Wednesday, April 4, 2012

Loan Gone Sour Clouds the Future of a Media Activists’ Haven in TriBeCa

New York Times
Colin Moynihan

Lenny Labanco is still allowing some people to organize events at 56 Walker Street.
In the second-floor room with the green walls, Lenny Charles Labanco pointed to where the news desk sat, and the television cameras once stood. Nearly 10 years ago, he started an organization called International News Net World Report, which from that room produced hundreds of 30-minute programs, which were broadcast on satellite television. 

The programs never made much money, but survived in large part because the building where they were made, at 56 Walker Street in TriBeCa, was owned by a supporter who charged minimal rent for the use of the studio and the lower floors where Mr. Labanco and others organized readings, panel discussions and fund-raisers, often for left-leaning causes. 

Now, though, Mr. Labanco has suspended the programs, and the future of the Walker Street building is in doubt. A loan agreement signed in 2007 by the building’s owner, Guy Morris, resulted in foreclosure proceedings, and the entity that owns the building, 56 Walker Street L.L.C., has declared bankruptcy. 

The lenders, Broadway Bank and Wexford/HPC Mortgage Company, an affiliate of WexTrust Capital, did not provide all the money they had promised, Mr. Morris said. Eventually, WexTrust went into receivership, and two of its top executives pleaded guilty to federal fraud charges. Broadway Bank in Chicago subsequently was shut down under the supervision of the Federal Deposit Insurance Corporation. That agency then transferred the loan to a second bank, MB Financial, which has asked a federal bankruptcy judge in New York for permission to foreclose. 

In response, Mr. Morris wrote to MB Financial officials, saying that the loan was “invalid and void” because of fraud connected to the original lenders and that the foreclosure should be called off.
Last week, according to both parties, the judge overseeing the bankruptcy appointed a Chapter 11 trustee expected to replace Mr. Morris and the building’s current management. Mr. Morris said he welcomed the move because it could present an opportunity to examine the loan’s history.
“It was quite positive, I think,” Mr. Morris said. 

A lawyer for MB Financial said in an e-mail that, in the past, Mr. Morris had conceded the validity of the loan and had not denied borrowing the money. The lawyer, Jeff Friedman, added that “the bank is prepared to cooperate” with the trustee. 

Mr. Labanco, a jazz guitarist known professionally as Lenny Charles, said that he rented the Walker Street building, then a “dusty old warehouse,” in 1998, planning to use it for concerts.
The 2000 presidential race, he said, rekindled his interest in politics, and he began planning news programs intended to challenge conventional wisdom. 

The programs were broadcast on Free Speech TV as well as more than 100 other satellite channels, Mr. Labanco said, and featured interviews with figures like the author Gore Vidal and Representative John Conyers Jr., the Michigan Democrat. 

Money was tight, and many of the fledgling producers and anchors learned on the job. Mr. Labanco said he found the experience to be invigorating, “an opportunity to do something good.”
At times the building also provided a home to the show’s contributors; some built rooms with scrounged materials on the empty top floor. One was Brad Will, a journalist who was fatally shot in 2006 while filming street clashes in Oaxaca, Mexico. 

“We created a community of media activists,” said Priya Reddy, a filmmaker who also lived in the Walker Street building. “Lenny gave us an oasis.” 

In 2003, Mr. Morris, an International News Net board member, bought the building for $3 million, planning to add a floor, build condominiums on the upper floors and use money from their sale to cover construction costs and subsidize the programs Mr. Labanco was producing. 

But construction took longer than expected, and in 2007 Mr. Morris signed the $11.3 million loan agreement with Broadway and Wexford to pay off a previous loan and complete the condos. The lenders failed to provide all of the promised money, Mr. Morris said, and contractors walked off the job. In 2008, the Securities and Exchange Commission filed the lawsuit accusing WexTrust of running a $255 million Ponzi scheme

Then, in 2010, financial regulators in Illinois closed Broadway Bank, and the F.D.I.C., as receiver, transferred the loan to MB Financial. 

Mr. Morris said that he wanted MB Financial to return responsibility for what he called a tainted loan to the F.D.I.C., and allow him to negotiate a settlement with the agency. 

On Saturday, Mr. Labanco said that while he would not resume making television programs at the building unless its future was secure, he was allowing some people to organize events there. 

Among them was Ms. Reddy, who said on Saturday that an annual film festival dedicated to the memory of Mr. Will would be held later this month as part of the New York City Anarchist Book Fair. “I still carry a tapestry made up of the threads of my experience there,” she said of the building.

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