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Richmond Times Dispatch (Virginia)
LOUIS LLOVIO
 
Several hundred people who were sold memberships to a SportsQuest gym that was never built have received partial refunds for the money they paid in.
 
Brian J. Gottstein, who was spokesman for Ken Cuccinelli before his term as Virginia's attorney general ended Saturday, said last week that 342 people who had requested refunds had received a total of $105,022.80 -- not even 20 percent of the $582,387.86 in refund requests.

Last week, Gottstein said that the money was paid not by the bankrupt SportsQuest, but by two surety companies that issued bonds covering the facilities.

One of the companies paid its $10,000 bond, but the Attorney General's Office had to sue the second one, Western Surety, "because it claimed that its bond did not apply to the facility."

"We settled our claims against the company for $95,000 out of a possible $100,000. Those funds have been used to issue partial refunds to consumers," he said.

SportsQuest was marketed as a utopia for amateur athletics on Genito Road near Powhite Parkway and state Route 288 in western Chesterfield County. It folded in August 2012 after mounting debt and growing skepticism about its future forced the enterprise into bankruptcy.

SportsQuest founder Steve Burton, who was eventually ousted by board members, filed for personal bankruptcy in April 2013. That case is ongoing.

The Attorney General's Office filed a civil suit against SportsQuest in February 2012, accusing it of violating Virginia's health spa and consumer protection acts by selling memberships without giving an opening date and then by selling memberships that included "false or misleading information about the projected opening date," according to court papers.

In November of that year, SportsQuest settled the suit for nearly $1 million.

The settlement called for the organization to pay $900,214 plus $50,000 in civil penalties and $45,800 in attorney fees.

At the time of the settlement, observers said it was unlikely the money would ever be recouped.

"We obtained a judgment against the company, but the company went through bankruptcy and was found by the trustee not to have any valuable assets. Thus, the money collected from the surety companies is the only recovery we have been able to get so far," Gottstein said. "To my knowledge, none of the consumers have recovered anything else on their own."

SportsQuest was to be centered on an Olympic-style village where elite athletes from around the world would come to train. It was to have included athletic fields, an ice rink, an entertainment center, training amenities, an athletic center and an arena for track cycling.

Despite the big dreams and a hard sales pitch, only athletic fields, concessions and bathroom facilities were ever built.

Chesterfield invested $4.3 million in the project by leasing the use of nine multipurpose synthetic fields for 20 years and of a senior center and gym. The senior center also wasn't built, but the county has a lien on the property.

In May 2012, SportsQuest's multimillion-dollar property was sold in a foreclosure auction for $5 million. Shaw Industries, which was owed about $15 million by SportsQuest, bought the property and renamed it River City SportsPlex.

By the time SportsQuest filed for bankruptcy three months later, all that remained of the business behind the $250 million athletic complex was $1,030 in assets and $7.35 million in liabilities.

In April, the trustee overseeing SportsQuest LLC's bankruptcy asked a federal judge for permission to step away from the case, citing a lack of available funds or property left to distribute to creditors.

LLLovio@timesdispatch.com

(804) 649-6348

Twitter: @LouisLLovio

Copyright © 2014, The Richmond Times-Dispatch and may not be republished without permission. E-mail library@timesdispatch.com

 
January 14, 2014
 
 
 

 

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