By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
But the fate of those two houses is now one of the central issues in tangled litigation between Elder and Ashcroft Homes, an Englewood-based builder of half-million-dollar homes. The case, which revolves around a failed effort by Elder to purchase the notes on the other two houses, has produced some stinging rhetoric on both sides.
One of Ashcroft's subsidiary businesses involves acquiring non-performing loans from other lenders and reselling them. According to Elder, Ashcroft officials approached him about the two notes, part of a portfolio of loans that the group was seeking to buy from an Ohio mortgage company.
"My intention was to try to recover the loans and finish the properties," Elder says. "If I had been able to buy the notes, we would have done exactly as we did with the other two -- buy the home, put the additional funds into it and pay off the liens. I worked with Ashcroft for nine months. It wasn't a pleasant experience."
Elder says he "got interested in the company" and agreed to loan Ashcroft $250,000. In return, Ashcroft agreed to help him acquire the notes on his properties and gave him the option of purchasing stock and entering other business ventures with the company. But the deal fell apart, he says, when Ashcroft failed to pay back the loan, then acquired the two notes and sold them to other parties -- despite the fact that Elder paid a $50,000 deposit to help secure the notes.
"The homes got foreclosed, and the contractors got foreclosed, too," Elder says. "I don't have any interest in those homes now other than the agreements I had with Ashcroft. And they didn't live up to their agreements."
Both Elder and Ashcroft Homes say they were damaged by the deal they made, each claiming the other breached the agreement. Ashcroft has been drubbed in the business press recently over reports of unpaid subcontractors, mounting liens and cash-flow problems that have kept the company from closing on several home sales. Joe Oblas, Ashcroft's executive vice president, says many of the company's difficulties are directly related to the deal with Elder. The collateral provided for Elder's loan to the company included deeds of trust on numerous Ashcroft properties that Elder has refused to release, he says, tying up company assets.
"All this comes down to one stupid phone call, one big mistake," Oblas says. "We called this guy because we were interested in acquiring the notes and wanted to know what he was doing with the properties, what our borrower was going to look like if we owned the paper."
Oblas says Elder came to his office and represented himself as a prosperous man who'd "sold a bunch of nurseries and made millions." He said he wanted to fulfill his father's "legacy" by finishing the homes on Troublesome Gulch and wanted to invest in Ashcroft Homes.
"The guy comes off as charismatic as the day is long," Oblas says. "A big teddy-bear type. Very soft-spoken. Nice guy."
Oblas says it took months to wrangle the portfolio of loans from the Ohio company at a favorable price. At that point, Elder demanded that Ashcroft sell the notes to him for less than the company paid for them; made numerous other demands at odds with the agreements the parties had signed; and tried to hold hostage the properties Ashcroft had offered as collateral on his loan.
"Once we got the notes, he stopped releasing our properties," Oblas says. "We've had homes with buyers that can't close. We've had homes with liens that can't be paid. It's clobbered a huge amount of our assets, and when you try to explain to somebody how this happened -- you've got to be a scientist to explain Harry Elder."
Elder says Ashcroft should pay back his $250,000 loan if it wants clear title to its properties back. Oblas says his company would like nothing better than to be clear of Harry Elder.
Dennis Polk, Elder's attorney, describes his client as a well-meaning businessman whose financial travails stem from unfortunate timing and economic forces beyond his control.
"There are huge pitfalls whenever you start a construction project," Polk notes. "Dealing with the trades is always a problem, and the overall issue of time in construction is always problematic -- even more so with luxury homes in a mountain environment. Building luxury homes on a spec basis is different than building a custom home for somebody. That's where the wiggle and the waggle happens in this."
If he had it to do over again, Elder says he would have chosen his partners more carefully. "To me, it boiled down to having a good, honest general contractor to lead the deal," he explains. "You're only as strong as your weakest link."
His creditors and their attorneys tend to view the matter differently. "His use of the legal system points out some real holes in the system," says Joe Reece, who sued Elder on behalf of a company that provided fireplaces for the big houses. "Here's a $5,000 debt, and he tries to make it inefficient for anyone to go after him."