Lambert Kay deal killed by selectmen

WINSTED — The two-month-long saga of an Arizona company’s plan to purchase the Lambert Kay building came to a close at a special Board of Selectmen’s Thursday, July 31.At the special meeting, the selectmen present voted unanimously to stop negotiations with the company, XS4D Entertainment Gaming Holding Company LLC.Selectmen George Closson and Jorge Pimental and Town Manager Dale Martin were not present at the July 31 meeting.XS4D of Fountain Hills, Ariz., originally offered the town $15,000 to purchase the building in June.The company proposed to purchase the building in order to create and manufacture the Transcender Therapeutic Gaming Surround Sound Reclining Chair.A special town meeting was scheduled for July 21 for residents to vote on the proposal.The meeting was scheduled by the selectmen in June despite Martin’s scheduled vacation.On July 18, three days before the special meeting, Gov. Dannel P. Malloy announced that the town would receive a $500,000 grant from the state’s Small Town Economic Assistance Program (STEAP) to assist with costs of redeveloping the building.However, at the July 21 special town meeting, Mayor Marsha Sterling said that the company requested a delay on the decision.Sterling said Town Attorney Kevin Nelligan advised her to make a motion to adjourn the meeting and reconvene at a later date.She did not tell the audience that Martin, who was on vacation at the time, received an email from a company representative that the deal was off.At the July 31 special selectmen’s meeting, Sterling read, in front of an audience of 50 residents, a speech concerning the emails from the representative.Agendas were not handed out to the audience at the special meeting.Sterling gives her side of story“The purpose of this meeting is to disclose and describe the events from July 21 to the present in respect to Lambert Kay and its possible sale to XS4D,” Sterling said at the beginning of the special meeting. “The developments of the last few days were truly unusual and odd and they warrant a full disclosure.”“Point of order, is this a purpose of a Board of Selectmen’s meeting? Will there be business conducted?” Community Lawyer Charlene LaVoie asked from the audience. “You’re having a meeting for no reason? Will there be agendas handed out to the public?”“There is a purpose to the meeting,” Sterling said. “I apologize that the town clerk’s office were not here to have agendas distributed.”Town Clerk Sheila Sedlack was not present at the meeting.“Is this to cover your ass?” LaVoie asked. “As a citizen I would like to hear what the meeting is for before it goes on.”“I will deny the point of order and ask the citizen to restrain herself and refrain from further comment,” Sterling said.In the beginning of her speech, Sterling said Martin set the date of the special town meeting and not the selectmen.She said she did not know why Martin scheduled the special town meeting when he was the “...sole contact [between the town and XS4D] to the runup to the town meeting.”“I would like to point out that the town manager asked that this meeting be postponed so he can be here,” Selectman Candy Perez said.“Excuse me, I will finish and recognize you when I am done,” Sterling said. “The town manager said he could not be here tonight because he said he had a medical appointment. We are holding this meeting because it is important for people to hear about this in a timely manner.”Sterling proceeded to read her pre-written speech in which she referred to herself in the third person.While the meeting was held on July 31, the speech was dated Monday, July 21, the same day as the special town meeting.The speech recounted events leading up to the July 21 town meeting.“During the morning of July 21, the town manager’s office received multiple phone calls and messages from an individual named David, describing himself as a consultant to XS4D,” Sterling said.She said that, since Martin was on vacation in Europe and he did not appoint an interim town manager in his absence, the messages were all forwarded to her.“Mayor Sterling had reviewed the June 11 written offer from XS4D but had no prior contact with [the company] or any of its principals, employees or representatives,” Sterling said. “Mayor Sterling returned David’s phone call. He declined to provide his full name or his company affiliation. David described himself as a hedge fund manager serving as a consultant to XS4D. To credentialize the proposed transaction and his clients, David noted that XS4D has some $300 million in fine Italian leather inventory sitting dockside.”Sterling said that David told her that no XS4D principals or employees were willing to attend the July 21 town meeting.“However, he committed that [the company’s] local lawyer and environmental consultant would attend and could adequately present the case for the sale of Lambert Kay to XS4D,” Sterling said. “David went on to state his clients’ conditions for his team’s appearance at the town meeting.”Buyer set conditionsSterling said that the conditions included that no questions would be asked of company representatives “...or disclosure sought as to the purchaser, their business plan, their product, their financial resources or their experience and ability to undertake and complete the project.”Sterling said other conditions stipulated by David included a “...receipt from Mayor Sterling of assurance that the proposal would be duly approved at what he termed the ‘formality’ of the town meeting and the town contribute the $500,000 STEAP grant to the transaction without disclosing such contribution to the town meeting as explicitly agreed with the town manager.”In response, Sterling said that she told David that the town meeting format is “...designed precisely to elicit citizens’ questions and allay any concerns, and it is such citizens’ perogrative to determine the outcome of such meeting.”“The question posed to the town meeting was for the sale and cleanup of Lambert Kay for $15,000 per [the company’s] written offer to the town, with no notion of a contribution by the town of $500,000 [STEAP grant],” Sterling said. “Mayor Sterling further informed [David] that his team could certainly request that the town meeting formally amend the contemplated terms of sale, but that absent such amendment, the question before it would be whether or not to accept the written offer on the table. David noted that he was unwilling to take that step. David stated that the town manager had instructed him not to include any mention of the STEAP grant in the written offer and stated that the contribution of the STEAP grant was a strictly confidential issue between the town manager and David.”Sterling said that David insisted that the company was told that they would receive the STEAP grant funding.“He further avowed that this was well-known to and fully understood by the town manager, who had led the discussions so far,” Sterling said. “He asserted that without an explicit approval of these revised terms from Mayor Sterling, he would no longer be sending a team to appear at the town meeting. Not being in a position to speak for the town meeting, Mayor Sterling encouraged him to send his team regardless so that his clients’ proposal as he understood it could be discussed and vetted by the decision-making body of the town meeting.”Sterling said that, instead, David requested the meeting be postponed for 30 days.“The town meeting was duly postponed on the advice of Town Attorney Nelligan based on the fact that persons unknown had indicated an unwillingness by XS4D to proceed on the written terms that were the basis for the town meeting,” Sterling said.Meeting attendees not toldSterling did not say this to the audience of the special town meeting on July 21.After the meeting, Sterling said she received an email from David that reiterated that he represented the company.“He stated that he found [my] unwillingness to override the town meeting and meet his revised terms, whether or not they deviated from XS4D’s written offer letter, wholly unreasonable,” Sterling said. “He further stated that as of the time of writing, his clients had abandoned their interest in Lambert Kay and had that very afternoon purchased an alternative property in an undisclosed location.”Sterling said David did not reveal his last name to her throughout her email communications.After she finished her written speech, Sterling said, in a conversation with Martin last week, Martin informed her that David is David Viens.Sterling then read a report from the Arizona Corporation Commission from March 2011 that ordered Viens to pay $2,310,895 in restitution and $200,000 in administrative penalties for defrauding investors who purchased unregistered promissory notes and limited liability memberships involving nursing homes.She said the commission found that Viens and his business partner made personal guarantees to the investors, but lacked sufficient assets to honor the guarantees.“Additionally, the commission found that Viens failed to disclose his previous criminal conviction for conspiracy to commit wire fraud in an Arabian horse buying scheme,” Sterling said. “In settling the case, Viens did not admit or deny the commission’s findings, but did agree to the entry of a consent order.”Sterling said that Martin told her that he knew about Viens’ background.“The town manager asserted during yesterday’s meeting that it was either a trade secret or an (Securities and Exchange Commission) secret that it not be disclosed who this man was,” Sterling said. “The town manager did not believe it was appropriate or relevant to disclose this information to the town attorney, the Board of Selectmen or the public. Now, it’s important to understand where we stand. We have a man who will not give his last name who says he has a secret deal with the town manager that is materially different than the offer we received from the company. “On the other side, the town manager asserts that in fact that everybody knew that XS4D is going to receive the grant. He said that was the case all along. When confronted with the fact that the June 16 meeting clearly delineated [the STEAP grant] as being outside of the scope of the offer, the town manager did not have a response.”Vote to end negotiationsSterling then asked for a motion from the board to have the town cease any and all negotiations with the company and that Martin and Nelligan acknowledge the withdrawal of the offer from the company.The motion was made by Selectman Candace Bouchard and seconded by Selectman Daniel Langer.Before the vote, Selectmen Perez stated her concerns over Sterling’s presentation of information.“You had information at the town meeting because of emails that occurred prior to the meeting and you said the company had pulled out,” Perez said. “Earlier in the day there was an email that the mayor had spoken about....”“I received no emails from the company until after the town meeting,” Sterling interrupted Perez.“But the town attorney sent an email out saying that we were asking for a 30-day postponement because Dale wasn’t here,” Perez said. “But now we get to the meeting and you made the comment that the company had asked for a postponement. You also knew a lot of information that wasn’t shared with this board, either at the town meeting or during our meeting afterwards. The communication with this board is my major concern. Something as serious as all of this is being held without all of us being in position to hear everything.”“This is all based on Kevin’s advice,” Sterling said. “All of this information has come to light subsequently. This is all what Kevin recommended to me.”“I am concerned about what happened that Monday night [on July 21],” Perez said. “You had already spoken to this man during the day. This board was not told of that. We had a lot of people at that town meeting who did not know any of this transpired.”“Kevin’s advice was to simply postpone the meeting and wait until Dale came back,” Sterling said. “I did exactly what Kevin told me to do. Disclosure has no timetable.”The Winsted Journal emailed a copy of Sterling’s speech to XS4D co-managing member Yvonne Wyman for comment.Wyman did not respond to requests for comment.Martin OK with decisionIn an interview on Monday, Aug. 4, Martin said that he was not troubled by the board’s decision.“I’m fine with it,” Martin said. “If that’s the direction that the board takes then I support the decision.”Martin confirmed that he knew about Viens’ background.“He has been here many times and other people in town have met him as well,” Martin said. “The reports about him have been accurate. I knew who we were dealing with. It obviously affected the deal. That’s fine if there is concerns with it, but the town attorney has said on many occasions that there were appropriate safeguards put in place. He wasn’t an officer of XS4D but just a spokesperson. He introduced XS4D to the town.”Martin said the town will continue to look for a potential developer for Lambert Kay.“We will do the clean up and then we will move on,” Martin said. “We got the grant for the clean up and we will solicit proposals once the clean up is done. We will solicit consultants for the clean up.”