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Sun West faces $23.5 million foreclosure suit

Sun West Acquisition Corp., Pasco County's partner in a proposed canal dredging in Aripeka, faces expanding legal and financial entanglements — this time from one of its own affiliates.

Dial One-One LLC filed a foreclosure suit April 28 in Pasco Circuit Court, saying Sun West Acquisition defaulted on a $23.5 million loan. Most of the money had been used a decade earlier to secure acquisition of a mine west of U.S. 19 that Sun West plans to turn into a 1,076-acre resort and residential community called SunWest Harbourtowne.

Dial One-One, a foreign limited liability corporation based in Wyoming, is managed by Palm Harbor accountant R. Victor Taglia, who also is an officer of Sun West Acquisition.

Sun West president John G. "Gary'' Grubbs already faces Internal Revenue Service liens on all of his property, stemming from more than $2.3 million in unpaid income taxes from 2008 to 2010, according to court records. The liens, filed in 2013 and 2014, remained on file last week with the Pasco Clerk of Circuit Court.

Despite tax troubles, Sun West is financing the effort to obtain a federal permit to dredge a canal from the county-owned SunWest Park to the Gulf of Mexico. A dredged canal would increase public boating access from the park, but also make the abutting Sun West Acquisition land more valuable for development.

On April 12, Pasco commissioners unanimously authorized County Administrator Michele Baker to sign the new permit application, prepared by consultant BC Peabody, to the U.S. Army Corps of Engineers. Sun West and Grubbs are responsible for the design, permitting, construction and mitigation of the canal, the county has said.

"He is writing the checks on the county's behalf,'' Baker said of Grubbs.

Five days earlier, however, Dial One-One delivered notification to Sun West stating its intent to foreclose. The loan, which had been modified in November 2015, required Sun West to pay its Pasco County property taxes on time. Taxes became overdue April 1 and Sun West still owed more than $14,000 as of May 17.

"Obviously, the county is always concerned when its development concerns have financial issues,'' said County Attorney Jeffrey Steinsnyder. "As for the dredging, we are not in a contract with Peabody. That is Sun West's responsibility.''

"There's no risk,'' said Commissioner Jack Mariano, the biggest booster of SunWest Park and the dredging. "All the expense falls on (Grubbs).''

In neighboring Hernando County, the county legal staff notified its commissioners, department heads and Tax Collector's Office of the foreclosure lawsuit.

"Please advise the (County Attorney's Office) if your department has any claims against the parties involved, as we might need to protect the claims,'' said a May 6 email.

On April 7, the day Sun West was notified of the pending foreclosure lawsuit, somebody started paying, on a piecemeal basis, the delinquent taxes owed to Pasco County.

The Pasco Tax Collector's Office received $5,043 on April 7 to cover the property taxes and late fees owed on 10 of the Sun West parcels. Eight days later, taxes on three more parcels, totaling $3,705, were paid. On May 3, somebody paid $2,410 on another parcel.

Still outstanding, though, is the $14,858 owed on the two most valuable parcels, totaling 229 acres. The Tax Collector's Office was scheduled to sell tax certificates on those two pieces of property Tuesday.

Twelve days before filing the lawsuit, Dial One-One filed paperwork with the state Division of Corporations so it could do business in Florida. Dial One-One lists just one officer on its incorporation papers — Taglia.

Taglia, Grubbs and Brooksville lawyer Thomas Hogan Jr. are officers in multiple companies, including Sun West Acquisition, Grubbs Construction Co., Grubbs Emergency Services, Dial One LLC and Bowtie Properties, according to state records.

Grubbs declined to comment on the foreclosure suit. Hogan, Taglia and Dial One-One's lawyer, Thomas P. Wert of Orlando, did not respond to requests for comment.

According to the lawsuit, Dial One, a Florida company, paid $23.5 million to the Hunt family in 2005 to settle an earlier purchase of the 1,800-acre Belcher mine and the more recent acquisition of an adjoining 5-acre parcel. Sun West signed a $500,000 promissory note for the 5 acres and made a verbal promise to pay back the $23 million, the lawsuit stated. A year later, Dial One assigned the mortgage to Dial One-One.

In a separate federal civil action against Grubbs, an IRS agent said Grubbs' attorney provided a typewritten statement in 2012 that said Dial One-One was owned by Dial One.

"However, this information does not agree with tax returns filed by Dial One-One and with annual reports and a dissolution document filed in Nevada,'' said the statement from agent Joann Leavitt.

That document, signed April 16, 2012, said the IRS was investigating Grubbs' tax liabilities for 2004 and 2005. The issue, the agent's statement said, was whether Grubbs was the true owner of Grubbs Emergency Services, which paid more than $64.7 million to an offshore partnership, Madison Associates LP in the Virgin Islands, in 2003 through 2005. The statement identified Taglia and Hogan as limited partners of Madison Associates.

"Taglia and Hogan 'invested' a significant amount of their distributions in Dial One, which then purchased real estate and made loans to entities in which John Gary Grubbs was subsequently given majority ownership,'' the agent's statement said.

Sun West faces $23.5 million foreclosure suit 05/19/16 [Last modified: Thursday, May 19, 2016 10:26am]
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