Developer P.J. Simao’s suit claims HSBC Bank “fraudulently induced” his company, Prime LLC, Alexandria Bay, into a $1.8 million loan for the Watertown, N.Y., club without revealing that another of his companies was in financial trouble.
Developer P.J. Simao is filing a countersuit against HSBC Bank USA based on the claim that the bank loaned him money to buy Ives Hill Country Club in Watertown, N.Y., without disclosing the financial troubles one of his other businesses, the now-closed DealMaker Auto Group, was experiencing, the Watertown Daily Times reported.
HSBC filed state Supreme Court action against Prime LLC, Alexandria Bay, whose managing member is Simao, to foreclose on the Flower Avenue West golf course, claiming it owed $490,000 on a $1.8 million mortgage provided in 2007. Simao owns the club’s real estate while Ives Hill Country Club Inc. performs course operations, the Daily Times reported.
Of the $1.8 million mortgage, $1.1 million was used to purchase property in the town of LeRay, with $700,000 used for the purchase of the club. The LeRay property’s mortgage has been satisfied. Prime has made interest-only payments on the country club property and was current on the payments as of April, the Daily Times reported.
The countersuit claims that HSBC’s May invoice increased the interest rate from 4.75% to 7.75%, which raised the monthly payments from $2,000 to $3,167, and sought $49,000 in retroactive interest. Simao claims that after the loan with HSBC closed in 2007, he received a call from the bank that his two DealMaker dealerships were $400,000 “out of trust” with HSBC on floor-plan financing the bank provided, the Daily Times reported.
Simao paid $300,000 to reduce the out-of-trust amount, but a few days later HSBC said DealMaker was $1.4 million out of trust. The following month, the bank sought repayment of the entire $1.8 million loan.
The countersuit claims HSBC “fraudulently induced” Prime and Simao into entering into the $1.8 million loan and the alleged effect was “to give to HSBC real estate collateral it would not otherwise have to assist in its recovery of the floor plan out of trust monies,” the Daily Times reported.
“HSBC cannot show one shred of evidence that I knew prior to approximately February 1, 2007, that there were any issues with DealMaker, DealMaker Dodge or V.M. Paolozzi Inc.,” Simao said.
Simao is asking that a judge void the forbearance agreement on DealMaker.
“I have never had my day in court with HSBC, and I hope I’m afforded the opportunity to prove that these claims are absolutely true,” Simao said.