I remember seeing Rober Lembke at a series of water lectures, Wringing Water from the Rocks sponsored by then Mayor John Hickenlooper and organized by Beth Conover. I remember Mr. Lembke taking the podium, slowly pouring a glass of water, and saying, “You have to get some free Denver Water anytime you can.”
Plaintiff Silver Peaks Holdings LLC said it put in 550 acres of land near Lochbuie as part of a real-estate-development venture with Robert Lembke and two of his associates. But instead of helping the development, Silver Peaks alleges that the three men, through a network of companies and enterprises, used its assets to benefit interests they had in other ventures.
The plaintiff contends Lembke and his associates used the land as collateral to borrow money to build a water-transport system with a capacity far exceeding the needs of the planned 2,300-home development. As result, the $14 million debt secured for the project was 10 times the cost of an adequate water system for the development.
Then Lembke and Ted Shipman, who Silver Peaks alleges controls the board of the Silver Peaks Metropolitan District, transferred water certificates and the entire water-delivery system to United Water and Sanitation District. United, which has no residents and a potential statewide service area, was created by Lembke as a vehicle to provide a water network serving future developments throughout the Front Range.
The plaintiff alleges that United is using the water-delivery system to help fulfill contracts with East Cherry Creek Valley Water and Sanitation District and Arapahoe County Water and Wastewater Authority…
“The defendants are using that water-transport system throughout Colorado’s Front Range to enrich themselves, while our client is left with a worthless investment in a business that derives no benefit from … the system it financed,” said attorney Timothy Flanagan, whose firm Fowler, Schimberg & Flanagan PC represents the holding company.
One cool thing about the Internet is the opportunity for targets of investigative journalism to respond to negative articles quickly. Here’s United Water’s response to Ms. Crummy from their website:
As some of you may have seen in today’s paper (click here for article), The Denver Post has reported on a meritless civil lawsuit filed in Adams County against SP Equities and other parties about the Silver Peaks housing development in Weld County that more than 275 families already call home.
Contrary to the implications in the article, since 2006 Silver Peaks has had — and will continue to have — a fully working water system sufficient to meet the development needs of the project.
We plan to address the baseless claims in the complaint by Silver Peaks Holdings and its sole representative, Aspen socialite Kelley Carson, in the courtroom. In the meantime, it’s clear that Ms. Carson and her attorneys are attempting to play the case out in the courtroom of public opinion. As we said to the Post, the claims give proof to the adage that “In good times you pursue business, and in bad time you pursue litigation.”
We want our friends and colleagues to know that this case is a thinly disguised last-ditch attempt by Ms. Carson to extract additional money from a 12-year old development project whose success is due almost entirely to the parties wrongly maligned in the complaint.
The complaint ignores stacks of evidence and history confirming that Ms. Carson and her former partner were actively involved in the operations of the project and were fully aware of the operational agreements negotiated during the early years of the development. Ms. Carson eventually chose to take an absentee role in the project, attending only 5 of the 65 Silver Peaks Metro District meetings since 2004.
Prior to the economic downturn, the project near the town of Lochbuie represented one of the more successful developments in the Northern Front Range. The project has strongly withstood the real estate recession and is poised to meet the growing demand for development in the Lochbuie area. The Silver Peaks neighborhood is also home to the only new retail development in Lochbuie.
Throughout the project some of the parties now sued by Ms. Carson have maintained the project by servicing debt on the project, while at the same time the Silver Peaks investment partnership distributed Ms. Carson’s entity millions in cash and property. As late as 2010, Ms. Carson asked some of the parties she is now suing to continue to finance the project without any personal contribution by Ms. Carson.
We have tried in good faith to resolve Ms. Carson’s issues, and we are now prepared to respond in the courtroom.