Former owner of Rangeline TIF property faces fraud, money laundering charges

In less than a month, the valuable TIF property at 1717 Rangeline, which includes Academy Outdoors as a tenant, will go on the auction block at the same time as its former owner awaits trial on federal bank fraud, wire fraud, fraud, and money laundering charges.

Also on tap for that former owner, Richard Thomas Gregg, 55, Nixa, is a bankruptcy fraud case stemming from lies he allegedly told during bankruptcy proceedings for his 1717 Marketplace LLC, the company which owned the Joplin property.

Ads placed in various publications earlier this month announced that the property is under receivership and is being sold 1 p.m. May 19 at the Jasper County Courthouse, 601 South Pearl, Joplin

The assets consist of the following: (1) real property located at 1717 S. Rangeline Road with the majority being leased to Academy, LTD. d/b/a Academy Sports; (2) real property located at 1611 S. Rangeline Road being leased to Ozark Restaurant Group d/b/a Back Yard Burger; (3) a lot located on 17th Street in the City of Joplin adjacent to a Wal-Mart Store; (4) the revenue stream from Tax Increment Financing and a Transportation Development District with regard to the 1717 Market Place development; and (5) an L-Shaped Tract of land located adjacent to the Academy tract. 

1717 Marketplace LLC filed for bankruptcy July 7, 2012, in U. S. Bankruptcy Court for the Western District of Missouri after defaulting on a $10.5 million loan from Regions Bank. According to documents filed by Regions Bank in opposition to the Chapter 11 plan, Gregg's company stopped making payments on its debt in August 2011, still owing $10,017,875.47.

Regions' opposition to the bankruptcy plan was rejected by the judge, but it was successful the second time it was filed after investigators determined that Gregg had siphoned off more than $1.6 million from the company after the bankruptcy was filed for 'personal loans" for himself and his business partner.

The bankruptcy investigator also discovered that Gregg and his partner, Scott Schaefer, received an $11.8 million insurance settlement for property that was damaged during the May 22, 2011, Joplin Tornado.

Market Place II filed a claim with its insurance company and received an aggregate amount of $11,800,000 in payments for its losses.  After rebuilding the facility and paying off a $6,600,000 loan from Midland Bank, Richard Gregg and Scott Schaefer caused Market Place II to distribute the remaining insurance proceeds to themselves, with each receiving at least $1,200,000. 

When 1717 Marketplace stopped making its payments to Regions Bank, it continued to take money out of its accounts for the partners.

From April 10, 2008, through July 6, 2012, the Debtor distributed $361,000.00 in draws to Richard Gregg and Scott Schaefer.  The Examiner concluded the draws were made without justification and when Borrower was insufficiently capitalized and not paying its debts. The Examiner further found that Scott Schaefer received these draws despite the fact that he had no active role in the performance of any duties for the Debtor. 

Scott Schaefer acknowledged in his deposition that after the Debtor ceased paying its bills, he continued to receive owner distributions. When confronted with the issue of why he and Gregg continued to take money from the Debtor after it failed to pay its loan obligations, Scott Schaefer incredibly responded, “I don’t know why we did what we did.

In addition to paying money to himself and his partner, the bankruptcy investigation also revealed that Gregg had made “loans” to  G&S Holdings, LLC (“G&S”) (a Missouri limited liability company owned fifty percent by Richard Gregg and fifty percent by Scott Schaefer) and as of August 31, 2012, G&S owed Debtor $464,297.63, exclusive of any interest.

A federal grand jury charged Gregg with 17 counts of bank fraud, money laundering, wire fraud, an bankruptcy fraud, including defrauding Buffalo Run Casino for $50,000 and Downstream Casino for $60,000.

Gregg's trial is scheduled for July.