DALLAS — Wells Fargo Bank and other creditors are asking a federal court in Amarillo, Texas, to force bankruptcy on the American Housing Foundation, which has acquired low-income apartment complexes in several states with the proceeds of tax-exempt bonds and federal tax credit financing.
The creditors, which include Texas Capital Bank and JPMorgan Chase & Co., said in filings with the U.S. District Court for the Northern District of Texas that the foundation owes them at least $15 million. A separate group of creditors, including Herring Bank of Amarillo, has filed suit in state court seeking $15 million.
The foundation's portfolio includes 13,700 residential units in Texas cities as well as in California, Arizona, Mississippi, Oklahoma, Kentucky, Georgia, South Carolina, North Carolina and Florida.
The foundation built or acquired the properties through tax-exempt bonds sold by conduit issuers in those states or with the use of federal tax credits. Even though the foundation continues to support most of the debt, the Texas Affordable Housing Corp. said the foundation has been in default since 2006 on more than $100 million of outstanding bonds issued in 2002.
The foundation's latest filing with the Internal Revenue Service said it had liabilities of $459 million and assets for $545 million at the end of 2007. Annual operational expenses total more than $70 million.
The foundation has defended itself with a filing that seeks monetary damages from the creditors for instituting the court case.
Foundation attorneys said nonprofits cannot be forced into bankruptcy. The counterfiling asks Judge Robert Jones to require that the creditors pay the foundation's attorney fees, and that the court levy an additional monetary penalty because the creditors knew that nonprofit corporations are immune to forced bankruptcy.
The suit was filed three weeks after Steve Sterquell, the foundation's president and founder, died April 1 at the age of 56 in a fiery car crash near Canyon, Texas. The incident at first seemed to be accidental. However, last week the Texas State Fire Marshal's Office said two gasoline containers inside the vehicle and other evidence indicated that "the fire and accident were determined to both be intentional acts to end his life."
Randall County Justice of the Peace Clay Houdashell ruled last week that Sterquell's death was a suicide.
Filings by the creditors allege that Sterquell changed the beneficiary of a $24 million life insurance policy from the American Housing Foundation to trusts controlled by his family two weeks before the crash.
Steve "Sterk" Sterquell 2nd, Sterquell's son and the current president of the foundation, would not discuss the matter except to say that his father's death has been a blow to the foundation.