Barnes Lumber: Mystery buyer revealed-- sorta
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The striped-shirted man who cast the winning $1.9 million bid still has not been identified. On the right is Chris Lee of Piedmont Development Group, which had been working on the rezoning.photo by lisa provence
At a highly publicized foreclosure auction of J. Bruce Barnes Lumber in the heart of Crozet in June, the winning bid of $1.9 million bid came from an unidentified man who refused to say who he was. On September 28, the trustee finally revealed that the bidder was a shill for Union First Market Bank, which held the note.
"It's not uncommon for lenders to do that if the bids are coming in too low," says Bill Cimino, Union First spokesperson. "Someone may have been trying to get a low price."
At the auction, Union First senior VP Dave Clelland, on hand as the official bank rep, upped the price when it was hovering around $450,000 to $1.4 million.
Charlottesville developer Keith Woodard offered $1.5 million and battled it out with the bank's secret bidder, known only as Striped-Shirt Man, until Woodard refused to go beyond $1.85 million, and the bidding ground to a halt with the bank's $1.9 million bid.
Spokesperson Cimino defends the manipulation of what he describes as "auction dynamics to get the price you want." Says Cimino, "It's a good deal for us."
The deed places the actual value at $3,285,200, which is how Albemarle has assessed the property's two parcels. Former owner Carroll Conley owed $1.9 million on a line of credit, according to the foreclosure notice.
A Union First entity called UB Ten LLC intends to market, but not develop, the property.
"We're working with Albemarle County to figure out what needs to be done to fit into the Crozet Master Plan," says Cimino. That includes rezoning the heavy-industrial site to mixed use, a process that was underway when the foreclosure notice went out.
At one point, Conley and developer Katurah Roell of Piedmont Development Group planned to turn Barnes Lumber into Crozet's own version of the Downtown Mall.
Union First seems eager to recoup its losses by selling the property. Says Cimino, "We still think it's an opportunity for the bank to get more than from the auction."
10 comments
Pretty greedy/stupid of Union to not be satisfied with $1.85 million. What were they thinking?
Mom
They were thinking 1.85 isn't enough.....and in the grand scheme of things this pittance of money is most likely less than 1/10 of 1% of their total profile.
No big deal.
Then they were acting against their own interests Golden Helmet. They have a non-earning asset now instead of cash and holding costs (taxes). Per your own words they'd have left a pittance on the table to accept the bid.
Maybe Union will finance the new Crozet Mall.
They did the right thing... The holding costs (taxes) are less than 1 percent annuallly and there is a good chance they will get 2.5 million in a year which is WAY more than they could get loaning the money out at 4.5%.
If something doesnt' seem right its probably not, and possibly illegal.
For the bank to "buy" this cheap then turn around and sell it, is abuse of process, to the detriment of the Conleys.
I bet the attorney Susan Thomas and the bank a little nervous right now hoping the FBI/ bar association do not catch wind of this and investigate for potential auction fraud.
Dave, so you are saying that the bank hurt the Conley's by paying more for the property than the second highest bidder?
The bank should have been honest about their intentions on bidding on it by identifying themselves honestly. Otherwise it does look like a shill. They really didn't care that they got stuck with it, because they got a good property for a low price, but if someone out bid them and then found out they were bidding against the the bank with the note, they would have felt manipulated. That is the whole problem here. Others should know they're bidding against the bank that holds the note. If The Hook had not reported it, would anyone have ever known?
Thank you Ponce...beat me to it.
It's all about the numbers kids.
And no...it's not auction fraud or a violation of Anti Trust law unless all of the bidders conspired to keep the winning bid supressed by setting a ceiling...they inserted themselves into the race with no reserve and won.
It's not illegal Today.
If they are bidding they are willing to buy and get "stuck" with it....question is - will they get stuck with it joyfully or regrettably?
Here - I see joy.
This happens at every auto auction in North America everyday.
People are in jail for shilling on EBAY. Attempted manipulation or conspiracy thereto is no more legal than actual manipulation.
The one legal case would be if all bidders upon registration were informed that shills could be used.
Where it gets creepy is if the bank wishes to finance the property and development thereof to someone who doesn't have the money, but is a "friend" of the bank or its directors. That party may not have been qualified to pay cash, but would benefit from the time the bank has bought by rigging the sale. They don't get it for a cheaper price than at the auction, and the bank gets a better price too because now that its owned by the bank, they have an incentive to make a profit on it. If it now sells for more than Conley owes, Conley gets none of that profit.