Nothing pretty about this
William Van Orsdel may be insolvent, according to a lawsuit filed earlier this week by members of an investment group the Greater Des Moines businessman joined to build West Glen Town Center.
Van Orsdel and Gary Kirke are the majority stakeholders in West Glen, the $100 million development in West Des Moines that was billed as one-of-a-kind blend of apartments, retail stores, offices and entertainment venues when plans were unveiled in 2003.
The project seemed fitting for the two men, who created a successful insurance brokerage and placed its offices in centerpieces of local real estate development, downtown’s Capital Square and West Lakes Office Park, before it was sold in 1998.
West Glen is often described as an idea floated by developer Tim Urban, an early partner in the project, and carried out largely thanks to the vision and determination of Van Orsdel. Kirke was said to be the pragmatist in the venture, bringing a bedrock business sense to the deal.
It is located at the gateway to West Des Moines’ golden mile on Mills Civic Parkway. Across the road is Glen Oaks, the state’s first gated community, with an exclusive country club that suffered financial woes of its own before its purchase last year by a group that includes other investors in West Glen.
Kirke and Van Orsdel are joined in West Glen partnership by Robert Horner, Terry Moss and Robert Pulver.
In 2004, they appointed Van Orsdel as the manager at an annual salary of $50,000. Authorization for the compensation expired in January 2006, according to the lawsuit, which outlines a deteriorating relationship between Van Orsdel and the other partners from that time on.
In court records, the partners claim that Van Orsdel bailed out on his financial obligations to them, enriching himself and other business interests in the process.
Among the allegations is that Van Orsdel mortgaged his $2 million home and nearby property in the South of Grand neighborhood to WAVO Properties LP, which he controlled.
The lawsuit says the property transaction, used to secure a $1.6 million line of credit to Van Orsdel, was a fraudulent insider transaction. The partners have asked a judge to declare the transfer “null and void” and to prevent Van Orsdel from transferring other assets that could be used to pay financial obligations.
“WAVO Properties had reasonable cause to believe that Van Orsdel was insolvent” at the time the mortgages were filed, the lawsuit says. The mortgages are dated October 2010. They were recorded first in November 2010 and again on Jan. 27 of this year.
Van Orsdel’s attorney, Thomas Hanson, would not respond to the suggestion that his client is insolvent, other than to say that the partners “make a long list of statements that are pretty strong” in the lawsuit.
Other allegations are that: • Van Orsdel paid $100,000 of his $3.4 million share of a $10 million JPMorgan Chase & Co. loan that was due in April 2010 and has not paid the balance;
• Van Orsdel didn’t pay his $347,000 share of a $1 million account the partners used to pay operating expenses that could not be covered by West Glen cash flows;
• Van Orsdel paid himself $13,000 a month from January 2006 until April 2009 without authorization from the partners;
• Van Orsdel, without the knowledge of the other partners, included himself in a West Glen employees 401(k) plan;
• Van Orsdel hid payments to himself by rolling them into capitalized costs for construction projects at West Glen;
• Van Orsdel used West Glen funds to pay for personal expenses, including computers, and expenses related to other business ventures; and Van Orsdel used $350,000 in West Glen funds to pay construction costs on an apartment in the Studio Block in the East Village.
The partners voted to oust Van Orsdel as manager in April 2009 and appointed Kirke to take his place.
As the lawsuit points out, the issues between Van Orsdel and the other partners resulted, in part, because West Glen cash flows were not sufficient to make loan payments and meet other expenses. More than $300,000 in property taxes went unpaid from September to December 2010.
In exchange for a mortgage on undeveloped West Glen land, Horner and Pulver have agreed to loan the center up to $3.6 million.
John Joseph, vice president of Josephs Jewelers, one of the first businesses to open at West Glen, said it was unfortunate that two business partners have squared off.However, he cautioned that the lawsuit shouldn’t be taken as a statement on the success of West Glen.
“It has absolutely no bearing on the center or its profitability. It’s strictly a disagreement between the partners,” he said.