
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, June 9, 1990                   TAG: 9007110397
SECTION: VIRGINIA                    PAGE: A3   EDITION: METRO 
SOURCE: Sandra Brown Kelly and David M. Poole Staff Writers
DATELINE:                                 LENGTH: Medium

LAKE HOTEL INVESTORS WANT $2 MILLION BACK

A group of investors - including the part-owner of the controversial Kim-Stan landfill - is moving to collect more than $2 million they put into a Smith Mountain Lake hotel that was never built.

Jerry Wharton of Wise is one of about 20 investors who have hired an attorney to determine if they can recover their money by selling a 150-acre tract owned by Smith Mountain Lake Resort Hotel Inc.

Although the investors hold a deed of trust on the land, two banks hold superseding mortgages that would give them first claim to any proceeds from the property's sale. In addition, the property was listed as an asset in a recent personal bankruptcy petition filed by developer David "Red" Dean.

Dean was a principal in Smith Mountain Lake Resort Hotel Inc., formed two years ago to build a hotel and conference center on a waterfront tract, know as the Holyfield property, near Hales Ford bridge.

The first stage of the project was to have included a 57-room hotel financed by selling individual rooms in the same way that condominiums are marketed. The company obtained a Bedford County building permit last fall, but construction never began because the company had neither a permit for the water system nor the necessary $5 millin financing.

"It was a bona fide, good-intnetioned project that did not work," said Dan Callahan, a lake builder who invested $275,000 last fall.

State Corporation Commission records show that officers in the company were: William P. Lawson, presdent;Dean, vice president; Richard B. Spencer, treasurer; and Alan Baker, secretary.

Lawson, who operates a convenience store at the lake, said Friday that he was replaced by Dean several months ago. Dean said he has since resigned as president.

Investors holding the third note on the hotel property met last week and nominated their own slate of officers: Jerry Wharton, president; Charles Peeples of Wytheville, vice president; and Leon Cooper of Moneta, secretary-treasurer.

The three men became officers of Smith Mountain Lake Resort Hotel Inc., earlier this week, according to Bruce Welch, registered agent for the company.

Wharton also is president of Kim-Stan, a private landfill in Alleghany County that was shut down last month after repeated pollution violations. Wharton could not be reached for comment Friday.

Roberts, the Wise County lawyer who also represents Kim-Stan, said that ivestors have found a potential buyer for the hotel property. "They're trying to make a deal so everybody comes out as they should," Roberts said in a telephone interview. "We think we can work this out."

Meanwhile, the First National Bank of Ferrum has filed a lawsuit against the hotel corporation asking for payment of a $50,000 loan the company received in October 1988 to buy telephone equipment and furniture for the hotel.

The note - which came due May 2 after four renewals - was personally guaranteed by Dean, Lawson ,Baker, Spencer and Frank Thompson, court papers show.

Cooper, in investor who owns Summit Mortgatge Co. of Moneta, said the phone equipment and other items bought with the loan are stored in a mini-warehouse at the lake. But because the storage bill has not been paid, the warehouse owner is threatening to sell the items, Cooper said.

by CNB