The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A homeowner at Abaco’s troubled Orchid Bay development is demanding that the Georgia Bar investigate its route into receivership, alleging that this has “frightened residents” and “severely damaged its viability as a tourism destination”.

Jonathon Moseley, an Orchid Bay homeowner and US attorney, in a December 30, 2013, complaint called on the Georgia Bar to probe the conduct of Synovus Bank, and its attorney Samuel Hatcher, in appointing Grant Thornton (Bahamas) as the project’s receivers.

The complaint, which has been obtained by Tribune Business, alleges that Synovus avoided the jurisdiction of a US Bankruptcy Trustee by appointing the Bahamian accounting firm and its partner, Paul ‘Andy’ Gomez, as Orchid Bay’s receiver.

Mr Gomez was appointed Orchid Bay’s receiver via three Supreme Court orders last year, after Synovus came to the Bahamas to enforce a $6 million-plus default judgment against the development’s owner, Atlanta businessman William B. Johnson.

Mr Gomez is the receiver for 100 per cent of the shares in Great Guana Cay (Abaco)Development Company, which trades as Orchid Bay and is owned by William B. Johnson Investment Company and Mr Johnson’s other entities.

But Mr Moseley, in his complaint, alleged that Grant Thornton (Bahamas) appointment had created a ‘conflict of interest’, where it was not apparent whether the firm was acting primarily for Synovus or the best interests of all Orchid Bay/William B. Johnson creditors.

Describing Grant Thornton’s Orchid Bay takeover as “a totally unnecessary armed invasion” accompanied by Bahamian police officers, Mr Moseley alleged: “In contrast to more cost-effective measures, such as garnishing a bank account or scheduling a judicial sale at auction of some of the housing lots, the actions taken served to run up billable hours of attorneys in the US and the Bahamas to needlessly increase the costs of litigation against Synovus Bank and its shareholders, and for those forced to respond to defend against such unnecessary actions of harassment.”

Criticising Grant Thornton for removing Orchid Bay’s management just prior to the key Christmas tourism season, Mr Moseley further alleged that the takeover had “frightened the residents” and “caused rumours in this small town environment”.

He added that the move had “interfered with vacation rentals over the Christmas holidays by homeowners of Orchid Bay (whose home ownership is completely free and independent of Orchid Bay), [and] severely damaged the viability of Orchid Bay as a tourist destination because word spreads quickly among the boating community (and false rumours spread faster than accurate information)”.

Mr Moseley’s action represents a new twist in the Orchid Bay saga, which has seen the property’s ousted managers, Jimmy and Melonie Albury attempt unsuccessfully (to-date) to overturn the Grant Thornton receivership in the Bahamian Supreme Court.

The Moseley complaint, which appears extremely sympathetic to the Alburys, said it was Jimmy Albury who first conceived of the idea for Orchid Bay some 25 years ago.

He then allegedly went into a 50/50 partnership with Mr Johnson, and “invested heavily”. Mr Moseley, though, alleged that Mr Johnson then transferred Orchid Bay’s assets into Great Guana Cay (Abaco) Development Company without Mr Albury’s permission, forcing the latter to file an action claiming the firm is a ‘constructive trustee’ for his 50 per cent share.

This has become an issue with the receivership, with Grant Thornton saying it has been provided with no evidence to support Mr Albury’s 50 per cent equity claim.

“William B. Johnson controlled all of the money from Atlanta, Georgia. It is my understanding that vastly more money was sent from Orchid Bay’s operations under Albury’s management to William B. Johnson then ever came back for investment or expenses,” the Moseley complaint alleged.

“However, as confirmed to me, Jonathon Moseley, by suppliers on Great Guana Cay, invoices had to go to Atlanta, Georgia, for payment. As a result, the operations of the development and marina suffered greatly for years.”

Mr Gomez declined to comment on the Moseley action, which claimed that the shares in Great Guana Cay (Abaco) Development Company were really owned by W. B. Johnson International LLC - an entity that Synovus does not have a judgment against.

Therefore, Mr Moseley is suggesting that the whole ‘ownership basis’ chain for the Grant Thornton receivership is flawed, but Tribune Business understands Grant Thornton is confident this is a non-issue, as it will have already been explored at US and Bahamian court hearings.

The Moseley complaint, meanwhile, alleged that the Alburys had managed to keep Orchid Bay running post-2008 without paying the Bahamas Electricity Corporation (BEC) or the Bahamas Telecommunications Company (BTC), plus around a dozen other suppliers.

Alleging that not a cent of the funds loaned to Mr Johnson by Synovus ended up at Orchid Bay, Mr Moseley recounted the alarm caused when Royal Bank of Canada threatened to call in its debt secured on the property.

“Jimmy Albury worked feverishly to preserve Orchid Bay, by searching for investors,” Mr Moseley alleged. “I know this, because I personally helped Jimmy Albury strategise ways to find loans or investors, and I personally wrote a draft business plan for Albury to use to find investors.

“Some potential investors required as a condition of a possible investment that some creditors be defrauded and left unpaid. Jimmy Albury refused to cooperate with such plans, believing that all creditors should be paid, equally and fairly.”

Mr Moseley alleged that Mr Albury found an investor group willing to buy Orchid Bay in January 2013 from Royal Bank of Canada, meaning Great Guana Cay (Abaco) Development Company was no longer the owner.