Rodriguez sued over condo project
COLUMBIA, S.C. -- Michigan head football coach Rich Rodriguez has been sued in federal court by a bank claiming he failed to pay back millions on a loan for a struggling Virginia condominium project, according to court documents.
The suit -- filed Aug. 13 in U.S. District Court in Spartanburg, S.C., and served on Rodriguez at his Ann Arbor, Mich., office last week -- says the coach owes a bank $3.9 million for defaulting on a loan to build condos near Virginia Tech's Lane Stadium in Blacksburg, Va.
Rodriguez told reporters the case won't hinder Michigan's preparations, while an adviser said the coach was the victim of fraud.
"This is something that's ongoing," Rodriguez said Tuesday in a Big Ten conference call. "It's not anything that will take our attention away from getting ready for the season."
Under the corporate name of The Legends of Blacksburg, LLC, Rodriguez and four partners borrowed more than $26 million for the project in September 2007, when Rodriguez was still coaching at West Virginia University. But as the luxury condo project struggled amid the economic downturn, that amount was amended down to about $3.63 million -- the cost of only the land itself, according to loan documents filed with the court.
When the loan matured in May, a law firm representing Banc Capital & Financial Services, Inc., the Spartanburg, S.C. bank servicing the loan, sent a demand letter to Rodriguez's investment group. In that letter, attorneys served notice that the reduced loan amount was in default for nonpayment, giving the group five days' notice to pay the loan in full or possibly face legal action.
Mike Wilcox, a Toledo, Ohio-based adviser to Rodriguez, issued a statement saying the coach had been the victim of fraud dating back to 2004, when he was coach at West Virginia.
"Coach Rodriguez is the victim of a fraudulent real estate Ponzi scheme that has unfortunately affected many Americans," Wilcox said. "Several other coaches and prominent individuals are involved in this transaction."
A Web site for the Legends of Blacksburg development boasts pre-construction prices starting at $350,000 for one of the 80 luxury condos with views of Lane Stadium. Fifty-two of the units have presold, according to the site.
Wilcox did not immediately return messages left at his office, and there was no attorney listed for Rodriguez on court documents. Wes Few, a Columbia attorney representing the bank, said his client is the one suffering, not Rodriguez.
"It's not a Ponzi scheme. The victim is my client," said Few, adding that the $3.9 million sought includes interest and fees associated with the loan. "My client's out $3.63 million."
The other four people named as guarantors on the loan are not named in this lawsuit.
In the conference call, Rodriguez also said that team morale hasn't suffered from allegations players practiced beyond NCAA time limits. The team opens its season Saturday against Western Michigan.
The school launched an investigation Sunday after the Detroit Free Press published a report in which players from the 2008 and 2009 teams said the amount of time they spend on football during the season and in the offseason greatly exceeded NCAA limits. The players spoke to the newspaper on condition of anonymity because they feared repercussions from coaches.
Michigan has hired an outside law firm to assist in the investigation of its football program, according to the Free Press.
The firm is to work with the athletic department's compliance office, run by associate athletic director Judy Van Horn.
"We have engaged an outside counsel to come in as a partner to discover and assess the facts," Bruce Madej, Michigan associate athletic director for media relations, told the Free Press on Tuesday.
Rodriguez, who addressed the allegations Monday during an emotional news conference, said his players relaxed over the weekend but are eager to get the season started.
"They feel good," he said Tuesday. "Our young men have worked very hard in camp. It's a neat group of kids."
Information from The Associated Press was used in this report.