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Mansion engulfed in swirl of lawsuits before fire destroys it

By Alan Gathright, Rocky Mountain News (Contact)

Published November 17, 2008 at 12:05 a.m.

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Neighbor Sue Sarasin, left, speaks to a American Family Insurance Agent, at the scene of a burned out home Thursday afternoon in Greenwood Village.

Ken Papaleo / The Rocky

Neighbor Sue Sarasin, left, speaks to a American Family Insurance Agent, at the scene of a burned out home Thursday afternoon in Greenwood Village.

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The multimillion-dollar Greenwood Village mansion was breathlessly described in sale advertisements.

An "exquisite new masterpiece by Aspen builder Mikel Mewbourn" that is "15,000 sq. ft. of elegance." A "4 horse property" with all the amenities, including a "dream kitchen," exercise room, sauna, wine cellar and "media/entertainment hall."

As the smoke cleared on the early morning fire that gutted the luxury home this month, court records revealed a real estate gamble that collapsed beneath the weight of bitter charges and countercharges.

Lawsuits have been filed against builder-developer Mewbourn and the mansion's 29-year- old owner, Denver Haslam, saying the project involved fraud, a "sham sale" and that Mewbourn diverted an investor's money for his personal use.

The builder's attorney, Randy E. Dunn, said Mewbourn denies all the allegations and has filed a countersuit against Peter Brody, a former business partner and investor in the project.

He declined further comment because of the ongoing litigation.

South Metro Fire Rescue and Greenwood Village police are conducting a joint investigation into the Nov. 6 fire but haven't neared a conclusion on what sparked the spectacular predawn blaze that collapsed large swaths of the mansion roof.

Investigators have not called the fire suspicious.

"It's under investigation, and it's going to take awhile," South Metro Fire spokesman Andy Lyon said.

Built in 2006, the mansion at 5301 S. University Blvd. was listed for $8.2 million in April 2007. But as a flurry of legal challenges among investors, contractors and the developer mounted and as the real estate market soured, the price was cut to $5.9 million in June.

A Prudential Colorado Real Estate listing noted: "Motivated Seller, Will Consider Trade."

Never occupied

Neighbors say no one ever moved into the expansive property, which incorporated the structures of two existing homes in the exclusive suburb in Arapahoe County.

Three lawsuits focus on Mewbourn, who works out of his Aurora home, despite a listing for the mansion calling him an "Aspen builder." Mewbourn is not listed as a licensed contractor in Aspen or Pitkin County, according to the joint city-county database.

Another key defendant in the lawsuits is the mansion's listed owner, Haslam, whose survival after a near-deadly skiing crash at Arapahoe Basin in 2003 became the subject of news stories and TV medical dramas.

Mewbourn and Haslam did not respond to the Rocky Mountain News' requests for comment.

In a lawsuit filed Jan. 18 against Mewbourn, Haslam and Commercial Capital Inc., Peter Brody said Mewbourn persuaded him to invest $105,000 in building the mansion in 2005 with the promise that he would be a 50-50 shareholder with Mewbourn in his M&B Development Group.

Brody, who also worked as general contractor on the mansion's construction, has a promissory note that his investment would be repaid with 6 percent interest by March 29, 2007, according to the lawsuit. He said Mewbourn has ignored his demands for repayment.

Instead, Brody said Mewbourn kept him in the dark when he sold the mansion to Haslam in March 2007 for $6.2 million.

"Mewbourn has made numerous payments to himself . . . from M&B's funds without proper authorization," Brody says in the lawsuit.

Brody accuses Mewbourn, Haslam and Commercial Capital, a Greenwood Village real estate lender, of "engaging in a sham sale of the property" to Haslam, whom the lawsuit portrays as a front man in the deal.

"Haslam provided no money for the purchase," Brody says in the lawsuit.

"Rather, Commercial Capital provided the funds to allow the closing of the sale of the M&B property to Haslam, with the proceeds of the sale (after payment of the construction loan) being repaid to Commercial Capital," the lawsuit contends.

"Although legal title was transferred to Mr. Haslam, control over the property remains with M&B and (Commercial Capital)," the lawsuit says.

The goal of the "sham transaction," Brody asserts in the lawsuit, was to deprive him of his loan repayment and his 50 percent share of profits from the mansion sale.

Commercial Capital denies any misconduct and, in turn, is suing Mewbourn, Haslam and Brody.

Suits and countersuits

The lender accused Haslam of defaulting on the construction loan and says Mewbourn breached his agreement to guarantee that Haslam would repay the loan. Commercial Capital says the two men owe more than $3.2 million, according to court records.

The lender accused Brody of fraudulent misrepresentation when M&B Development Group applied for the original loan to buy the property and redevelop it in 2005.

As M&B vice president, Brody touted himself as an "experienced construction worker" who would help manage completion of a profitable project, according to the lender's lawsuit. But, Commercial Capital says, "Brody walked off the project," which has been "both untimely and unprofitable."

Haslam has filed lawsuits accusing Mewbourn and Commercial Capital of misrepresentation, while denying he's done anything wrong.

A masonry contractor who said he was stiffed for $60,587 in work installing stone columns, entrance walls, patios and a driveway and stucco, won an April default judgment against Mewbourn and his company after they failed to respond to the lawsuit.

This isn't the first time the 38-year-old Mewbourn has faced accusations of wrongdoing.

At age 20, he served 15 months in a state prison "boot camp" after being convicted of larceny in Grand County, according to the state Department of Corrections.

In an odd twist, Mewbourn is being sued by a woman who admits in court papers she was recently released from state prison. Mary Beth Stenzel, 49, served nearly three years after pleading guilty to theft of more than $15,000 and securities fraud in Denver.

Stenzel says she and Mewbourn were partners in a "joint venture" to buy the University Boulevard property in 2005, and she put up the earnest money for the deal. Stenzel accuses Mewbourn of breaking their partnership and her purchase deal by buying the place himself, according to her lawsuit.

Haslam, the young owner of the ill-fated mansion, lives in a modest brick home in Denver's Park Hill neighborhood.

"He's a nice guy and a good neighbor," said neighbor Larry Murdock, adding that Haslam works as a financial consultant.

"But I was shocked to see he had a home worth that kind of money," said Murdock, who read about the mansion fire in the newspaper.

"Do you have that kind of coin hanging around?"

Comments

  • November 17, 2008

    7:57 a.m.

    Suggest removal

    SheikYurBooty writes:

    Do a web search on "Denver Haslam" - interesting stuff.

  • November 17, 2008

    8:34 a.m.

    Suggest removal

    zipper writes:

    They jumped on the real estate bandwagon too late and got burned, every one wanted in on the action, called themselves general contractors, developers, and real estate investors. And they gambled with the banks money, and we all pay. Greed is what drives these deals, not common sense and business knowledge, what a joke.

  • November 17, 2008

    8:44 a.m.

    Suggest removal

    ofcourse writes:

    The bank did not do their "due diligence" unless they had previous business with these folks. Whose getting fired!!! Are they asking to be bailed out. Incompetence and Greedy are cozy bedfellows.

  • November 17, 2008

    8:58 a.m.

    Suggest removal

    Cowboy63 writes:

    This has got walk-away arson written all over it. There are plenty of stories of owners, sinking luxury boats, torching 2nd and 3rd cars, burning down properties, etc.

    They bought what they couldn't afford and now nobody wants to take it off their hands.

  • November 17, 2008

    12:44 p.m.

    Suggest removal

    kes1 writes:

    I remember this story on "Untold Stories of the ER". I was flipping through the channels, and I heard Summit County mentioned and just watched the rest of it. I can't believe this is the same guy. hmmmm.

  • November 17, 2008

    12:45 p.m.

    Suggest removal

    kes1 writes:

    i mean the story of his ski accident a couple years ago.

  • November 17, 2008

    12:48 p.m.

    Suggest removal

    davies writes:

    Ah, good old greed; look where it gets you. Do people think insurance investigators are just dumb or what? When it turns out that this was a case of arson, we'll have someone who previously had only been in debt but is now going to prison; plus the asset everyone is fighting over has been reduced to ruins. Brilliant!

  • November 17, 2008

    2:46 p.m.

    Suggest removal

    pete10000ft writes:

    definitely arson...now can they prove it?

  • November 17, 2008

    3:10 p.m.

    Suggest removal

    opinionatedcolo writes:

    I arson, who stood to benefit? Most of these lawsuits would not go away if the house went down. Instead of fighting over the house, now they will be fighting over insurance money, if any is ever paid. Certainly when there are disputes over a house that then goes up in flames, questions will and must be asked, but there are so many allegations here that it is even more complicated for investigators. Even if arson is proved (not easy) tying it to someone will be difficult.

  • November 17, 2008

    3:12 p.m.

    Suggest removal

    BetterEducated writes:

    What an incredible coincidence.
    The big house is built and doesn't sell.
    Then it burns down.
    Gee.

  • November 17, 2008

    6:29 p.m.

    Suggest removal

    happymike44 writes:

    Today's word boys and girls is fraud.
    You spell it f-r-a-u-d tomorrows word will be p-r-i-s-o-n .
    Hope they understand while there is a ongoing arson investigation.
    They stand zero chance of a payoff.
    Good Luck getting the money out of the insurance company.