BOCA RATON, Fla.--(BUSINESS WIRE)--February 01, 2010
BPrepared Statement: Arthur Falcone, Chief Executive Officer of The Falcone Group
The following is a prepared statement by Arthur Falcone, Chief Executive Officer of The Falcone Group, in regard to TOUSA's lawsuit against The Falcone Group.
During 2005, TOUSA and entities controlled by Arthur and Edward Falcone created a joint venture to buy the homebuilding assets of Transeastern Properties. TOUSA was the controlling member of that entity and owned the overwhelming majority of its beneficial interest.
However, at the request of TOUSA, the companies owned by Arthur and Edward Falcone ended their relationship with the joint venture in the summer of 2007, having agreed to exchange mutual releases for any claims they may have against each other. Additionally, entities owned and controlled by third parties agreed to close on the sale of two communities to the joint venture, which had been previously under contract, at the previously-agreed upon price of approximately Fifty Million Dollars.
What the TOUSA creditor's committee lawsuit seeks against Arthur and Ed Falcone and their companies is merely to set aside the mutual releases which the parties exchanged in 2007. Arthur and Ed Falcone have no ownership interest and were not members or shareholders of any of the entities--Independence Land Development 23, LLC, Live Oak Development II LLC, or Kendall Land Development, LLC--from which the TOUSA creditor's committee is now seeking money damages. Moreover, the basis of their case is the novel proposition that TOUSA simply paid too much for the property they agreed to purchase back in 2004-2005. They propose that the seller should bear the risk of the alleged decline in market values, not the buyer, who agreed to proceed to closing in the summer of 2007 despite the supposed decline in the value of the property. The owners of the three entities being sued have indicated that they intend to contest this proposition vigorously.
The lawsuit also makes reference to a court ruling regarding TOUSA in October. "I think that Judge Olson's ruling back in October in favor of TOUSA against some of Wall Street's biggest financial institutions was a totally different situation than our business dealings and the landbankers dealings with TOUSA," Art Falcone remarked. These transactions were arm's length agreements and not in any fashion the type of transactions that fraudulent conveyance law was meant to prohibit. Falcone believes that there is no merit whatsoever to the TOUSA creditor's committee suit.
"Just because in hindsight TOUSA's creditors think they overpaid, it doesn't mean they can now go to the courts and demand their money back. Imagine if you bought your home a few years ago for $300,000 and now it's worth $150,000. You can't just go back to the seller and demand your money back. That's the market."
About Arthur Falcone and The Falcone Group
Arthur Falcone is CEO of The Falcone Group, with over 30 years of executive experience. His proven track-record has led to the company's success today as a vertically integrated real estate and land development organization, and has successfully established the group as an internationally-recognized real estate corporation with over 30,000 residential lots developed and over one billion dollars in sales. For more information go to www.falconegroup.info.