EUGENE, Ore. (CN) - Jon M. Harder, CEO of Sunwest Management, filed for bankruptcy on New Year's Eve, listing more than $100 million in debts. Sunwest is or was the 4th-largest assisted living facility operator in the USA.
The Tennessee Commerce Bank sued Sunwest in late December, claiming it had defaulted on three loans totaling $20 million. That move came shortly after the Royal Bank of Scotland called in a $21.6 million loan to Sunwest and Fortuna Assisted Living.
Investors have accused Sunwest of running a Ponzi scam. Here is the Dec. 19, 2008, Courthouse News story on that lawsuit in Oregon state court.
Law Firm Allegedly Helped with Ponzi Scam
PORTLAND, Ore., Dec. 19, 2008 (CN) - Investors in Kensington Green Assisted Living Property say law firm Davis Wright Tremaine helped property management company Sunwest Management trap them in a real estate Ponzi scheme.
According to the lawsuit, Sunwest sold the plaintiffs shares in a multi-property senior living facility. Each of 15 plaintiff companies bought one property, but Sunwest and Davis Wright allegedly concealed that only a small number of the properties were making money. Sunwest allegedly used the profits from successful properties to subsidize the others.
Once the plaintiffs bought the properties, Sunwest no longer had the duty or the financial ability to continue the secret subsidies, plaintiffs say.
Timothy Dozois, a partner at Davis Wright Tremaine, allegedly helped sell the properties by preparing misleading sales documents and giving them to investors and by helping to form the plaintiff companies.
The plaintiffs want undisclosed damages. They are represented in Multnomah County Court by Michael Esler.
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