Bank of North Georgia has filed suit against the developers of a Lumpkin County sewer plant whose investors include several high profile Forsyth County residents and former public officials.
In the civil lawsuit, filed Monday in Forsyth County Superior Court, the bank cites WRF Georgia for breaching a loan contract. WRF's investors include four former elected officials -- Mike Evans, John Kieffer, Paul Kreager and Clint Day.
The suit asks WRF to pay the remaining principal balance due of more than $1.9 million, in addition to future interest, late fees, attorney fees and costs.
Kieffer, WRF manager, said he is “working with the bank and have full intentions of resolving and working through this issue.”
“We are struggling with the same difficult issues that all developers and builders are facing today,” said Kieffer, a former Forsyth County commissioner. “We’ve got multiple options in place to resolve this, and we’ll continue to work on this until it is resolved.”
The bank loan of about $2 million was used to build the Lumpkin County Wastewater Treatment Plant and Disposal System.
The plant, managed by Lumpkin County, is fully operational, serving about 10 large commercial clients, including a nearby Home Depot.
Kieffer said the plant, which opened in 2006, is not jeopardized by the lawsuit.
“This suit will have nothing to do with the viability of the ongoing operation of the plant,” Kieffer said. “I don’t want there to be any misunderstanding that those customers in any way need to be concerned.”
Bank of North Georgia’s attorney, Ed Tate, said Lumpkin County is not involved in the suit.
“The bank made a loan. It was secured by certain real estate and also guaranteed by the individuals listed,” said Tate of the Atlanta firm Seacrest, Karesh, Tate & Bicknese. “The loan is in default ... my recollection is it’s been in default for several months.”
Tate would not say whether the bank was willing to settle out of court, but Kieffer said it has shown an unwillingness to bend.
“[The suit] came about as a result of an impasse we have had with the Bank of North Georgia as a result of unrealistic interest rates on their current loan,” he said. "We are at 8 3/4 percent in a world of 4 percent rates.
“We have tried over the last year to restructure the rates in order to get through these tough economic times, and they have been unwilling.”
The loan of $1,882,800 originated in December 2005 and carried a 7.75 percent interest rate. Nearly one year later, the loan amount was increased to $2,033,950 at a 8.75 interest rate.
Kieffer said he tried to work with the bank toward reducing the $18,000 monthly payments down to $10,000. A substantial amount of the difference would come by lowering the interest rate.
“We are surprised and disappointed that the bank was unwilling to work with us short of this suit,” Kieffer said. “I don’t think anybody expected it would get to this point, but the banks are in a desperate situation as well.”
In addition to Kieffer, the list of investors includes several former and current politicians.
Day is a former state senator who ran unsuccessfully for U.S. Senate and lieutenant governor; Kreager is a former Forsyth County school board member and husband of a former county commissioner; and Evans is a former state representative and currently a Ninth District Congressional hopeful.
Other WRF investors include John Cirello, Charles Perry and James Perry.
All seven investors guaranteed the loan, but Kieffer said he was the only one who was hands on with the project.
“I’m the manager of the company. Mike is just a silent partner," Kieffer said. "He’s an investor and is not as familiar with the day-to-day operations as I certainly am. Truthfully, that’s the same situation with Paul and Chuck. They are much more inactive members than I am."
E-mail Jennifer Sami at jennifersami@forsythnews.com.
In the civil lawsuit, filed Monday in Forsyth County Superior Court, the bank cites WRF Georgia for breaching a loan contract. WRF's investors include four former elected officials -- Mike Evans, John Kieffer, Paul Kreager and Clint Day.
The suit asks WRF to pay the remaining principal balance due of more than $1.9 million, in addition to future interest, late fees, attorney fees and costs.
Kieffer, WRF manager, said he is “working with the bank and have full intentions of resolving and working through this issue.”
“We are struggling with the same difficult issues that all developers and builders are facing today,” said Kieffer, a former Forsyth County commissioner. “We’ve got multiple options in place to resolve this, and we’ll continue to work on this until it is resolved.”
The bank loan of about $2 million was used to build the Lumpkin County Wastewater Treatment Plant and Disposal System.
The plant, managed by Lumpkin County, is fully operational, serving about 10 large commercial clients, including a nearby Home Depot.
Kieffer said the plant, which opened in 2006, is not jeopardized by the lawsuit.
“This suit will have nothing to do with the viability of the ongoing operation of the plant,” Kieffer said. “I don’t want there to be any misunderstanding that those customers in any way need to be concerned.”
Bank of North Georgia’s attorney, Ed Tate, said Lumpkin County is not involved in the suit.
“The bank made a loan. It was secured by certain real estate and also guaranteed by the individuals listed,” said Tate of the Atlanta firm Seacrest, Karesh, Tate & Bicknese. “The loan is in default ... my recollection is it’s been in default for several months.”
Tate would not say whether the bank was willing to settle out of court, but Kieffer said it has shown an unwillingness to bend.
“[The suit] came about as a result of an impasse we have had with the Bank of North Georgia as a result of unrealistic interest rates on their current loan,” he said. "We are at 8 3/4 percent in a world of 4 percent rates.
“We have tried over the last year to restructure the rates in order to get through these tough economic times, and they have been unwilling.”
The loan of $1,882,800 originated in December 2005 and carried a 7.75 percent interest rate. Nearly one year later, the loan amount was increased to $2,033,950 at a 8.75 interest rate.
Kieffer said he tried to work with the bank toward reducing the $18,000 monthly payments down to $10,000. A substantial amount of the difference would come by lowering the interest rate.
“We are surprised and disappointed that the bank was unwilling to work with us short of this suit,” Kieffer said. “I don’t think anybody expected it would get to this point, but the banks are in a desperate situation as well.”
In addition to Kieffer, the list of investors includes several former and current politicians.
Day is a former state senator who ran unsuccessfully for U.S. Senate and lieutenant governor; Kreager is a former Forsyth County school board member and husband of a former county commissioner; and Evans is a former state representative and currently a Ninth District Congressional hopeful.
Other WRF investors include John Cirello, Charles Perry and James Perry.
All seven investors guaranteed the loan, but Kieffer said he was the only one who was hands on with the project.
“I’m the manager of the company. Mike is just a silent partner," Kieffer said. "He’s an investor and is not as familiar with the day-to-day operations as I certainly am. Truthfully, that’s the same situation with Paul and Chuck. They are much more inactive members than I am."
E-mail Jennifer Sami at jennifersami@forsythnews.com.