HOA Nut House

One guilty finding linked to Paradise One raises questions for others who lost deposits

By Dan Crowley

EASTHAMPTON - Three years after being taken to the cleaners, a group of prospective condominium buyers who lost a combined $146,000 in deposits at the failed Paradise One development are still wondering what happened to their money - and whether authorities will do anything about it.

The missing condo deposits were to be put in an escrow account, which is designed to offer strong protections in real estate transactions. A Gazette investigation in 2008 found that money was withdrawn from the restricted account and never returned when the project collapsed.

What's more, lawyers named as escrow agents on purchase-and-sale agreements told the newspaper they were not aware of the transactions.

Despite contacting the state Attorney General's office and Northwestern District Attorney's office about the matter, those who planned to live at Paradise One say they still want answers.

They are calling for authorities to investigate what went wrong.

"If the state of Massachusetts doesn't protect escrow accounts ... if it's not a crime, what can I do?" asked Marcia K. Morrison of Easthampton, who lost $30,249 in condo deposits at Paradise One.

"I never, ever would have put any deposit money down if I knew the escrow account was not protected," she said.

'Very frustrating'

Morrison said she's received no action from the Attorney General's office regarding her lost money, though Northwestern Assistant District Attorney Jayme Parent said the case remains under review in the local district attorney's office.

After receiving a complaint from Morrison, the Attorney General's office assigned a mediator to her case in Hampshire County, according to Jill Butterworth, a spokeswoman for the office.

"That mediator spoke to Ms. Morrison in 2008 and 2009," said Butterworth. As a matter of policy, she declined to provide more details about the case.

"It's just been very frustrating," said Morrison, a dean at Holyoke Community College who also invested and lost $10,000 in Possibilities LLC, a limited equity partnership set up by Heather P. Whitley and her former partner, Nancy B. Whitley, for Paradise One.

Last week, Parent prosecuted a Hampshire Superior Court case against Heather P. Whitley, who was found guilty of larceny involving a $120,000 loan for the high-profile condominium development at the former Easthampton Dye Works building on Cottage Street.

Judge Mary-Lou Rup imposed a 10-year probationary term and told Whitley she must repay two Belchertown women who provided the loan a minimum of $250 a month or face two years in jail. Rup found Whitley innocent of two other charges: forging a record and uttering a public record.

Nancy Whitley has not been charged with any crimes. She was the person who informed the prospective condo buyers that their deposits had been taken from a money-market fund that had been set up as an escrow account for future Paradise One condominiums.

According to correspondence reviewed by the Gazette, Whitley told Morrison the money may have been used for project expenses. She offered an apology and said she could not explain why there was activity on the money-market account.

"It was my clear understanding that all deposits were to be left in escrow until closing time or until the project ended," Nancy Whitley wrote to Morrison.

In the wake of the development's collapse, Heather P. Whitley declined to comment when asked by the Gazette what happened to the condominium deposits.

Others lost more

Faye Schuett and Linda S. Burnett, of Farmington, Mich., entered into a purchase-and-sale agreement for a Paradise One condominium and lost a $41,895 deposit made in January 2007. Their money was placed in the money-market account and, like Morrison's, was withdrawn and moved to other bank accounts, records reviewed by the Gazette show.

In a recent phone interview, Faye Schuett said she doesn't understand why authorities would focus on an unpaid loan, which typically carries more risks, rather than money tapped from an escrow account that is supposed to be safeguarded.

"It is supposed to be protected, and they spent it," Schuett said. "One of them, or both of them, should be paying back these deposits."

When Paradise One fell apart, the Michigan couple said Nancy Whitley eventually informed them by email that their condominium deposit had likely been spent on project expenses.

Ashish Shankar Rajadhyaksha of New York City heard a similar story when he tried to get his $74,000 in condominium deposits returned.

A University of Massachusetts graduate who planned to relocate with his wife to the Pioneer Valley and run a small textile business, Rajadhyaksha had wired $55,000 in savings from the State Bank of India for a Paradise One unit in January 2007.

Two months later, he sent another $19,000 condominium deposit for his future Easthampton home. Like others, he also lost a $1,000 non-refundable deposit on the deal.

"$75,000 put me back quite a bit as you can imagine," said Rajadhyaksha, who is pursuing a master's degree in business administration in New Jersey.

Rajadhyaksha said he was following the recent prosecution of Heather P. Whitley in Northampton and had phoned the Northwestern District Attorney's office a few weeks ago to inquire about the $74,000 he lost.

"They told me they are looking into it," he said. "I'm hoping they'll move on it at some point."

Dan Crowley can be reached at dcrowley@gazettenet.com.

Source