Game of the Century
For such a high-stakes game, not many people knew about it. After years of struggle, a cowboy named Glenn Miller and a ragtag assortment of investors lost a potential pot of gold to lawyers bankrolled by the giant Vail ski resort. If it had been a poker game, Glenn Miller would be the one left sitting in his underwear. But now the cowboy and his allies want a re-deal. At stake is the Gilman Tract, 6,000 acres of land wedged in between Vail and Beaver Creek that Miller bought in 1983.
Vail's plans to develop the property, once so contaminated that it was a Superfund site, have caused a furor among environmentalists and Eagle County residents. Residents of Minturn, a picturesque community caught between Vail and the proposed expansion on the Gilman Tract, fear that the ski resort is going to turn their town into a nest of chairlifts and condos. Other opponents, concerned about the impact of Vail's plans on the natural beauty of the area, have packed public hearings on the expansion of what is already North America's largest ski resort.
Behind the public hearings is the story of a classic piece of real estate maneuvering by Vail Associates against a crusty old Coloradan who had no idea of the real value of the property he held for years.
Glenn Miller originally thought he was holding a gold mine of mineral tailings that he could turn into fertilizer. Then government officials stepped in and declared the property so polluted that it became a Superfund site. The final twist was that Miller ended up sitting on a piece of property that a federal judge has described as "some of the most valuable real estate in the state, if not the world." But by then Miller was too broke to do anything about it and lost the land.
Here's how it happened: According to court records, Vail Associates set up an option agreement with a pair of Denver lawyers, Jim Aronstein and Mike Page, who, using Vail's money, purchased rights to portions of the Gilman Tract under the name Turkey Creek Limited Liability Company. Thus, Vail was able to quietly put itself into a position to take hold of the valuable property. Any day now, a deal may be struck in bankruptcy court that will end Miller's hopes and ensure that Vail gets the land.
It's unclear at what point Miller realized that the property was worth more that just its fertilizer potential (Miller has turned down repeated requests for an interview by Westword), but his partners are aware of it. The cowboy plunged into bankruptcy, but his partners screamed for justice, and Miller and his allies went to court, claiming that Vail and its allies dealt from the bottom of the deck. One example of this, they claim, is that Aronstein went to work for Vail after having represented a Miller associate, in the high-stakes game. The courts, however, have said that Aronstein did nothing illegal.
"Mr. Aronstein is guilty of moral turpitude," claims Tom Smith, president of American Consolidated Holdings Corporation, which owns a 30 percent stake in Miller's venture. "But what's more distressing is the fact that the courts are legalizing legal plunder. Aronstein thinks he's in the right to foreclose on his own client. If not for Aronstein's meddling, Miller could have cut his own deal with Vail Associates."
Skip Netzorg, an attorney for Turkey Creek, dismisses Smith's allegations. "These are unfounded, baseless accusations of 'moral turpitude,'" says Netzorg. "These conspiracy allegations that are being made by Miller et al. are ridiculous. At some point, they have to prove what they say. And the trial court found that they couldn't."
At this juncture in the Old West, guns might have been drawn. Smith, a Virginian who claims to have circled the globe as an oil wildcatter and now suffers from diabetes, has to content himself with a verbal barrage. He insists that Miller's defeat was due to a loaded deck. Smith claims that Aronstein and Page have known the value of the property since their dealings with Miller's joint-venture partner back in 1981 and have been maneuvering from the sidelines ever since.
Netzorg counters: "Jim Aronstein lived in the Vail Valley for a long time before any information came out on the property. He's been up there hiking before. This property isn't a secret. The Eagle Mine, one of the most famous in Colorado, is on it. For someone to say that this is a secret deal is silly. There's not one shred of evidence to support it, including a conspiracy of secret information. The court decimated them on this point."
He's right about that. Both the Eagle County District Court and the Colorado Court of Appeals have ruled in favor of Turkey Creek. Miller still hasn't given up.
"This is a winner-take-all dog fight," says Miller's attorney, James Hahn, who has worked on the case on contingency for the past year. "It's the highest-stakes poker game I've ever been involved in. Glenn has invested everything he's got in this project." Referring to Vail's close ties with big-money players on Wall Street, Hahn adds, "It's one individual from the old school fighting against some very big hitters from back East."
For now, though, Vail Associates merely waits, avoiding messy publicity while Miller and Smith fight it out with Turkey Creek. Environmentalists might liken the ski resort to "the house," which stands silently behind every game at a gambling establishment and always wins in the end. Ted Zukoski of the Land and Water Fund of the Rockies says the acquisition of the Gilman Tract might be the last piece in what he describes as "Vail's vision of an undivided ski area running from Arrowhead to Breckenridge."
The ski resort's attempt to keep a low profile while pursuing the Gilman Tract has worked. "When you're buying up all the vacant land in Eagle County," says Zukoski, "I think you start getting worried about public perception and backlash.
"Vail also has an interest in keeping the public's focus on individual pieces of the puzzle. By focusing on their expansion [on federal forest land that connects Vail with Miller's property] and Gilman, we miss the connection between these pieces and the big picture. I just hope that people who moved there for the beauty don't get frustrated and move to Montana, and then the new people who arrive won't realize what they've lost."
Miller's backers claim in court documents that "it's hard to envision the raw land being worth less than $60 million. But the ultimate resale value should be far more than that." The word "billion" is tossed out casually.
"The value of the property is all over the place," says Hahn. "It really depends upon two things: who owns it and what use it's put to."
Jerry Jones, a former vice president of Vail's Beaver Creek ski resort, has a similar take on Vail's maneuvering. "Vail wants the Gilman property as a long-term real estate asset," says Jones. "How much could be made in that capacity is staggering. And if you could bring skiing to the land, the profits are unbelievable.
"And the fact is that there's only one real buyer of this property, regardless of who wins this legal battle between the 800-pound gorilla and the little guy--and that's Vail."
This is far from the first fight over the Gilman Tract. Long before lawyers arrived on the scene, the land was referred to as Battle Mountain because of the blood spilled there by the Southern Utes and the Arapahoe, who fought over the area's water supply and once-fertile elk breeding grounds.
The whites didn't need a card game to flush out the Utes and the Arapahoe. They just pushed them off the land and took over. The first mine on Battle Mountain was the "Little Ollie," claimed on Christmas Day 1878. By the following May, swarms of other prospectors had also staked claims.
The biggest player to arrive on the scene early on was New Jersey Zinc, which started buying land in Eagle County in 1912. By 1918 New Jersey Zinc had consolidated its holdings into the Eagle Mine. One of the other movers and shakers was W.H.J. Miller (no relation to Glenn), who was described by turn-of-the-century author William McCabe as "a practical mining man of wide experience. Mr. Miller has enlisted eastern capital in several of his undertakings and will score a big success."
McCabe also gushed about the county's bright future: "Altogether the mining world of Eagle County is a world within itself. Our resources are as yet untouched, we have ore enough in the depths of our mountains to make the nation wealthy, which will be brought to the surface in the course of time and its production will never cease."
For a long time it didn't. Founded in 1879, the Eagle Mine once contained the largest underground mill in the world. The Eagle Mine produced almost 70 percent of the lead used in both World Wars, according to several accounts, and New Jersey Zinc was eventually absorbed by corporate giant Gulf & Western. Contrary to William McCabe's prediction, the Eagle Mine dried up and was closed in 1977. But in 1981 New Jersey Zinc (at this time held by Gulf & Western successor Paramount, which would later be bought out by media giant Viacom) decided to give it another go and formed a joint-venture partnership with Gold Fields Mining Company of Colorado. The joint-venture paperwork was handled by the law firm that both Aronstein and Page worked for, according to court records.
At the same time, there were rumblings from the Colorado Department of Public Health and Environment and the federal Environmental Protection Agency. The agencies were concerned that by-products of the Eagle Mine, including the huge piles of mine tailings on the property, were contaminating the Eagle River. Heavy-metal pollutants from the mine had killed many of the fish in the river.
In 1983, New Jersey Zinc's parent, Gulf & Western, started looking to get out of the Gilman Tract. It eventually sold the property to Glenn Miller for roughly $15 million in cash and promissory notes. Miller was lured by the abundant supply of tailings, which he intended to process into fertilizer. But just a few months after Miller took over the land as a joint-venture partner with Gold Fields, the EPA and state health officials closed down the property and "froze" the mine tailings. In 1984 they declared it a Superfund site. Miller was out of business before he even had a chance to try to make his own company, Green Gold Enterprises, profitable.
The EPA ruled that Gulf & Western was responsible for the cleanup to the tune of approximately $60 million because Miller hadn't been told about the environmental problems on the property before the sale. But the shutdown crippled Miller financially.
It was also around this time that Gold Fields decided it wanted out of the joint venture with Miller, and by 1986 the partnership was terminated, according to court records. "We conducted an underground exploration program for a couple of years," says Gold Fields' vice president, Collon Kennedy. "But it didn't work out. We wanted to get out, but we couldn't find any buyers."
The property that Gold Fields was exploring wasn't part of the Superfund site, but the stigma of the EPA's involvement hurt the venture's attempt to get out from under the land. In addition, tax liens were piling up on the property because of Miller's inability to pay his Eagle County property taxes or the promissory notes now held by Gulf & Western; according to Eagle County treasurer Terri Schall, the interest on the notes was accruing at the rate of $7,605.44 every day. Those problems scared away prospective buyers. In fact, Gold Fields found itself with more and more of this unwanted property because Miller, unable to pay his share of the joint-venture costs, instead transferred some of his interest in the property to Gold Fields.
As things dragged into the early Nineties, with no buyer in sight, neither Gold Fields nor Glenn Miller, ex-partners in the now-defunct joint venture, realized the long-term value of the land.
"Look, both of us were exploring for minerals," says Kennedy. "We weren't trying to develop the property for real estate purposes. And at that time, there was no indication that this was valuable land. Nobody was stepping forward to buy this property with close to $30 million worth of liens against it and a Superfund site next door. That really chilled our ability to sell this property. We even tried to sell our interest to Miller for $130,000, but the deal fell though because Miller was broke. All we wanted to do was get out and get on with our lives."
Lurking in the background was Vail.
Sometime around 1991, while Gold Fields was trying to find someone to buy its interest in the Gilman Tract, Turkey Creek lawyers Aronstein and Page took a leisurely walk on the property with Paul Testwuide of Vail Associates. At least it may have seemed that way. The real purpose was explained later in a court deposition in which Testwuide was grilled about what the three men had been doing that day:
Q: And when you went up there with Aronstein and Page, you were there as an employee of Vail Associates?
Q: And what was it about your job at the time that allowed you to go visit the [property] with Messieurs Aronstein and Page on behalf of Vail Associates?
A: They wanted to know the viability of if there could be any skiing on that property.
Q: They wanted your opinion as an employee of Vail Associates, right?
A: That's right.
Q: Did they tell you why they were interested in your opinion about it?
A: They were trying to secure some what I believe was abandoned mining claims.
Q: And did they tell you why they were trying to do that?
A: So they would own them instead of the previous owners.
Q: And were they just doing that for the fun of it or what?
A: Well, it was kind of fun walking around up there, but I am sure that they were trying to put together these claims so that they could put them to beneficial use.
Q: They came to you as an employee of Vail Associates because they were seeking participation by Vail, weren't they?
A: That's my understanding.
According to court records, by the time of that hike, Vail Associates had already agreed to put up money in the form of an "option agreement" so that Turkey Creek could take hold of Miller and Gold Fields' property, using Vail's money.
Vail spokesman Paul Witt says Turkey Creek approached Vail with the deal, and Turkey Creek agreed to keep Vail's involvement confidential. "It's a common business practice when involved in things of a speculative nature," explains Witt. "It could color the deal if Vail was directly involved."
Ted Zukoski isn't surprised that Vail would want to keep a low profile in its dealings with the Gilman Tract. "They could encounter a lot of bad blood," says Zukoski. "They're already seen as the 800-pound gorilla who's stomping on the locals. If I were the Vail Associate flacks, I'd be worried about that, too."
Turkey Creek went into action in 1990 by quietly purchasing several tax liens on Miller's property from the Eagle County treasurer. That made Turkey Creek an indispensable player in whatever was to follow. Then came the Turkey Creek lawyers' little hike on the property with Vail employee Testwuide. Then, in 1993, Turkey Creek approached Gold Fields with a deal, offering $130,000 for its interest in the property, the same amount that Gold Fields had tried to secure from Miller two years earlier. Gold Fields officials say they had no idea that Turkey Creek, which in 1996 swooped down on Miller and foreclosed on the property, was fronting for Vail. ("Turkey Creek waited for the EPA to finish its cleanup before they threw Miller under the bus," says Tom Smith.)
The fact that the Turkey Creek lawyers at one time represented Gold Fields was one of the cornerstones of a Miller lawsuit against Turkey Creek that was first tried in 1996.
Miller claimed that because he was a joint-venture partner with Gold Fields, the Turkey Creek lawyers also represented him, forming an attorney-client relationship. In court, Miller's attorney argued that since the Turkey Creek lawyers performed work for the joint venture and because Miller reimbursed Gold Fields for attorney fees in the form of transferred interest in the Gilman property, the lawyers represented the joint venture and would therefore be violating that attorney-client relationship by buying Gold Fields' share of the land.
"Miller is the victim, there's no doubt about it," Smith says in his Virginia drawl. "When Gulf & Western found out about the Superfund decision, it scared the hell out of them, so they dumped the property on Miller. And Miller stepped in as the cowboy he is and took the personal risk. But when Miller, who took the risk, decided he wanted to develop the property, Aronstein took it in a billion-dollar plunder. Aronstein didn't take it when there was a risk; he waited until afterwards. He devastated his client."
The U.S. District Court in Eagle County didn't see it that way, and neither did the Colorado Court of Appeals. Both courts ruled that "the law firm and the lawyers were retained by Gold Fields to represent only it and not the joint venture...Miller has asserted no other facts that would demonstrate the existence of an attorney-client relationship between the lawyers and the joint venture."
Miller also claims that as part of their joint-venture agreement, Gold Fields had to clear the Turkey Creek deal with him before Gold Fields went through with it. However, the courts ruled that after the joint venture terminated in 1986, it was each partner for himself.
Collon Kennedy of Gold Fields agrees with both court decisions. "When Aronstein and Page came to us in 1993, they weren't our lawyers," says Kennedy. "At that time, we looked at it as 'Thank God, let's get out of this.' In retrospect, maybe we should've found some other lawyers, others that we hadn't dealt with previously. But when they came to us to take on our problem, we just wanted to move on. We couldn't find anyone else who would buy the property with $30 million of liens on it."
In 1993, Aronstein and Page further cemented their role in the deal by purchasing for $70,000 the deed of trust and judgment against Miller that Viacom had inherited from Paramount and Gulf & Western. Under the deal, if Turkey Creek could successfully foreclose on the property, an action it initiated in July 1994, Viacom would get the accrued judgment of approximately $23 million against Miller, and Turkey Creek would get the land, Miller's attorney contends. Presumably, under Turkey Creek's option agreement with Vail, the ski resort would get the land. (Aronstein's attorney Netzorg won't discuss details of either Turkey Creek's deal with Viacom or its deal with Vail.)
Tom Smith, meanwhile, had been sniffing around the property on behalf of American Consolidated, the New Jersey-based holding company of which he's chairman. "In 1991 I was negotiating with Paramount for their liens," says Smith, "but Aronstein got preferential treatment from the Viacom attorneys. Miller and American Consolidated got screwed."
Smith tends to rant on the subject. "This is one of the darkest days in the history of the judicial system of Colorado," he says. "I don't see why Aronstein doesn't appoint himself as a federal judge so he can rule on this case. He's got every other conflict of interest going--why not that?"
Gold Fields' Kennedy, however, has a little more distance from the subject, though he was swept into court to testify after Miller challenged Turkey Creek's foreclosure action.
"Part of the problem," says Kennedy, "is that this transaction took place over ten or eleven years. A lot can happen in that time. And as you can imagine, people will look back and wish they did things differently. By Miller's account, the part of property we owned was worth $100 million. Well, if it was worth $100 million, it's hard to understand why he didn't buy it for $130,000. We did everything we could to work out a mutual arrangement with Miller, and he couldn't come through. Now he comes back to drag us into court. We didn't make a windfall at all with our sale [to Turkey Creek]. And if you consider the legal fees, we didn't even come close."
Why did Miller drag all this into court? Miller's attorney James Hahn notes that his client is broke and says Miller has everything sunk into the Gilman Tract. Hahn says Miller has no choice but to fight.
Tom Smith, battling for his share of the action, complains that American Consolidated's stock was selling for $3 a share when the company bought a 30 percent share of Miller's action and now fetches 10 cents a share. He's full of fighting words. "We know one thing," says Smith. "If we don't get a fair judgment in Colorado, we'll come out of New Jersey and sue the whole lot of them. We'll fuck 'em all up before it's over and be glad to do it. We welcome the litigation. Ol' Aronstein'll recognize my first cousin from New Jersey, who's gonna handle the case. He's the F. Lee Bailey of New Jersey. And he won't sell me out, either."
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