Syndicator Alan Stalcup Triggers $285M Personal Guarantee: Suit

Alan Stalcup, the shadowy syndicator behind GVA, faces yet another fraud suit from a spurned lender. But this filing is different.

The allegations lodged by Benefit Street Partners, if upheld in court, could financially ruin him.

The New York-based private lender sued Stalcup, claiming the investor — one of the Sun Belt’s most prolific this cycle — misappropriated insurance proceeds, commingled tenant security deposits and committed “forgery and fraud that would make even brazen criminals blush,” according to the complaint filed in New York Supreme Court last month.

All of the above are “bad boy” acts that triggered recourse carveouts on a $346 million loan backed by 19 multifamily properties that Benefit Street made less than three years ago.

Stalcup personally guaranteed those recourse obligations. Now, Benefit Street is going after him for the debt’s principal, interest and fees — $285 million, all told.

Stalcup denied the lender’s allegations in an email: “Every single loan referenced in the complaint has been paid back in full or is currently performing.”

“The insinuation that I am liable for outstanding principal … of $261,910,513.71 is farcical and utterly outrageous,” he continued. “I intend to vigorously defend against these claims and believe that the relief demanded by BSPRT will be promptly denied.”

Ethan Kobre, the attorney representing Benefit Street, said the lender declined to comment on ongoing litigation.

As the commercial real estate downturn drags on, more lenders are flexing their muscles, holding borrowers accountable for personal guarantees so they can recoup something after a default.

But the judgment Benefit Street seeks against Stalcup is next level.

Previously, the $187 million personal guarantee a judge ruled Fortress Credit Corporation could collect from Charles Cohen topped the charts.

But while Cohen is a billionaire, Stalcup is a former golf marketer from Austin.

The principal’s “bad boy” acts run the gamut.

Stalcup allegedly forged Benefit Street’s name to transfer half of his equity interest in a Charlotte, N.C., apartment complex — The Commons at University Square — to an international entity.

After a fire tore through Legacy at Six Forks, a multifamily complex in Raleigh, N.C., the principal concealed the disaster from his lender for 18 months, the complaint claims. Meanwhile, he hired an affiliate to perform mitigation and restoration work and received nearly $1.4 million from his insurance carrier, only $250,000 of which went to repairs, Benefit Street lays out.

“Where’s the rest?” the suit asks.

The affiliate, Reno99, went out of business “immediately” after Benefit Street asked for accounting of the outstanding insurance proceeds, the lender claims.

There’s more: Stalcup commingled tenant deposits with operating cash at all 19 of the properties to the tune of half a million dollars, forcing Benefit Street to cover the deficiency, it alleges.

“That magnitude of commingling over a two-year period is no innocent mistake,” the suit reads.

And the lender claims Stalcup committed gross negligence at the properties.

He allowed swimming pools to stagnate, “causing them to look like swamps,” black mold to bloom and burned-out buildings to sit so they “function[ed] as both an eyesore for residents and reputation-harming physical waste,” Benefit Street writes.

Stalcup already settled a separate fraud suit for nearly $4 million, according to a copy of the agreement tucked into the Benefit Street suit.

Benefit Street alleges that settlement with an undisclosed lender signals Stalcup “knows the gravity of his (mis)conduct.”