Monessen consultant $43M in debt, files for bankruptcy
The New York attorney who was hired to help Monessen transform blocks of blighted properties into a thriving artists' colony is mired in more than $43 million in debt and myriad legal entanglements, partly from his own failed real estate deals, court records show.
After learning from the Tribune-Review about attorney R. Randy Lee's financial problems, Monessen city administrator John Harhai said Monday that Lee's $3,000-a-month contract will not be renewed when it expires at the end of the month.
“We're putting that on the back burner and not renewing it this month,” Harhai said. “We're going to look at it (and) get our solicitor to look at it.”
Mayor Mary Jo Smith, a staunch supporter of Lee, said no one looked into Lee's credentials before he was hired and neither Harhai nor Smith could provide an official, detailed accounting of the work he did to earn $18,000 paid to him during the last six months.
Harhai could speak only in general terms about the work Lee performed — making several trips to Harrisburg to talk with officials about funding, filing applications for state grants, discussing financing with banks and attempting to market Monessen to artists around the country.
But Harhai said he still believes Lee is the right man to help revive the former steel town, where the population has plummeted from 18,424 in 1960 during its industrial heyday to about 7,700 today.
“I don't see any reason we shouldn't hire him back,” said Harhai, who spoke with Lee by phone after hearing about his financial issues.
Harhai's brother, state Rep. Ted Harhai, D-Monessen, said he introduced Lee to officials from the state Department of Community and Economic Development to discuss possible funding but had no further involvement.
Thus far, the project has received no state funding, John Harhai said.
Lee, 70, of Staten Island, was hired in October to help purchase hundreds of abandoned homes and vacant lots in the city, then sell them at affordable prices to artists.
In return, the artisans — from painters and glassmakers to weavers and sculptors — would promise to live, work and sell their products on the properties, all seized by Westmoreland County because of unpaid taxes, Harhai said.
But while Lee was being paid to chart Monessen's future, his own financial life was unraveling, a slide that began with the downturn of the nation's housing market five years ago, he said.
“I was a very prolific developer and had many projects on the drawing board and when the economy started to go bad, I hung on for several years,” Lee said. “After that, I was trying to continue to develop the projects. Unfortunately, the economy eventually caught up with me.”
Last month, Lee and his wife, Eileen, filed for bankruptcy, citing $43,052,617 in debt, court records show.
Page after page of debts owed to the Internal Revenue Service for taxes never paid in 2009 and 2010 and money owed to banks, credit card companies and individual investors are included in the bankruptcy filing. A home on Staten Island valued at $1.25 million is under foreclosure, as are a number of other residential and commercial properties in the New York area owned by Lee, records show.
The filing lists assets of $634,897, including a condominium in New York worth $370,000, a condominium in Rahway, N.J., valued at $125,000, several cars and jewelry.
But Lee insists his New York problems have nothing to do with his hope to model Monessen's art community after those established elsewhere in the nation.
“I'm their planning consultant. My job is to bring to bear my experience and planning in development and commercial (real estate) to help the town, which is what I'm doing,” he said.
Lee entered the local picture when New York developer George Christo found cheap properties for sale in Monessen online and purchased them, Smith said.
While talking with Christo about Monessen's hopes of developing its abandoned parcels, he suggested Lee might be helpful because of his experience with building affordable housing in New York, Smith said.
Christo corroborated that story, adding that he was peripherally involved with Lee because they both dealt in the New York-area real estate market. He said he was not aware of Lee's financial problems, but “Randy has developed a significant amount of real estate in his career.”
“He is very savvy, a very sharp guy,” said Gary Gutterman, the chief executive officer of the Metropolitan Council on Jewish Poverty in New York City. “(He's) very knowledgeable about real estate development.”
Lee is working with the council to build affordable senior housing, Gutterman said.
County seeks funding
Westmoreland County Commissioner Charles Anderson said news about Lee's bankruptcy should have no impact on the overall outlook for the project.
Anderson said his office is attempting to obtain some Marcellus shale-related state funding for the project before the county sells the abandoned properties to the city.
“We're proceeding with our plan,” Anderson said.
This is the most recent attempt to reinvent Monessen, which has never recovered from the closing of the sprawling Wheeling-Pittsburgh Steel Co. mill in 1986. At its peak, the plant employed more than 6,000.
At one point, the city hoped to develop the riverfront property where Wheeling-Pitt operated.
But the only visible redevelopment that has taken place is the rehabilitation of several old warehouses along the river and the opening of a boat launch, Ted Harhai said.