By Lauren Young

Staff Writer

A major proposed development project in Fayetteville has been terminated by the village board, after the development company failed to meet certain conditions imposed by the village. That company, Morgan Management, is currently being investigated for fraud by the federal government.

With that investigation still ongoing, and the fact that certain conditions were not met for a project proposed by the company in Fayetteville, the village has officially terminated the management’s pending zone change request, including its proposal for an apartment complex project on 547 E. Genesee Street at the former O’Brien and Gere site.

Mayor Mark Olson made the announcement on Aug. 20, after sending a letter to Morgan Aug. 16 addressing the village’s decision to both deny the proposal’s request for a zone change to planned urban development and sever ties with the project altogether.

Olson said it was in the best interest of the village to discontinue the zone change request and overall project.

“After going through the process with Morgan Management, and learning more about what they are involved in and the processes they’re going through, the trustees have decided to not continue forward with the project,” said Olson.

Residents have voiced concerns over the project and/or the company for the more than three years since the company first approached the village with it in March of 2015. Two petitions against the village approving the site’s rezoning were presented — one signed by nearly 350 residents in September of 2015, and a recent petition, signed by eight residents surrounding the site.

Investigation leads to indictments

In early May, a search warrant application was filed against Morgan Management, alleging that the company falsified income statements to obtain larger mortgages. Some allegations listed in the application included ploys like leaving out turned-on radios and shoes outside empty apartments to look occupied, and in one instance, a woman allegedly lying to inspectors about her boyfriend being asleep inside an empty room. The indictment indicated that the loans involved totalled about $170 million.

This affidavit led to a 62-count indictment of Robert Morgan’s son, Todd, and nephew, Kevin, for conspiracy to commit bank and wire fraud. Frank Giacobbe, previous owner of Aurora Capital Advisors, and Patrick Ogiony, managing director of Morgan Management, were also indicted by the same federal grand jury.

The federal search-warrant application was filed last May to investigate what the the U.S Attorney’s Office called a “multi-million-dollar mortgage fraud scheme,” for seven of Morgan Management’s apartment complexes. The village of Fayetteville suspended the project on May 29, then retracted its suspension on June 26 after a meeting with Robert Morgan to discuss the project’s potential to move forward.

Conditions not met

In moving forward, the village requested four conditions to be met by the company— only one of which was met.

“We couldn’t come to terms with the other agreements, and we just weren’t going to be able to overcome those struggles,” said Olson.

The conditions were:

• Robert Morgan had to act as the point person for the project.
• A performance bond was required to be set up to “protect the village and show [Morgan’s] commitment to the project,” — which Olson said was never obtained.
• The project had to consider attracting the baby boomers and “empty nesters” market to its project, as Olson said the village lacks a variety of these housing developments.
• Morgan had to provide an escrow check for the village’s escrow account — which was also never obtained, said Olson.

The conditions were initially set as the board of trustees wanted Morgan to “show his commitment to the project and community.”

But now that Morgan Management will not be developing at 547 E. Genesee Street, what will this mean for the site’s designation as a brownfield and for the Brownfield Cleanup Program?

According to Olson, the village is actively reaching out to others who have ideas for the site, saying that the Brownfield Cleanup Program, which remedies environmental hazards posed by abandoned or contaminated commercial and industrial sites, is still an important issue for the village.

“We want residents to keep open mind, understanding that something like a contaminated site in the village is not a good thing,” said Olson. To alleviate its potential hazard to the public, Olson said, would “work better for the community.”