Newspaper article THE JOURNAL RECORD

Falls Fallout: Edmond Development Headed to Sheriff's Sale

Newspaper article THE JOURNAL RECORD

Falls Fallout: Edmond Development Headed to Sheriff's Sale

Article excerpt

Nearly $5 million worth of real estate from the failed Falls condominium and shopping center development is slated to be auctioned off at sheriff's sales in the coming weeks after one of the developers pleaded guilty to money laundering in federal court.

Some of land was cleared and graded several years ago, but construction never began on the $40 million Falls development near E. Second Street and Vista Lane in east Edmond. The project was supposed to include 130,000 square feet of office and retail space and 194 condominiums with amenities like granite countertops, gas fireplaces, wet bars and 42-inch plasma TVs.

The land fell into foreclosure after developer Derek C. Swann used money from investors in the project to pay for memberships to tony Gaillardia Country Club for him and his business partners, as well as to lease several BMWs, according to court records.

A building that once belonged to the Oklahoma Municipal Power Authority at 2300 E. Second St., appraised at $1.9 million, is headed for a sheriff's auction Thursday at the Oklahoma County courthouse. More than 22 acres of land, valued at $2.9 million, involved in the case are headed for the auction block on April 7.

Many investors in The Falls development have yet to be repaid and have some claims to the land, according to court documents.

"There are a number of people out there and entities who apparently loaned The Falls money or the principals owed them some money," said Ray Zschiesche, an attorney who is representing lender Allegiance Credit Union in one of the foreclosure lawsuits against The Falls developers.

"There are number of second mortgages out there, as well as liens on the properties," he said.

Between 2006 and 2008, Swann bilked investors out of about $5 million to invest in The Falls, according to court documents. He promised returns as high as 20 percent, as well as an ownership interest in the development once it was built, but instead used the money to pay off early investors and to help fund a lavish lifestyle, according to court records. …

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