By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
Moreland acknowledges that Osborn will be due money once some more units sell — but that's a prospect made tougher by the current state of the economy, and also the tarnished image that Osborn's legal troubles have given One Lincoln Park. "It's a shame, because it is such a great building," Moreland asserts. "The construction is just superb. People love the location." In fact, he says he's planning on claiming a unit for himself and moving into the city once things settle down.
On January 22, Osborn filed a $3.9 million lien of his own against the unsold units, an act that threatened to grind all sales to a halt. Osborn lifted the lien a week later, he says, after he gained assurances from Cerkovnik of timely payment. (Cerkovnik did not return calls for comment.) But many of Osborn's alleged victims categorize this move as just another example of how he milks money out of investors and business partners before the projects have even come close to his promises of big dividends.
"Instead of doing one project and moving on, like a normal developer, Erik tried to do three and four at once," says Moreland, who believes that when money and resources came up short on one project, Osborn would shortchange his other projects to stay on top. "He had a chance to make seven million dollars out of this, at least," Moreland adds.
Instead, when the projects came crashing down, Osborn became a pariah in the development community. His disgruntled investors didn't stop at shunning him: This wealthy, powerful crew started complaining about his business practices to the DA's office. Although Osborn's indictment pre-dates the financial crisis that has exposed several massive Ponzi operations — in which money from new investors was used to pay returns to prior investors — the name of Bernie Madoff is frequently brought up by people who say they were taken in by Osborn.
"It's like a giant Ponzi scheme," says one of Osborn's former partners. "He brings you in, and he's very smooth. But this guy almost buried me financially. He can't decipher right from wrong."
Another former partner says that just reading headlines about Madoff brings back the experience with Osborn: "People that you thought were honest and trustworthy actually weren't."
"Erik is a hell of a salesman. He could sell you the Brooklyn Bridge," says Doug Greenspan, owner of Sureshock Electric. "I used to think Erik was aboveboard and was just in the wrong place at the wrong time." Not any more, though. The Boulder-based company first did work on the Roslyn project before Osborn convinced Sureshock to bid on the Diamond Lofts, which was already behind schedule and plagued by cost overruns. Now Greenspan holds the largest Diamond Lofts lien, for $700,000 worth of electrical work.
"I hate to use the word 'lie,' but does [Erik] embellish?" Greenspan says, then answers his own question with a huge laugh. "He's almost pathological in the way he talks about things: 'Don't worry, everything's been handled, yadda, yadda yadda.' Well, it's not true, but he believes it. With Erik, it's not a malicious thing, it's just a greed factor."
In Unit 305 of the Diamond Lofts, Osborn stands before a large kitchen table holding boxes of court documents and contracts. This 1,186-square-foot loft features high ceilings, expansive windows and a thoroughly modern kitchen that make it a great buy at $375,000 — if Osborn could just get the liens taken off it. He says the process has been hampered by the slow legal process of untangling the various claims — they total over $3 million — and bundling them into a single arbitration case. Last fall, Osborn took out another mortgage against his Polo Club home, this one for $220,000, to clear some of the disputes. But while he'll have periodic meetings with the building's new manager to discuss the details of completing the remaining units, about the only things that Osborn himself is constructing these days are legal motions on his own behalf.
One recent Osborn filing seeks to dismiss the award against him in the Cedar case on the grounds that Raymond had inflated the appraised value of one of their joint properties. Osborn sees many of his legal problems as stemming from his financial dispute with Raymond, where accusations of theft first surfaced. While the charges "are pretty damning," Osborn acknowledges, he insists they are all based on the false premise that his partners never knew about the money he was drawing from the projects.
"It's disingenuous to say it was some nefarious, secret plan," says Osborn. He produces contracts that show he was promised certain "construction fees" and meeting records that note how the project is using Oceanview and Red Zone as contractors. He opens a laptop and plays recordings of conversations he had with Moreland and Manoogian, when the investors acknowledge that the millions initially put into the One Lincoln Park project were technically a loan to the Osborns.
"For ten years, I operated my business the same way," Osborn says. "You look at these contracts from different projects and they all look the same. In no way did they ever expect me to do construction at cost."