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KeyBank Thrown Into Golf Community Brawl

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The battle at Bonita Bay Club, an exclusive luxury community on Florida's west coast, is turning into an all out war.
Yesterday a Wall Street Journal article highlighted a tale of dysfunctional management by David Lucas, CEO of Bonita Bay Group, the club's management company. As such, homeowners and golf club members have attempted a coup to try to save their club assets from disarray and possible loss of their entire investment. But Dealbreaker has learned that according to club members involved in the negotiations, the Bonita Bay Turnover Committee also voted to pursue KeyBank as an accomplice to defrauding investors just this past Wednesday.

The Ohio-based bank, who manages a loan of over $100 million made to Lucas's BBG for development of the club, was served a letter with notice of discovery this week. Lucas was also served a civil fraud suit by two club members who are asking the court to classify it as a class action. Sources familiar with the legal strategy say after discovery is complete; KeyBank will be named as a co-defendant in the club members' suit.
"The decision this week to fight this in public didn't come lightly. Many members didn't want the fact they'd been scammed by Lucas to be aired publicly and at first were willing to write a check to make it go away," said a golf club member who wished to not be named. But as more evidence of malaise came to the forefront opinions quickly changed. Over one hundred emails have come into the club's Turnover Committee in the last two days saying they support the committee's moves. A budget of around $1 million has been set aside for legal fees.
The heated battle encompasses a twisted set of maneuvers, by both BBG Group and Key Bank, to get their loan paid off instead of honoring prior commitments to use club money to pay back members that want out of the club. Bonita Bay Group sold membership on the contingency of members being able to withdraw the initiation fee within 30 days if they chose to resign - a unique deal that helped fuel sales during the property's boom years. The battle heated up last November when Lucas told members who were hampered by the financial crisis and needed cash that the previous withdrawal policy would not be honored. Ouch!
Club members believe KeyBank has a loan covenant built into the deal that is directing Lucas to pay them back first before any monies can be returned to resigning members. So far Key Bank won't show club members revised loan terms to prove or deny this allegation but even Lucas has said in published press reports that it is KeyBank who won't allow him to use money from the loan to payback members. Many of these membership deals, however, were made over a decade before KeyBank even took control of the loan in 2007.
Michael Lissack, a Bonita Bay Group resident says, "This move shows KeyBank is directing BBG to defraud the senior creditors with club assets." Lissack, a former Wall Street banker, was one of the first community residents to call foul play against BBG and Key.
It's still hard to tell who is controlling whom in this drama. Some residents like Lissack say it is all really just a Ponzi scheme purported by Lucas and aided by Key. According to the WSJ, Lucas scoffed at the idea that the company is running a Ponzi scheme. Yet press reports say Florida attorney general is now looking into the Ponzi charge and Dealbreaker has learned the FBI is investigating other extortion threats made to club members by BBG.
For now we wait to watch if club members can stay in the fight against Lucas and his enablers, without losing a lot more money, and come out with control of their private playground.