason's counterclaim after he ruled that the developer violated discovery rules by failing to provide financial information on how much money his companies allegedly lost when Scott Huonker, a Wisconsin Community Bank vice president, promised then withdrew the promise to lend money for the concrete plant north of Madison.

In an affidavit, attorney Daniel Bach said he and attorney Kent Carnell could no longer represent Cason.

"Over the past several weeks, Mr. Cason has demonstrated an unwillingness to meet with his attorneys, respond to e-mails or voice messages," Bach said in the sworn statement.

In his own affidavit, Cason pointed the finger at Carnell and Bach, saying the two failed to pay a financial expert enough to make a full analysis of his companies' losses. That failure, Cason charged, led the two attorneys to submit incorrect information to the bank about the damages.

The lawsuit began as a foreclosure action last July by Wisconsin Community Bank. Weeks later, Cason filed a counterclaim, alleging misconduct by bank officials that he said caused the financial mess, which forced him to lay off all 50 of his employees.

Cason's allegation was based in part on an unsigned, seven-page "commitment letter" that Huonker sent him in April 2007 agreeing to lend $3.9 million for Southern Wisconsin Structural Concrete. In pretrial depositions, bank officials said because the letter wasn't signed, it didn't commit the bank to lending the money. Huonker resigned from the bank shortly before it sued Cason and his companies, acknowledging in a deposition that he left because of "screw ups" in how he handled the financing for Cason's projects.

Cason also alleged in his counterclaim that Huonker instructed him to falsify statements to make it appear as though loan money from Wisconsin Community Bank was used on two housing projects being financed by the bank when in fact it was used as start-up money for the manufacturing plant. In a pretrial deposition, Huonker denied he knew of or orchestrated the misdirection of the money.

Because the counterclaim has been dismissed, the allegations, which were the subject of an April 27 story in the State Journal, are no longer part of the litigation.

Cason, who also filed for Chapter 11 federal bankruptcy protection earlier this month, said he's not sure what he'll do next. Wisconsin Community Bank's attorney, Ann Ustad Smith, issued a statement Monday, saying the decision means all of the "counterclaims and related defenses of Brian Cason and his companies against Wisconsin Community Bank" have been dismissed.

"The bank can now proceed to judgment on the notes, guarantees, mortgages and security agreements signed by Mr. Cason and his companies," the statement continued. "While the bank would have preferred to amicably resolve Mr. Cason's disputes, the bank is pleased with Judge Nowakowski's decision and looks forward to concluding this matter."

http://www.madison.com/archives/read.php?ref=/wsj/2008/04/27/0804270200.php

Developer, Brian Cason, Says Bank Left Him High, Dry

Wisconsin State Journal :: FRONT :: A1

Sunday, April 27, 2008
By DEE J. HALL dhall@madison.com 608-252-6132

A year ago, Brian Cason was a successful entrepreneur whose real-estate development and construction businesses employed 50 people in the Madison area. A planned manufacturing plant was to employ 75 more.

"We were doing extremely well," the hard-charging businessman from Verona said as he guided his Ford Expedition on a tour of some of the homes, condominiums and commercial buildings that his company, Alta Construction, has built around Dane County in the past six years.

Today, Cason, 41, teeters on the edge of bankruptcy, and two multifamily housing projects have been mothballed. He's been forced to lay off all but one of his employees, and his Verona home is in foreclosure. All that remains of the planned manufacturing plant is a mound of dirt - and debt.

But his story isn't just another tale of risky loans gone bad. In fact, Cason contends in a response to a lawsuit by his lender, he consistently met his payments to the bank, Wisconsin Community Bank. The problem came, he said, when the bank broke its promise to fund the plant, his most ambitious project, and then called the loans on his other projects.

Complicating matters, Cason alleges, as the manufacturing plant got closer to reality, bank Vice President Scott Huonker instructed him to falsify loan requests to make it appear money sought for the plant would instead go toward the housing projects. Huonker and his supervisor, Rick Cushman, conceded in sworn depositions in January the actions were illegal.

"But Huonker denied he knew of or orchestrated the misdirection of the money."

A national leader\ Wisconsin Community Bank came to the Madison area about a decade ago when it purchased Cottage Grove State Bank. The bank, with $400 million in assets, is one of the national leaders in the U.S. Department of Agriculture's loan program that finances rural business development. It is a subsidiary of Heartland Financial USA in Dubuque, Iowa, which has banking companies in seven states. The bank is based locally in Cottage Grove, with offices in Fitchburg, Madison, Monroe and Verona.

Huonker, who resigned from Wisconsin Community Bank shortly before it sued Cason, said he's been advised by Cushman, regional president of the bank, not to comment on the case. In a deposition, Huonker, who had 15 years of banking experience, acknowledged he started job-hunting last spring because of his "screw-ups" in handling Cason's loans.

But in an interview, Cushman and bank president Tom Wilkinson backed Huonker. "I think Scott tried to do the very best job he could under very difficult circumstances," Wilkinson said.

The two bank officials declined to discuss the bank's lawsuit and Cason's counterclaim. Cushman called suing a client "a last resort."

A trial before Dane County Circuit Judge Michael Nowakowski is scheduled for June 9.

Unsigned letter\ Much of the dispute between Cason and Wisconsin Community Bank centers on an unsigned letter Huonker sent to Cason on April 2, 2007, court records show.

Titled "Loan Commitment," the seven-page letter pledges the bank would lend Cason $3.9 million for construction of a precast concrete manufacturing plant in Arlington. The plant was also backed financially by Columbia County and the village of Arlington, population 500.

Throughout the fall of 2006 and the spring of 2007, Huonker accompanied Cason to meetings with local officials and helped plot strategy for launching the business. Cason said Huonker assured him the bank would help finance the plant and that the USDA had agreed to underwrite the project.

Arlington Village President Bill Stewart, who, like Huonker is a commercial lender, said others also assumed Wisconsin Community Bank was funding the venture.

"I had a really secure feeling we were going to get the loan," Cason said. "A large reason for that was I had a bank vice president (Huonker) in my office all the time who was at least as excited about this as I was."

When Huonker failed to show up at the April 26, 2007, closing for the land - saying there were "paperwork issues" - Cason wasn't too concerned. He said Huonker assured him "he'd be able to get the money in three days."

When that deadline came and went, Cason began taping his telephone conversations with bank officials. On April 30, during a tense confrontation at his office, Cason showed Cushman the commitment letter he'd gotten from Huonker. "Rick (Cushman) reacted like someone who had just seen a ghost," Cason said.

Cason then showed Cushman other documents that he said proved Huonker had diverted loan money from the two Madison projects to pay for the concrete plant.

Took a hard line\ The next day, according to court records, Cason met with Cushman and Wilkinson at Wisconsin Community Bank's Madison office. There, Cushman took a hard line, saying the bank had no intention of financing the plant and pointed out that Huonker's commitment letter had not been signed. Wilkinson reiterated that position last week, saying Cason was an experienced borrower who should have known that such an unsigned document wasn't valid.

In his deposition, Cushman said Cason became "very agitated" by the bank's position.

"'I don't think you quite understand.'" he quoted Cason as saying. "'We've already signed contracts and we're moving dirt at Arlington....'"

The bank offered to provide some financing for the land - but not the building - if Cason would agree not to sue it or publicly discuss what had happened with the plant, Southern Wisconsin Structural Concrete. Cason refused, saying the loan wouldn't cover his debts or the money he owed to subcontractors and suppliers.

On June 7, Cason told Cushman on the phone that the Bank of Sun Prairie had agreed to a financing plan, and that it would be finalized in two to six business days. In a tape of the conversation shared with the Wisconsin State Journal, Cushman assured Cason, "We'll sit tight."

Two business days later, on June 11, Wisconsin Community Bank declared Cason and his companies in default on $6 million worth of loans and lines of credit.

The declaration of default stemmed, in part, from Cason's submission of falsified requests for loan money from the multifamily housing projects - actions that Cason alleged were directed by Huonker. "The only reason they knew about it (falsified requests) was because I told them about it," Cason said. Cason also denied that at the time of the letter, he was late in repaying the loans. In his deposition, Cushman acknowledged the loan payments weren't delinquent at that point.

That default declaration violated the terms of the deal with the Bank of Sun Prairie, causing that deal, too, to fall apart.

Ripped up check\ In a deposition, Huonker acknowledged no loan for the Arlington plant had been approved when he sent the commitment letter to Cason last April. Huonker explained that he was "trying to help out Brian," who was seeking, and got, a $500,000 loan from Columbia County to help pay for the plant. (Cason said he later ripped up the county's check after he discovered the bank had no plans to finance the project.) Martha Gilliam, an official with A&S Building Systems of Caryville, Tenn., said Huonker also gave her a personal assurance that Wisconsin Community Bank would finance Southern Wisconsin Structural Concrete, prompting her company to begin construction on a customized $725,000 prefabricated steel building for the plant.

Asked by Cason's lawyer Daniel Bach why he sent the commitment letter knowing the loan hadn't been approved, Huonker answered, "In hindsight, yes, you're right, I should not have provided it." Cushman said in a deposition that Wisconsin Community Bank also had never secured USDA backing for the plant.

Taped conversation

While the bank disputes Huonker's commitment letter, it's unclear how much officials knew of his plan to shift money for his multifamily housing loans to finance the concrete plant. In a conversation Cason secretly taped at Huonker's Fitchburg office on June 20 and shared with the State Journal, Huonker insisted he told Cushman of the transfers.

But in an interview, Cushman denied knowing about the diversions.

Huonker also acknowledged in his deposition that he attempted to move $1 million from loan funds for construction of Cason's 33-unit apartment project on Madison's East Side to cover the cost of 38 acres Cason was buying at the Arlington Industrial Park. That move was blocked by another bank employee.

According to an e-mail cited by Bach, Cason's lawyer, the employee wrote, "No way. We can't do any more. We shouldn't have done the first two."

"Did you understand that that's a violation of law?" Bach asked Huonker.

"I didn't think of it at that point in time, but afterwards, yes," Huonker replied.

'Common sense' factors\ Stewart Macaulay, a UW-Madison professor who teaches contract law, said it may not matter whether Huonker's commitment letter was signed. Even unwritten agreements can be enforced, he said.

Macaulay said Nowakowski likely will weigh "common sense" factors such as "whether a reasonable person would think this person (Huonker) has the power ... to make those type of commitments" and whether Cason was reasonable in trusting Huonker because of his previous business dealings.

Macaulay, who has taught at the Law School for 51 years, added that the judge also will likely consider whether the bank was more or less formal in its previous dealings with Cason. If it always used signed loan-commitment letters, that would help the bank's position, Macaulay said.

But Huonker said in his deposition that in the 15 months he worked at Wisconsin Community Bank, the only commitment letters he ever wrote were in connection with lending money for the concrete plant.

Has vowed to fight\ Cason has vowed to fight for the money to make all of his creditors whole. The major creditors, including A&S Building Systems, are betting on Cason. They've decided not to press their legal claims, for now.

Brett Kirner, manager of the Arlington Industrial Park, said he's also holding off on a lawsuit to recover the $250,000 he's owed for the earthwork he paid for at the site.

"From my perspective, Alta did act in good faith," Kirner said. "Then something fishy happened."

But Cason said even a victory in court won't erase the last 12 months of strife, which he said has damaged his credibility in the business community.

"Right now, it's just one long line of lawsuits," he said. "Win, lose or draw, I'm always going to have this hanging over my head."