New York hedge fund under scrutiny after taking over ownership of Mount Sunapee lease

 

The above image is from the Mount Sunapee resort website.

By Ray Carbone

NEWBURY – It was a meeting viewed both by complex business interests around the world as well as residents of the Sunapee area.

At a public information session held at the Mount Sunapee Resort’s base lodge last week, more than 100 people gathered to express concerns about the transfer of the lease for the state park’s popular ski resort to one of the largest alternative asset management firms in the world.

Och-Ziff Real Estate, which manages over $30-billion in funds from its offices in New York, London, Beijing, etc., took over the lease as part of a $456 million deal involving 14 properties, most of them family recreation areas, from the previous owner, a real estate investment trust named CNL Lifestyle Properties.

But several people who spoke at the NH Department of Natural and Cultural Resources meeting held on Tuesday, Aug. 22, wondered about the hedge fund’s commitment to maintaining local management and operation of the state-owned recreational facility.

The question has become especially significant after Och-Ziff agreed recently to pay $413 million in federal government fines and other penalties in order to satisfy charges filed by the security and exchange commission that two former company executives operated a “far-reaching” bribery scheme, violating the Foreign Corrupt Practices Act. The SEC says the pair paid tens of millions of dollars to high-level government officials in several African countries – including the son of the late Libyan dictator Moammar Gadhafi – to garner investments as well as other valuable resources, including mining deals, for the company.

“Our firm is not proud of what happened here and we take full responsibility,” David Levine, Och-Ziff’s general counsel, told the audience last week. “It’s a disappointing chapter in our 24-year history.”

Levine blamed “two rouge (former) employees” that acted outside company policy for the bribery incidents, which occurred between 2007 and 2012. He said that the company has instituted several measures to insure that a similar problem doesn’t occur in the future.

The operator of Mt. Sunapee will continue to be The Sunapee Difference, a company owned by Tim and Diane Mueller who have managed the property since 1998.

But Andru Volinsky, a member of the governor’s executive council and the official who asked for the public meeting, said Och-Ziff was making a smart business move. “When I see a company that’s instituted a lot of compliance measures, those are all big steps and you do it to avoid prosecution… Certainly, Och-Ziff has stepped up their game but it wasn’t a completely voluntary matter.”

The original, print version of this story, published in the InterTown Record of Sutton, New Hampshire on Tuesday, August 29, 2017, was ended here for space reasons. Below is additional information regarding the meeting.

Indeed, the U.S. Department of Justice has agreed to delay prosecuting the company any further for three years as executives work to incorporate the new measures aimed at greater compliance with the federal laws, and assist the department of justice’s ongoing investigation.

For some residents, the issue of the new lease owner was not as important as how the transfer occurred. Typically, such arrangements like would be subject to approval by the governor and the executive council.

But Jeff Rose, the commissioner of the state’s department of natural and cultural resources, which has governing authority over state parks, and Anne Edwards, an associate attorney general, said the recent situation was exempt from that requirement because it involved, not the lease itself, but the entity that owned the lease and 13 other properties.

So, while Och-Ziff is now the owner of leaseholder, the lease itself is still owned by CLP Mount Sunapee, LLC, the same organization that has held it for the last nine years. (To the relief of some attendees, the operator of Mt. Sunapee will continue to be The Sunapee Difference, a company owned by Tim and Diane Mueller who have managed the property since 1998.)

At the same time, Commissioner Rose said that the state has already begun negotiations with Och-Ziff on the lease, hoping to alter it to make similar transfers require state approval in the future.

But Steve Russell, the president of the Friends of Mount Sunapee nonprofit organization, said no change is necessary. Speaking on behalf of his group, as well as the NH Sierra Club, Russell said that the property’s original 1998 lease indicates that state official should have reviewed the transfer before it occurred in April.

“Examining risk and financial security are essential to maintaining the public trust,” Russell said at the meeting. “It is standard practice in all state contracts.”

Russell also pointed out that the three-year prosecution agreement that Och-Ziff has with the department of justice i as insufficient as a guard against future misconduct by the firm . He said that Public Citizen, a nonprofit organization that monitors government activities, recently indicated that similar agreements are an “inadequate enforcement and oversight mechanism.”

“We believe the state has abandoned its oversight of the lease of the Mount Sunapee State Park,” Russell added. “We appeal to elected state officials to begin a complete and transparent review of this lease acquisition… so that the people of New Hampshire, who are the rightful owners of the Mount Sunapee State Park, can rest assured that our state park is in the hands of those worthy of the public’s trust.”

The story was originally published in the InterTown Record of Sutton, New Hampshire on Tuesday, August 29, 2017.

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Special New London (NH) Tracy Library plant stolen – again

By Ray Carbone

NEW LONDON – For the second time in two years, a valuable Japanese maple tree has been stolen from the community garden around the Tracy Memorial Library.

Sandra Licks, the library’s director, said that the most recent theft was discovered about a month ago. “Someone just dug it out and made off with it,” she said. “It’s a bit odd and kind of sad.”

Donna Ferries, president of the nonprofit Garden at Tracy Library volunteer organization that oversees the garden, said she and other members of her group are upset about the vandalism. “Particularly when it’s happened a second time,” she said.

The small tree was first installed in 2016 to honor long-time area resident Sue Little, who oversaw a restoration of the original 1927 garden about 15 years ago, Ferries explained.

“It was (planted) when she resigned from the board,” the current president said of her predecessor. (Little lived in the New London area until recently, she added.) Last year, the group waited about a month after the original theft before replacing the plant last year.

Licks said that Sue Ellen Weeds-Park, the professional gardener who manages the plantings, told her that the most recent incident occurred around May 15.

‘Someone just dug it out and made off with it. It’s a bit odd and kind of sad.’

Tracy Memorial Library Director Sandra Licks

After both thefts, New London Police were notified, Ferries said. “They’ve offered to install a camera,” she noted.

The plant theft is not the first vandalism in the garden. “We have a beautiful fountain,” Ferries said, “and last year, somebody tried to lift it out. And, in doing so, they broke off a water spout.” The valuable copper fixture cost about $1,000 to repair, a cost that was divided between the gardening group and the library trustees, she explained.

The original Morgan Homestead property, on the corner of Main and Pleasant streets, was purchased in 1918 by long-time summer resident Jane Tracy with the goal of converting it into a town library and community center. The building briefly served as the town’s original hospital before work began on the garden area. When it was completed, the grounds included a square garden area surrounded by lilac bushes, four L-shaped beds of flowers surrounded by grass paths and other plantings.

Photographs from the era show a community landmark that many residents enjoyed, but over the years, the property was neglected. By the 1990s, all that remained of the original garden were some trees and shrubs. Interest in the grounds then revived, and in the early 2000s, a restoration project, lead by then-Garden at Tracy President Little, returned it to its original picturesque state and community asset.

The stolen plant is known as an Acer palmatum, or “waterfall,” Japanese elm. “It’s a special variety, grown just to be very, very full and its branches cascade down like a waterfall,” Ferries said. “I have one and it only grows about three-feet high.

“I think they’re worth somewhere between $60 and $80,” she explained. “In New York, they chain them down, chain them to rocks (for security).”

Licks said the location of the small woody plant, by a shed and near the property line, may have been a factor in the thefts. “It’s not in a highly visible area,” she said.

Ferries confirmed that the garden group is considering that possibility. “When we do replant it, we’re wondering if we should put it in the same place,” the president said. “We may want to put in an area that’s more visible.”

This story first appeared in the InterTown Record of Sutton, New Hampshire, on Tuesday, June 13, 2017.

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