PhillyDeals: Sheriff's sale moratorium riles bank trying to collect from developer

The January moratorium on Philadelphia sheriff's sales did more than keep hundreds of homeowners who borrowed money they can't repay from getting thrown into the street.

It also stopped banks from foreclosing on developers who they say owe money, according to a complaint filed with the state Supreme Court by Jay Sidhu's New Century Bank.

According to the bank, Common Pleas Court Judge Pamela Dembe's Jan. 20 order, and its extension last month, "improperly" postponed all city sheriff's sales until at least April.

The city is trying to reorganize its foreclosure program as officials search for more than $50 million that City Treasurer Alan Butkovitz says disappeared from the program under the former sheriff, John Green.

Meanwhile, New Century has been trying to collect $5.5 million from Tower Apartments Partnership, after the developer fell behind on payments for a stalled 32-unit condo building at 5801 Morris St. in Germantown.

The building was to be sold at sheriff's sale on Feb. 1 to help pay the debt. But that's been postponed by Dembe's order.

The bank's lawyers, Francis M. Correll Jr. and Leona Mogavero, of Klehr Harrison Harvey Branzburg L.L.P., argue that Dembe lacked the power to stop all sheriff's sales, and are asking the state Supreme Court to let business foreclosures proceed.

"Common Pleas had absolutely no authority to postpone the sheriff's sales of commercial real property" under the city home-foreclosure program, Correll and Mogavero wrote.

Tower's lawyer, Daniel McElhatton, said his client was in default because New Century's predecessor bank "stopped funding construction" of the project and New Century refused to agree to a settlement. He said the bank should reach an agreement with Tower, and that asking the Supreme Court to step in was "a colossal waste."

Yet another Center City office building is being turned into residential space.

Philadelphia landlord Ron Caplan's PMC Property Group (Philadelphia Management Corp.) has agreed to pay $8.3 million for the former AAA building, on Market Street in the middle of the city's 20th-century office district.

Caplan says he wants to build apartments and stores there, and hopes to add a tower and parking at the six-story building, if he can find tenants.

The deal is scheduled to close Friday, CBRE broker Robert Fahey, who handled the sale, told me. Caplan is buying the building from creditors led by NorthStar REIT, of New York, which took the building over after a group of Philadelphia and New York investors, who paid around $18 million for the building in 2006, were unable to make payments. AAA moved to Delaware in 2005; the building has been vacant since.

FiServ Inc., of Brookfield, Wis., says it bought Maverick Network Solutions, a North Wilmington firm that runs prepaid, reloadable Visa and MasterCard debit-card programs for employers, retailers, and other companies, for an undisclosed sum.

FiServ will keep Maverick's cofounder and chief executive, ex-MBNA Corp. executive James Shanahan, and 10 other employees. FiServ calls Maverick a fast-growing business. Prepaid debit cards are replacing checking accounts and credit cards as new federal limits make it tougher for banks to charge high fees on more traditional banking services.

Because FiServ won't say what it paid, we don't know how Maverick's local private investors did on the deal. Those include Robin Hood Ventures in Philadelphia's University City Science Center; Emerald Stage2 Ventures, of Philadelphia; Trestle Ventures, of Exton; and Devon International Group founder Dr. John Bennett, of Villanova.

But we do know the State of Delaware dropped a small bundle. Delaware invested $370,000 in Maverick, but received just $146,000 in proceeds from the sale to FiServ, says Delaware Economic Development Office spokeswoman Nikki Lavoie. Delaware's money helped persuade Maverick to move its operations to North Wilmington from King of Prussia.

FiServ, a public company, wouldn't comment on whether private investors made money as taxpayers lost.