For those of you that have followed all my posts, you will recall sometime back I showed some videos profiling Dan McLean, and I walked away from that post feeling like Dan McLean seemed very believable and professional and that I could trust him and his company. Here were the questions I asked myself in that post: What I was looking for in these videos is to see what kind of man is Dan McLean; how is he at his profession; what is his background; generally asking myself the question, would I buy a used car from this person?
Unfortunately in looking for other information for the blog yesterday, I came across some damaging news items that will win me no fans at MCL. And my hard earned reputation for at least some modicum of balance in these posts? I hope most of you will feel like he is just doing what he has always said he would do: inform. But I’m sure some will say…he tossed it down the trash bin from the 51st floor!
So to try and provide some balance and offer some benefit of the doubt to Mr. McLean and MCL, I’ll provide this context. The economy is tough. Things can get ugly. Otherwise decent people can get themselves in financial trouble. Also, in an environment where cash is scarce, people that have assets can be sued without merit by people that don’t have assets, sometimes unfairly harming the reputations of those who become targets. Successful people, that is, people with money, are many times the targets. I am sure the Development business is not beanball, and there are some tough characters and some nasty situations that arise. So, with all this said, here is what I found when I took my second look.
The title of an article I found, dated Feb 28, 2009, is as follows: LIENING ON McLEAN; once a star developer, daniel mclean is now besieged by angry lenders and investors; will his reputation recover. Unfortunately I can’t reprint the article in full so you can get every word in context. (you can subscribe and then get access to the full article, or get access through a research database like Nexis)But below are some high points.
The article essentially said Dan is currently fighting a flood of lawsuits and foreclosures (as of this article’s date, the lawsuits totalled 42 million dollars); he recently faced a fraud lawsuit and had to pay 4.2 million to his business partner, (yes, that’s right, fraud towards his business partner), 3.2 million of which was punitive damages; his cash flow problems also caused the IRS to file a lien on him for 2.6 million in income taxes owed (the article goes on to say he found a way to finally pay this). He won a couple of other lawsuits against him but lost a couple of others. Here’s a paragraph:
In November, Chicago-based real estate investment firm Wrightwood Capital LLC filed a humiliating foreclosure lawsuit against Mr. McLean’s Streeterville penthouse, which he had put up as collateral to get an extension on a $24- million loan for a failed condo conversion project in Atlanta.
Here’s another, again, this is what he did to his business partner, Mr. Tully: Over a six-year period, Mr. McLean relied on “a series of accounting frauds and blatant lies” to conceal a diversion of funds from Mr. Tully, according to a Jan. 21 opinion written by Circuit Court Judge Stuart Palmer. Yes, you read that correctly: blatant lies to his business partner to conceal a diversion of funds.
I have read that ruling of what he did to Mr. Tully several times. If that statement is an accurate description of what happened, then I need to hear nothing more in order to answer my question about whether I would buy a used car from Dan McLean.
Take note also of the above: a failed condo conversion project in Atlanta. He is also facing a 17.2 million foreclosure lawsuit on another condo project at 2500 W Roosevelt Road in Chicago. I am asking myself, could the VUE Charlotte be next? He says in the article that every developer is facing liquidity problems, “but fortunately my big projects are going fine.” [yes, the Vue Charlotte is one of the big projects he is referring to in this statement. We’ll get back to to the statement in a moment]
What is tremendously worrisome to me about the article are the hints in it that his reputation is tainted (look at the title of the article and this is a theme that runs throughout). According to the article, McLean’s response to the lawsuits against him is that he has a few disgruntled investors, but it is a small fraction when seen in the context of the numbers and size of his developments. But lets really try to be objective here. Any statements Dan McLean makes now… can they be believed? In the article above, February 2009, his big projects are “going fine.” In September, 6 months later, the headlines appear of the Vue Charlotte work stoppage because bills hadn’t been paid for 2 months.
Given this context, read the article by Kerry Hall Singe again, which casually refers to McLean’s financial difficulties: Lenders’ worry about sales stopped work at The Vue. Again, it mentions the foreclosed project in Atlanta, and more importantly to me, it explains that McClean had to once again make a personal guarantee on the loan in order to secure financing for the Vue. The article is about his lenders being concerned about frozen condo sales. His response is he has solid buyers (yes, folks, that is us!)
Below are some other articles that you will be able to read in full:
McLean gets lawsuit summons at ‘Legends’ event Nov 5, 2008 A line from the article: But beneath his affable manner is a sometimes stiff-necked businessman who has had his share of disputes with investors, lenders and, in this case, a buyer.
Wrightwood sues McLean over Atlanta loan Nov 12, 2008
McLean ordered to sell home, pay $6.1 million March 3, 2010
As you follow links and read these articles is you will see he has some failed projects, Atlanta being I think the most recent, and the one in Chicago. Will the VUE meet the same fate? What has been his track record since the economy turned sour? How many projects have succeeded, and how many failed? Or are in jeopardy of failing?
Instinctively I distrust anyone facing the financial difficulties the Mr. McLean is currently undergoing. He has a personal guarantee on the loan for the VUE. [banks asking for a personal guarantee should give you an idea of his net worth, which in one article was put at 100 million dollars]. What do you think he will do if and when these units don’t sell? His investors must be in shell-shock right now.
But that is my opinion only. How about you? Given what I have just written above, does this change the landscape a bit? Or am I overdoing this, and do you feel this is just a hit job and that I’m no better than Kitty Kelly or a tabloid reporter chasing Tiger Woods? Would you plead with me that I am not buying the salesman, I am buying the used car, and the car runs fine? Please comment or send private feedback to Vuebuyer10@yahoo.com.