AUBURN, Maine — An Oxford developer who is poised to break ground on a hotel and conference center near the Oxford Casino is embroiled in a legal dispute with an Auburn bank that loaned his company millions of dollars.
One of Joseph Casalinova’s companies, Building Solutions, of Oxford, secured a $3.5 million commercial line of credit from Mechanics Savings Bank in 2008.
The original loan was due to be repaid a year later, but was renewed three times annually. The final date of payment for the entire amount of $3,498,461.88 was July 29, 2012.
When Building Solutions failed to repay the loan, the bank sued in Androscoggin County Superior Court for $3,688,230.20, plus interest, costs and attorneys’ fees.
A judge attached the company’s assets, but, according to a second lawsuit filed earlier this year by Mechanics Saving Bank, Building Solutions transferred its assets to Casalinova, his wife, Joy, business partner Brian O’Donnell and Casalinova’s other business interests.
According to an amended complaint filed in Androscoggin County Superior Court on Sept. 19, a judge had awarded Mechanics’ Bank a judgment for $3,706,587.60 against Building Solutions. The company hadn’t paid the judgment and was insolvent, according to the complaint.
The second complaint says that the Casalinovas and their business partner schemed to hide the true wealth of Building Solutions through “false audited financial statements” for the company that had supposedly been prepared by a local certified public accounting firm.
“The financial statements . . . were not prepared by Austin Associates and are false and/or fraudulent,” according to the complaint. Those statements were given to the bank for each year beginning in 2007 and ending in 2010. The bank said it executed the line of credit based on those false accounting statements.
The “false or fabricated audited financial statements” said that Building Solutions had anywhere from $5.8 million to $10.6 million in annual revenues and, in 2010, had $16 million in assets, including unencumbered investments in real estate in Auburn and Oxford valued in the millions of dollars, as well as equipment that was owned free and clear, according to the complaint.
Portions of the bank’s line of credit to Building Solutions was siphoned through payments to defendants named in the second lawsuit, including Joseph and Joy Casalinova, 280 Merrow Road LLC, Fifty Merrow Road LLC and Hayes Boarding Stables/You Can Do It! Inc.
A court clerk said a motion for summary judgment filed by Mechanics’ Savings in the 2012 complaint is pending.
In the second suit, the court is waiting for the defendants to answer the second, amended complaint.
The bank sued for negligent misrepresentation, intentional misrepresentation, uniform fraudulent transfers, piercing the company veil and unjust enrichment.
Reached by email, James Belleau, the bank’s attorney, declined to comment for this story.
An attorney for the defendants did not return a voice mail message Wednesday.
In June, Casalinova Development Group and GIRI Hotel Management announced plans to buy farmland on Route 26 across from the Oxford Casino. They planned an 80- to 120-room, four-story hotel, conference center and family-style restaurant that was expected to open next summer.
Joseph Casalinova declined to talk about the financial investment his company intends to make in the hotel, nor about the purchase price of the farmland where the hotel will be located.
When complete, the hotel development is expected to create between 85 and 125 permanent jobs, in addition to the jobs created during development and construction, Casalinova said.
In Auburn, Casalinova has been working on two development projects: reusing the former police station at 1 Minot Ave. and building a new 85-room Best Western Plus Hotel in the city’s Kittyhawk Business Park.
The city gave him until the end of 2014 to come up with a plan to rehab the single-story former police station. His earlier plan called for a multi-story building with retail space for a financial institution on the ground floor and office space on upper floors.
The planned hotel was announced in April last year and would include a restaurant and common space on the 35-acre subdivision. A second phase could include a convention facility, according to plans on file with the city.
Building Solutions constructed the Bedard Medical Campus on Minot Avenue in Auburn and, in 2008, the company received the 2008 Economic Achievement Award presented by the cities of Lewiston and Auburn.
Joy Casalinova, formerly Joy Siegel, was named in 2011 to the board of corporators at Mechanic Savings Bank, according to a posting on Building Solutions’ website.
She was treasurer and co-founder of the company and oversaw the accounting.
The website quotes then-bank president and CEO, Rick Vail, describing Joy Casalinova as a “well-respected business woman in central Maine and she brings a wealth of banking and business ability and experience to Mechanic Savings Bank.”
According to Building Solution’s website, she had served as a senior vice president of a publicly traded bank specializing in commercial real estate development.
Joy Seigel Casalinova died Aug. 23, according to her online obituary. She was 60.