Austin grand prix hits another legal obstacle
1 August 2012
Just as the US Grand Prix appeared to be entering the home straight when it comes to making its return to the F1 world championship calendar, another bump in the road looks poised to delay, if not completely derail, the final preparations.
After encountering serious setbacks towards the end of 2011, when financial wrangling and adverse weather conditions halted construction of the Circuit of the Americas on the outskirts of Texas capital Austin, impressive progress has been made in making up for lost time, with the track and its facilities getting a provisional seal of approval from the FIA's Charlie Whiting last month. Although final inspections prior to November's debut will need to be made in the coming weeks, everything appeared to be moving smoothly, particularly once the legal battle between project originator Tavo Hellmund and financiers Red McCombs and Bobby Epstein was resolved.
Now, however, it has emerged that another court case could be pending, this time involving land that the circuit is built on.
According to the Austin Business Journal, a lawsuit filed by Hillary Ryan, principal at Thunderhill Ranch Holdings, accuses Kam Kronenberg and Accelerator Holdings LLC of 'fraud, civil conspiracy and tortious interference'. The report describes how Ryan wanted to buy 78 acres in eastern Travis County in June 2010, after the CotA project had been announced but before the site for its construction had been established.
At the time, Kronenberg was responsible for evaluating and implementing investment opportunities for Ryan, and he apparently attempted to discourage the completion of a contract for the land, even though he was 'aware that the facility was likely to be constructed' and 'was likely to have great value'. Kronenberg allegedly had Ryan's signature forged and re-assigned the contract to Accelerator, causing Ryan to lose out on an estimated $20m that could have been made on the sale of the tract.
"Texas entrepreneur Hillary A Ryan, principal of Austin's Thunderhill Ranch Holdings LP, has filed a real estate fraud lawsuit against his former financial manager and two real estate holding companies based on claims of a secret deal to acquire a tract of land near the new Circuit of the Americas F1 track in Austin," a press release issued by Thunderhill confirms.
"According to the lawsuit, Mr Kronenberg was working on Mr Ryan's behalf in June 2010 to purchase slightly more than 78 acres of property adjacent to the land where the Circuit of the Americas facility is now located. After the purchase contract was signed, the lawsuit says, Mr Kronenberg advised Mr Ryan that he planned to exercise an option to terminate the contract based on Mr Kronenberg's view of the slim chances for the F1 track, and his belief that even if the facility were built, the property would be 'frozen out' of the overall Circuit of the Americas development.
"However, according to the lawsuit, Mr. Kronenberg knew the facility was likely to be built, greatly increasing the land's value. The lawsuit says Mr Kronenberg then secured a contract extension and provided an assignment to purchase the property to another of his clients, Accelerator Holdings LLC. According to the claims, the assignment document contained a forgery of Mr Ryan's signature. The tract eventually was purchased by another of Mr Kronenberg's clients, Land Accelerator Holdings LLC.
"Currently, the land has skyrocketed in value as an integral part of the overall Circuit of the Americas' development. The lawsuit includes claims of breach of fiduciary duty, fraud, tortious interference with an existing contract, and conspiracy by the defendants."
Accelerator, the holding company established by Hellmund, Epstein and McCombs to anchor the CotA dream - and subsequently sued by Hellmund in a bid to capitalise on McCombs's buy-sell agreement - contains several key names involved in the development of CotA, including circuit executive vice-president Bruce Knox and chief financial officer Dan Allen. Current vice-president Kurt Rechner is the chief compliance officer of Epstein's Prophet Capital Asset Management concern.
The USGP is due to be staged at the Circuit of the Americas on 18 November, as the penultimate round of an increasingly tense campaign.