Local developer Arthur Cleveland, whose ownership of the Spartanburg Marriott at Renaissance Park has been clouded by controversy for several years, has signed a consent order agreeing to forfeit his real estate license for a period of three years.
The reason is two separate, but related, cases of fraud.
Cleveland has been besieged by foreclosures and losses in the past few years. In addition to the Marriott property, Broadwalk, the Montgomery building, his personal home and many other parcels have been either lost or threatened through court proceedings.
The legal problems relating to his real estate license are tied to a 400-acre parcel of land known as Meadow Farms.
Cleveland and his company, Cleveland-White, had a management agreement with a group that owned Meadow Farms to manage, rent, lease and operate the property, beginning in 1997.
According to court documents, Cleveland withdrew $8,000 from the Meadow Farms account on March 21, 2002, without authorization, for a loan to Renaissance Park Inc.
Two of the Meadow Farms owners (there are 15 to 20 individuals and trusts that own the property jointly), looking into that $8,000 disappearance, discovered a larger fraud.
Eight days after he took the $8,000, Cleveland received a check from the city of Spartanburg for Meadow Farms for just over $118,000 in return for some land sold for utility right-of-ways, but Cleveland never gave the money to the owners.
Instead, Cleveland testified in the Spartanburg County Court of Common Pleas in 2005 that he put the money into a project he owned called Hartsville Crossing.
Cleveland later sold his interest in Hartsville Crossing, but never repaid the $118,000 or, according to court records, $2 million in other debts related to the Hartsville Crossing project.
On March 17, Circuit Judge Doyet Early III ruled Cleveland committed fraud and said he "showed neither remorse nor explanation" for his actions.
Cleveland and Cleveland-White Co. jointly were ordered to pay $148,000 in actual damages, and Cleveland was
ordered to pay an additional $15,000 in punitive damages.
These facts were outlined in the complaint against Cleveland that was to go before the S.C. Real Estate Commission this past month.
According to Real Estate Commission spokesman Jim Knight, the paperwork on Cleveland's agreement to relinquish his license is not complete, but Cleveland and his attorney, Ken Anthony, have signed their part of the deal.
"Once the consent order is in place, it will mean Mr. Cleveland, while he can still own Cleveland-White, cannot be the broker in charge or do any real estate transactions for the company," Knight said.
Cleveland signed the order Nov. 14 to avoid a hearing before the Real Estate Commission.
In late 2005, the owners of Meadow Farms, still unable to collect what they were owed, had Cleveland back in court, grilling him on his assets.
Cleveland, who has estimated his own fortune prior to beginning the Marriott deal at $10 million to $12 million, told the court he had no income except what he derived from refinancing property he owned. He agreed with the suggestion he was living by "robbing Peter to pay Paul" and testified that his wife's family was providing the money to pay the mortgage on his Converse Heights home.
On Friday, one of the Meadow Farms owners said the group has received "only a tiny portion" of the money Cleveland took from them.
Last month, Cleveland put Marriott-owner Renaissance Park Hotel LLC into bankruptcy to forestall a foreclosure by mortgage-holder Bridgeview LLC.
Bridgeview is owed about $23 million on the hotel, while the city of Spartanburg is responsible for about $20 million in payments over the next two decades for debt related to the hotel.
Funds to meet the city's obligations are expected to come from rent loan payments and taxes paid by the Marriott.
One thing not in doubt is the day-to-day operations of the hotel. Atlanta-based Bridgeview, the city and Marriott all share the desire that it should stay open. They agree the hotel is doing good business.
Additionally, a federal bankruptcy judge ordered on Nov. 3 that the hotel will continue to operate under the Marriott flag while the bankruptcy is sorted out.
Lane Filler can be reached at 562-7426 or [email protected].