Apartment Purchase Becomes a Nightmare

The purchase of a nearly 500-unit apartment complex in Springdale in 2007 has turned in to a multi-million dollar nightmare for the seller, Industrial Developers LLC of Washington County.

Industrial Developers, led by Joe Edwards and Gerald Johnston, the former chief financial officer for Tyson Foods Inc., sold Brookhaven Apartments LLC to Business Pros LLC of Fountain Green, Utah, Carvala LLC of Texas and JJ Mecca LLC of Missouri. The transaction required the three entities to assume a $29.7 million loan for the property.

In exchange, the buyers were supposed to pay Industrial Developers $1 million in 2009, according to the lawsuit filed in U.S. District Court in Fayetteville.

But Industrial Developers said it hasn’t been paid and, to make matters worse, the buyers didn’t pay property tax for 2008 and 2009, which came in at more than $500,000, the lawsuit said.

The buyers also are accused of defaulting on the $29.7 million loan, and Edwards and Johnston hadn’t been released from their guarantee, the lawsuit said. Edwards and Johnston “were forced” to pony up about $8 million to keep the loan active, they said in the lawsuit. 

Industrial Developers, Edwards and Johnston said the damages are more than $9.5 million.

Wendell A. Jacobson of Fountain Green, Utah, who is listed as the manager of both Business Pros and Carvala, declined to comment.