The city of Bowling Green filed a federal civil lawsuit Monday regarding the initial development of the wrap around the downtown Bowling Green parking garage, then known as Hitcents Park Plaza.
The suit, filed in U.S. District Court in Bowling Green, names as defendants Mills Family Realty and its predecessor MR Group; the officers of that group, Ed Mills, Chris Mills and Clinton Mills; and Bowling Green businessman Rick Kelley. The lawsuit seeks unspecified damages.
A civil complaint represents only a plaintiff’s claim, and the defendants have the right to file a response in court. Kelley’s attorney, Alan Simpson, called the suit “frivolous” and “an outrageous waste of taxpayer money” on Tuesday morning. Clinton Mills said the Millses feel "confident that the city's basis for the claim are inaccurate," and it is "unfortunate that the city is wasting taxpayer money on such an exercise. We look forward to defending our position."
The suit accuses the defendants of “fraud, breach of contract, breach of fiduciary duty, civil conspiracy, and conversion. Defendants, engaged in – and conspired to engage in – a pattern of racketeering activity intended to defraud the Plaintiff out of millions of dollars. Defendants also committed fraud, violated their fiduciary and contractual duties to Plaintiff, and engaged in a civil conspiracy to enrich themselves at the expense of the Plaintiff.”
The suit stems from issues related to the development of the wrap surrounding the downtown parking garage, which became public when contractors filed more than $2 million in liens in February 2015 on the almost-complete project, saying they were not being paid for their work. Restaurants in the building also closed and a series of lawsuits followed. Ultimately, the county issued a $30 million bond to pay contractors and finish the project with a new developer.
A review conducted by then-state Auditor Adam Edelen and released in December 2015 concluded that there was overspending on the project of $9.7 million, resulting in a $4.5 million deficit; poor oversight on the project by elected officials; and numerous, often contradictory, agreements between the developer, Mills Family Realty, and other parties.
In an interview in 2015 with the Daily News, Edelen said three key elements waylaid the project: “Rick Kelley worked every angle available to him; the Millses were out of their expertise” and the development was plagued by a lack of oversight by government agencies.
Kelley, the former owner of Mariah’s restaurant before it moved into Hitcents Park Plaza, was hired by Mills Family Realty as a consultant for the development.
“The city, especially the mayor, have been trying to vilify Rick Kelley for years now. This is the latest attempt to do so,” Simpson said Tuesday. “This lawsuit is frivolous and they know it.”
The suit alleges that the defendants improperly colluded to use bond funds to finance their businesses.
“Every one of the expenditures was approved by the bond counsel ... there is no mistake in that,” Simpson said. “Why wasn’t the city’s bond counsel used? The city all along knew bond proceeds were being sued for working capital.”
At the time of the audit, Clinton Mills acknowledged that MFR “was not the right pick” to act as developer, but said that the company was hampered by the complexity of the project.
The Kentucky secretary of state’s website shows Mills Family Reality’s status as “pending dissolution.”
The suit filed Monday goes on to allege that “In particular, but without limitation, Defendants wrongfully diverted and illegally used bond funds – which were approved and guaranteed by Plaintiff in connection with the WRAP Project at Block 6 of the Western Kentucky University Gateway to Downtown Bowling Green Tax Increment Financing Development District (the “Project”) – to establish and operate their own private businesses. As a direct result of Defendants’ tortious and fraudulent conduct, Plaintiff has suffered and continues to suffer several million dollars in damages.”
Warren County Commonwealth’s Attorney Chris Cohron said in December 2015 that his office is reviewing the state audit, but he has not since provided information on the status of his investigation.
Simpson said the FBI had also reviewed the case “and has taken no action. For the city to file (a suit claiming violation of federal laws) flies in the face of law enforcement.”
Last month, the Bowling Green City Commission in a 4-1 vote approved allowing the Keating Muething & Klekamp law firm of northern Kentucky to file the civil action.
– Follow News Director Wes Swietek on Twitter @BGDNgovtbeat or visit bgdailynews.com.