Judge finds Cove officer in contempt of court
ELKHORN The chief financial officer of the former management company at Cove Condominiums in Lake Geneva was found in contempt of court Friday.
Chandra Webster, chief financial officer for Geneva Management, was ordered to spend 60 days in the Walworth County Jail for failing to comply with an order to turn over funds and records to a receiver appointed to sort out the financial collapse of the high-end condo hotel. Walworth County Judge John Race stayed the jail sentence and gave Webster until 4 p.m. Friday to comply with the order.
“If she doesn’t comply, I’ll sign a warrant of commitment on Monday the 28th,” Race said.
A packed, standing-room only courtroom audience of condo unit owners broke out into cheers and applause when Race found Webster in contempt. There were so many unit owners that the overflow crowd was placed in the adjoining media room and in the juror box.
“I was glad to see the judge find her in contempt, but I doubt there’s any money or records left,” said condo unit owner Sandy Wadington. “But, that’s not what we are here for. The Cove is a wonderful place, and it will survive this. We are all in for the long haul.”
The Cove is marketed on the basis of its location adjoining Geneva Lake and Big Foot Beach State Park. It also is just two blocks from the historic Riviera Lakefront Facility in downtown Lake Geneva and in close proximity to Geneva National Golf Club.
The case could be a long haul for unit owners. Michael Polsky, the Milwaukee attorney acting as the receiver, said the Chapter 128 proceeding is unable to move forward in a timely manner without the Cove’s past operating records, including payroll, accounts receivables and accounts payables.
Wisconsin Chapter 128 is an alternative to federal bankruptcy proceedings.
A major stakeholder in the case is PNC Bank. The bank’s Milwaukee attorney, Robert Pysyk, argued that Webster has known since July 2012 that Race issued orders requiring that no assets, including records and funds, be removed from the premises at 111 Center St.
“Those orders required that everything stay put, the cardinal rule of receivership,” Pysyk said. “Yet what happened was they grabbed and ran.”
David Williams, the Lake Geneva attorney representing Geneva Management, argued that the management company was not a party to the action when the orders were issued. He said nothing was taken from the property after a Nov. 14 order was issued after Geneva Management had been replaced.
The former Geneva Management operations manager, Paula Holmes, testified Friday that when she arrived at work on Monday, Nov. 11, computers and files had been removed from the office, including electronic and paper files from the QuickBooks software program used to record financial transactions. She said Webster told her to start removing everything, including blank door access cards and cleaning supplies.
“She said she was taking everything the management company had paid for,” Holmes said.
A Madison company, IDM, now manages the Cove. Sean Skellie, an IDM partner, testified Friday that he had completed an inventory and could find no financial records.
Skellie said he discovered that $634,604.80 could not be accounted for. The money was to be used to pay the unit owners and the condo association. The money was a combination of advance payments for unit rentals and other revenue, including a special assessment paid by unit owners to pay PNC bank.
“I don’t know where that money is,” Skellie said.
Race ordered Webster to provide all records pertaining to the Cove and all funds held in trust.