Cancellation of condo project spurs lawsuits

Jennifer Shubinski

Monday, April 4, 2005 | 11:09 a.m.

The scuttled plans for Krystle Sands condo-hotel prompted some buyers to file lawsuits last week against the developer and the project's limited liability company.

The plaintiffs are seeking at least $70 million in damages and return of escrow money to the buyers. Among the lawsuits' claims are allegations of fraud, deceptive trade practices and civil conspiracy.

Five lawsuits, including one that is seeking class action status, were filed in Clark County District Court against F.W. "Freddie" Schinz, Krystle Sands LLC, Krystle Towers LLC and Fidelity National Title Agency of Nevada.

Florida-based Schinz announced last spring his plans to build the $400 million Krystle Sands, a 45-story condominium-hotel on the 3.6-acre site of the now-demolished Algiers hotel. Those plans were canceled last month after Schinz said he sold the limited liability company, Krystle Towers LLC (formerly Krystle Sands LLC), formed in Florida, to Turnberry Associates.

Will Kemp, one of the attorneys for the plaintiffs, said Turnberry Associates is not specifically named as a defendant because it allegedly purchased the limited liability company from Schinz.

The land's title on the Clark County Assessor's Web site does not reflect a change in ownership of the company. Florida Secretary of State online documents do not yet reflect a sale.

Mark James, an attorney for the plaintiffs, said he and other plaintiffs' attorneys are looking into exactly how the deal was structured.

Reached at his Florida office, Schinz said he did not know anything about the lawsuits and referred calls to Mario Romaine, an attorney with Turnberry.

Romaine declined comment. Nobody else from Florida-based Turnberry could be reached for comment.

The five lawsuits all basically levy the same accusation: that Schinz never planned to build the tower and that, while selling 600 condo units, he sought a buyer for the land.

That buyer, the lawsuit seeking class-action status alleges, was Turnberry Associates, which bought the limited liability company, and subsequently the land, for $97 million. Schinz bought the land July 2004 for $26.2 million, according to Clark County Assessor Records.

"In our opinion, this is outrageous conduct," James said. "We find it extremely outrageous that someone would breach their contract with our clients to reach a massive, reportedly over $50 million, profit for themselves."

The plaintiffs are seeking the alleged $70 million profit from the sale of the company, according to the lawsuit.

The lawsuit alleges that in a March 25 letter to buyers, John Riordan, vice president of sales for Turnberry, falsely represented that the Krystle Sands project was canceled because it was unable to get construction financing.

That is despite the fact that Turnberry Associates announced four days prior to the letter that it was able to get construction financing to build a separate 636-unit condo project in Las Vegas, according to the lawsuit.

James said the announcement came via a press release from the company.

A press release dated March 21 from Turnberry Associates said it plans to begin sales for its Turnberry Place, a 636-unit community at Paradise Road and Karen Avenue, in late March with construction slated to begin this spring.

James said some of his clients have received refunds on their escrow deposits, relating to the Krystle Sands project, while others have not.

"There appears to be an attempt to tender back checks and wash their hands of the whole thing," he said.

The Krystle Sands property is behind Turnberry Place, a luxury high-rise condo complex and next door to vacant land, once the site of the El Rancho, also owned by Turnberry.