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Date of Issue: April 20, 2006

Another fine GSR mess, Ollie!

If the legal troubles for Villa Rosa developers GSR LLC continue to mount, someone’s going to have to print a scorecard to tell Islanders who the players are - and which side they’re on.

The latest chapter in the GSR saga has GSR partner Ed Furfey filing a lawsuit in late March against Bon Eau Enterprises LLC of Sarasota, claiming among other allegations that the interest rate Bon Eau charged GSR on a $6.4 million "loan" to the company last year is "usurious."

That means an interest rate on a loan is above what the legal maximum is in Florida, said a local Island attorney.

Furfey claims in the suit that the transaction was a loan because it was money in return for a title to 2.56 acres of GSR property - a portion of the Villa Rosa project in Anna Maria - and was subject to GSR’s right to repurchase the property at "option prices." In exchange, said Furfey, Steve Noriega of GSR conveyed the property title to Bon Eau.

But Furfey, even though he is an equal partner in GSR, says he had no knowledge of the transaction and it was nothing more than an "extension of credit by Bon Eau Enterprises to GSR, despite being disguised as a sale and purchase.

"The terms of the agreement constitute a loan commitment, the ‘deed’ was given as security for repayment of the of the $6.4 million, and the ‘option prices’ are interest for the extension of credit."

Further, claimed Furfey, the warranty deed was actually a mortgage and the rate of interest as charged by the "option prices" is "usurious" and unenforceable according to a Florida statute that makes it illegal to charge an interest rate greater than 25 percent.

Furfey also noted that both Bon Eau and GSR used the same attorney in the transaction and alleged that the $6.4 million was "significantly less than the fair market value of the Villa Rosa property."

As a result of the transaction, GSR - and Furfey as a partner - have "suffered damages which it is entitled to recover," the lawsuit said.

Furfey, however, already has a legal action against his GSR partners, Robert Byrne and Noriega, over the Bon Eau deal, claiming he was never notified or given "first right of refusal" on the sale of the 2.56 acres of the 17-unit Villa Rosa property on South Bay Boulevard in Anna Maria. He also alleged in that lawsuit that the sale price was "well below market value." Furfey claims he was unaware of the entire Bon Eau deal last August.

Because Furfey is a GSR partner, he had to include Byrne and Noriega in the suit against Bon Eau, although he already has the aforementioned lawsuit against the two men (The Islander, March 8).

But wait, there’s more.

Another company, Longboat Partners LLC, has sued GSR and the trio of partners, claiming GSR is in default of an $800,000 loan made to the company in July 2004 (The Islander, March 15).

That lawsuit states that GSR and Longboat were supposed to develop the 11-unit Bleu Claire condominium complex on Longboat Key.

As a GSR partner, Furfey is a defendant in that case along with Byrne and Noriega, while he’s suing Byrne and Noriega in another case, and at the same time Furfey, along with Byrne and Noriega, are suing Bon Eau in the third case.

What it means for Anna Maria is that plans for the 16 multi-million-dollar homes in the controversial gated community could be on hold for some time until all the legal difficulties are resolved.

GSR recently finished its model home for the project, but has not yet delivered the final plat to the city, according to Mayor SueLynn. Until the city signs off on the final plat and it’s recorded with the circuit court, GSR can’t sell lots.

That means homes can’t be built and the city won’t be getting any building permit fees for Villa Rosa homes any time in the near future. A building permit for a $2 million home in Anna Maria would cost close to $40,000.

The city commission gave GSR site plan approval for Villa Rosa in July 2002.