$1 million lien placed against Rockland contractor after alleged diversion of part of $10 million loan
ROCKLAND, Maine — A Superior Court judge approved a $1 million attachment against family members who run a Rockland contractor business after the bank that loaned them $10 million claimed the individuals had been improperly diverting money.
The diversions allegedly include the transfer of $1.3 million outside the country to pay for construction of a villa in Cervinara, Italy.
Justice Jeffrey Hjelm approved the attachment on Thursday in Knox County Superior Court against Frank Ferraiolo, John Ferraiolo, Vincent Ferraiolo and Filomena Ferraiolo.
The judge ruled in his order that The Bank of Maine was more likely than not to recover a judgment against the Ferraiolos of at least $1 million. He also ruled that there was a clear danger that if the family members were informed in advance of the attachment that they would remove assets from the state or conceal it so that the assets would not be available to cover any future judgment.
A certificate of foreclosure was filed in Knox County Registry of Deeds last week against the Ferraiolos by The Bank of Maine for properties in Rockland, Rockport, Camden, Union, Warren, Appleton and Washington.
The bank stated in its court complaint that even if it liquidated all the properties, the Ferraiolos would still owe the bank more than $1 million. The bank states that the aggregate value of the properties listed on the mortgage, based on municipal assessments, was less than $4 million.
The papers filed in court by the bank do not state why the loan was acquired.
The latest order attaches liens on the bank accounts of the four family members in an attempt to recover $1 million.
The bank states in its court complaint that it loaned the Ferraiolos $10 million in June 2011. Conditions of the loan required that the Ferraiolos not make payments to their families outside the ordinary course of business.
The bank claims it notified the Ferraiolos in February 2013 that they were in default of the loan. After the bank began collection action, the family members as shareholders of Ferraiolo Construction, Ferraiolo Corp. and Ferraiolo Pre-Cast merged the companies into another corporation and filed bankruptcy on March 13 in U.S. Bankruptcy Court.
The bankruptcy filing by the company states that it employs 45 people. The weekly payroll is $40,000. The company has filed a motion with the bankruptcy court to allow it pay employees.
The Ferraiolo company’s corporate attorney George Marcus said Monday afternoon that the bankruptcy court approved the payment of employees.
He said the corporations hope to resolve the issues with the bank. He said he does not represent the individual family members and doesn’t know who their attorneys are.
The company has assets and liabilities estimated at between $10 million and $50 million, according to its bankruptcy filing. The estimated number of creditors is listed as between 100 and 199.
On Feb. 22, John and Vincent Ferraiolo each attempted to transfer $20,000 from Ferraiolo Construction to their personal accounts in violation of the loan agreement, the bank’s court complaint states.
The Ferraiolos also established bank accounts in New Hampshire, again in violation of the agreement, according to the bank.
The bank stated in the complaint that it also became aware that the Ferraiolos had borrowed more than $1.3 million from the contracting companies to build the Italian villa.
The mortgaged properties that are subject to foreclosure are 279 Main St., located at the intersection of Main Street and Park Drive in Rockland; 250 and 261 Pleasant St. in Rockland, where the Ferraiolo business offices are located; 488 Main St. in Rockland, at the intersection of Lindsey Street; nearly 6 acres of vacant land at 324 Limerock St. in Rockland; 14 School St., formerly known as the Odd Fellows Building; a quarter acre parking lot at 17 Limerock St. in Rockland; 50 acres at 187 West Meadow Road in Rockland; property on Route 1 in Rockport, property on Route 17 in Washington; property on Old Augusta Road in Warren; property on East Sennebec Road in Appleton; and property on the Cobb Road in Camden.
Telephone messages left Monday morning at the Ferraiolo offices for Frank and John Ferraiolo were not immediately returned.
The company performs road construction, and commercial construction site work, sale of asphalt and concrete products, and related businesses.