Nevada investors sue over San Antonio land deal

Nevada investors who put up $65 million for a land development deal involving Texas A&M University charge in a new lawsuit that they were damaged by misconduct and self-dealing by the project’s former managers and a prominent San Antonio attorney.

The investors, organized as Las Vegas-based company Verano Land Group LP, filed suit Monday in Clark County District Court against their former managers as well as the international law firm Fulbright & Jaworski LLP and one of its attorneys.

The attorney who was sued, Jane Macon, is a partner in Fulbright & Jaworski’s San Antonio office and is known locally as the first female city attorney for San Antonio.

At the heart of the lawsuit is what happened after Verano Land Group and its predecessors assembled acreage for a master-planned community to be called Verano and anchored by a new Texas A&M campus in the southern part of San Antonio.

“Verano Land Group’s former managers and the law firm Fulbright & Jaworski used their control over Verano Land Group to pursue their own agendas and damaged Verano Land Group in the process. This lawsuit is Verano Land Group’s effort to ensure that Verano Land Group and its Nevada investors are made whole,” the suit says.

Records show that what was planned as the 2,700-acre Verano community has now been expanded to 3,100 acres within a tax increment financing district.

San Antonio government records show planners envision that Verano will include more than 2,500 single-family detached homes, some 3,375 multifamily homes and another 1,000-plus condominiums and townhomes — along with 5.98 million square feet of retail and other commercial space.

The Verano community was planned to be developed around a new Texas A&M University campus, and the Verano company donated 694 acres appraised at about $25 million to the university for its campus.

The campus site was dedicated by local dignitaries in 2007; the Texas A&M campus is now up and running and some infrastructure work has been completed for the Verano planned community.

However, no vertical construction has started in the Verano community outside of the university site. An official with the company declined to say Thursday whether the legal dispute spelled out in the lawsuit has stalled the development.

A January 2007 story in the San Antonio Express-News said a predecessor company to Verano, Triple L Management, had made a splash by paying $20 million in cash during a six-month period at that time for the project’s initial 1,700 acres near a Toyota truck plant.

“Triple L’s bankrollers,” the story said, included William McBeath, a longtime MGM Resorts International hotel and casino executive; along with Cannery Casino Resorts executives Bill Paulos and Bill Wortman.

“As word of Triple L’s proposal spreads, investors’ ties to the gambling industry have raised eyebrows. Casino gambling remains illegal in Texas, but proposals to usher it in routinely come up in the state Legislature,” the 2007 newspaper story said.

However, Triple L officials at the time said a casino wasn’t part of the plan for Verano.

Nevada incorporation records show Verano is now run by Southern Nevada business executives including Joseph DeSimone Jr., who has a real estate, development, investment and finance business in Henderson called First Federal Realty DeSimone.

DeSimone on Thursday said that because of the litigation, he couldn’t say who the other current investors in Verano are. The lead attorney representing Verano in the lawsuit, J. Randall Jones of the law firm Kemp, Jones & Coulthard LLP in Las Vegas, said he was unable to comment on the suit.

The lawsuit was filed against numerous individuals and entities including Fulbright & Jaworski, Macon, Verano’s predecessor company Triple L Management LLC and three former Verano/Triple L officials: Ralph Lampman, Robert Lozzi and Tom Lozzi.

The suit claims the Lozzis and Lampman ran the project initially but that in late 2010 their company Triple L was removed as manager “due to continuing concerns” over its adequacy as a manager.

After its removal, the lawsuit says new management discovered “acts of gross negligence, bad faith, self-dealing, conversion, breach (of contract and fiduciary duty) and conspiracy.”

The suit says, for instance, that Verano’s limited partners had agreed to the concept of donating 400 acres to Texas A&M for its campus, and the increase in the acreage for the donation was made without their consent and approval.

The suit claims Macon, Fulbright & Jaworski, the Lozzis and Lampman all have derived “personal benefits” for their role in causing Verano to boost the size of the donation to the university.

The suit further alleges Macon and Fulbright & Jaworski were involved in and assisted the Lozzis and Lampman in creating a separate entity called VTLM Texas LP to become the “developer” of Verano and that this was not disclosed to or approved by Verano Land Group and its investors.

As the developer, VTLM is entitled to receive payments that should be going to Verano Land Group and its investors — including some $250 million in “public money” that will reimburse the developer for the costs of developing Verano’s property, the suit says.

“The Verano Land Group property has been designated a Tax Increment Reinvestment Zone (TIRZ),” the suit says. “Without the knowledge, consent or approval of Verano Land Group and its investors, the legal documentation for the TIRZ name VTLM — not Verano Land Group — as the ‘developer’ entitled to payment of the TIRZ funds,” the suit says.

“Macon and Fulbright & Jaworski falsely represented to the Nevada investors that the TIRZ had been obtained for the benefit of Verano Land Group, and, along with the Lozzis and Lampman, concealed from Verano Land Group’s limited partners the existence and involvement of VTLM,” the suit charges. “Macon even came to Las Vegas for two investor meetings at which she continued to foster the false impression that the TIRZ was created for the benefit of Verano Land Group.”

The suit asserts allegations of professional negligence and breach of fiduciary duties against Macon and Fulbright & Jaworski, saying they failed to provide competent legal advice “with respect to Verano Land Group’s dealings with Texas A&M,” and were conflicted because Texas A&M and the city of San Antonio are longtime clients of Fulbright and Jaworski.

The suit also claims the Macon/Fulbright & Jaworski legal advice on certain issues has “impeded the ability of Verano Land Group to proceed with a sound economic plan for the development of the project and substantially increased the costs related to the project.”

Verano Land charges in the lawsuit that Macon and Fulbright & Jaworski were involved in “overbilling, causing development activities that did not benefit Verano Land Group to occur in order to bill for the associated legal services and participating in the improper self-dealing by the Lozzis and Lampman.”

Triple L is also accused of breach of fiduciary duties related to alleged “self dealing” while the Lozzis, Lampman, Triple L and VTLM all are accused of aiding and abetting and inducing breach of fiduciary duties.

All of the defendants are accused of conspiracy, with the suit charging they “acted jointly and in concert to cause harm to Verano Land Group and its investors who put approximately $65 million into Verano Land Group.”

The suit seeks a court order blocking the defendants from taking any action on behalf of, or in the name of, Verano Land Group; and an accounting of all costs and expenses related to the project so far.

It also seeks unspecified compensatory and punitive damages.

Multiple efforts this week to obtain comment from Fulbright & Jaworski and Macon on the lawsuit were unsuccessful.

Lampman and the Lozzis couldn’t immediately be located for comment — the address for their Triple L Management company is a postal box at a UPS store in northwestern Las Vegas.

Legal

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