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O.C. developer’s CEO might owe $230 million

By
Real Estate Agent with The Adam and Eric Group 01499486

The chief executive of Irvine-based developer SunCal Cos. could be personally responsible for paying up to $230 million in bond guarantees he made on California housing projects, theWall Street Journal reported today.

SunCal CEO Bruce Elieff reportedly signed personal guarantees on $230 million worth of surety bonds related to 10 stalled developments backed by bankrupt Wall Street firm Lehman Brothers, the Journal said.

The bonds are pledges to construct roads, sewers, bridges and other public infrastructure for a new community.

The guarantees include $56.5 million worth of bonds related to the 308-home Marblehead Coastal project in San Clemente, the Journal said. San Clemente officials have demanded payment on $33 million of those bonds. Other cities also have demanded payment for the bonds, including San Juan Capistrano, Beaumont and Palmdale, the newspaper said.

The Journal wrote:

“Mr. Elieff’s predicament is unusual these days: Developers were far more likely to risk and lose their personal fortunes during the real-estate collapse of the early 1990s, and many learned their lessons during the last cycle. Donald Trump, for example, who was pushed to the brink in the early 1990s, avoided investing any of his own money or signing for any of the debt on most of the projects that have carried his name in the past 15 years.”

SunCal filed bankruptcy on Marblehead and 21 other Lehman-backed projects throughout the state, saying that Lehman’s collapse cut off funding for development and even for critical maintenance.

The Journal said that Elieff, one of O.C.’s richest people with a personal fortune of $300 million in 2007, never expected to have to pay the bonds himself. Elieff maintained that Lehman agreed to take responsibility for the bonds, although Lehman denies that such an agreement ever was signed, the newspaper said.

Post based on an article published in the OC Register by Jon Lansner and Jeff Collins. 

Comments (3)

Karen Seeman
Exit on the Hudson Realty - Tenafly, NJ
CDPE, (201) 247-0556, bergencountyhomes4sale.c

Another Lehman casualty.  Yuck!  nteresting story.  I'm sory there is lingering pain.

Sep 30, 2010 08:57 AM
Karen Seeman
Exit on the Hudson Realty - Tenafly, NJ
CDPE, (201) 247-0556, bergencountyhomes4sale.c

Another Lehman casualty.  Yuck!  nteresting story.  I'm sory there is lingering pain.

Sep 30, 2010 08:57 AM
Cody Battershill
RE/MAX House of Real Estate - Calgary, AB
ABR. CCS. Calgary REALTOR

Good Post!

Sep 30, 2010 10:44 AM