Turmoil at the Top

Turmoil at the Top

By David R. Corder

Associate Editor

Tampa's Wilson Co., the commercial real estate development company that Harvard business graduate Jack Wilson founded in the early 1980s, reached an apparent turning point last October. Over the past decade or so, the company had evolved into one of the state's most prolific builders of tax-credit-funded affordable multifamily properties. But the company neared the completion then on its most recent multifamily project.

In an apparent strategic change last fall, the company reallocated resources to a proposed 226-unit, market-rate townhome project near Interstate 75 and Interstate 4. Several weeks ago, it moved forward on the project and executed an option to purchase the 35-acre development site for almost $2.5 million from Miami's Purity Enterprises Inc.

The deal came at a crucial time of inner corporate turmoil that is being played out in the courts. The matter became so serious this summer that a judge questioned, if the company didn't change, whether it could continue as a going concern.

This is the Wilson Co., one of Tampa Bay's development icons in the 1980s and 1990s. The Wilson Co. laid the first foundation for the eventual development of Carillon, the 432-acre mixed-use, office-retail-residential development in St. Petersburg's Gateway area. It built landmarks such as the mixed-use Bayport Plaza, an office-hotel property that sometimes serves as host to governors and presidents. Legend's Field, the New York Yankee's spring training home, bears the thumbprint of Jack Wilson, now in his mid-60s, a former chairman of the Greater Tampa Chamber of Commerce.

This latest effort to reposition the company comes amid an intense dispute between Carolyn Wilson, who nearly two years ago had succeeded her retired husband as Wilson Co.'s president, and three minority shareholders and longtime company confidants - Debra Koehler, Chris Bowers and Gary Welsh. In one of her first actions as president, Carolyn Wilson accused the minority shareholders of mutinous actions, fired them and then sued them to enforce shareholder agreements.

Upset with efforts to redeem their shares, the minority shareholders responded with a lawsuit. They asserted their rights under shareholder agreements that they say were signed before Jack Wilson first exhibited symptoms of a progressive brain disorder. The dispute became so acrid the minority shareholders petitioned a Hillsborough County judge for public disclosure of Wilson's medical records.

Then earlier this summer, the minority shareholders won a decisive round in a battle that could hinder Carolyn Wilson's efforts to reposition the company. Her management of the assets in TWC Holding Co.- the Wilson Co.'s primary operating entity - has come under harsh criticism, court records show.

In a non-final order for a temporary injunction, Hillsborough Circuit Judge Richard Nielsen declared that Carolyn Wilson has engaged in a pattern of self-dealing at the detriment of the minority shareholders.

"The self-dealing of Carolyn Wilson has had, and is likely to continue to have, a negative impact on the cash flow of TWC to remain as a going concern," Nielsen writes. "Were it to continue, it would present continuing negative and improper ways and methods by which TWC does business. Only injunctive relief can address this kind of ongoing wrongdoing."

At the crux of the issue, Nielsen accepted the minority shareholders' arguments that Carolyn Wilson set up a separate operating company, TWC II LLC, to develop the Wexford Townhome project in east Hillsborough. Wilson Co. accounting records convinced Nielsen that Carolyn Wilson had reallocated cash and personnel to the townhome project. It didn't matter to him she had reimbursed the company for the cash disbursed. The judge accepted arguments that she profited from the transactions.

"She has agreed to reimburse costs, but has not agreed to pay fair market rates for the ongoing services of TWC," Nielsen wrote.

Because of the facts claimed, Nielsen forbid Carolyn Wilson or any of the Wilson Co. entities from allocating any further corporate assets to the townhome project. On the other hand, Nielsen allowed Carolyn Wilson and TWC II to continue with the townhome project so long as they did not use Wilson Co. assets.

Wilson didn't respond to a Gulf Coast Business Review request for comment. But Dan Mitchell, a GrayRobinson PA attorney representing Wilson, disputes Nielsen's conclusion. "With all due respect to the judge, the corporate opportunity that is mentioned in there (the non-final order) is non-existent," Mitchell says.

That's because Purity offered Wilson only a first right of refusal on the property, not an option to buy, Mitchell says. "The idea that Carolyn usurped a corporate opportunity is totally fallacious," Mitchell says. "Carolyn Wilson is not the robber baron she is made to be in this thing."

Nothing in the injunction restricts how Wilson Co. manages about $300,000 a month in fees the company now accrues from the 34 affordable housing projects it now manages in Florida. His ruling did not mention the leasing revenue Wilson Co. and its affiliates produce through a small portfolio of commercial properties they still control.

The injunction prohibits, however, Carolyn Wilson and her staff from redacting financial information from company records, a claim the minority shareholders have asserted. Financial records she and the company disclosed under subpoena for March to April this year contained no information about the townhome project. It wasn't until May when the company produced an unredacted general ledger.

"The Wilson parties claimed those entries contained confidential or proprietary business information," Nielsen wrote in his order.

Upset with Nielsen's conclusions, Carolyn Wilson appealed the decision to the 2nd District Court of Appeal. Mitchell, a prominent Tampa appellate attorney, heads the legal team that filed the appellate petition. Wilson's appeals still awaits judicial review.

Mitchell says the minority shareholders failed to give Carolyn Wilson and the companies she controls enough time to prepare a defense against the minority shareholders' motion for a temporary injunction. He also argues their claims are a ruse because they failed in an earlier effort to win the appointment of a temporary receiver to oversee Wilson Co.'s assets.

"It was not until the hearing on (the minority shareholders') motion for receiver and motion for temporary injunction when it became clear (the minority shareholders) were going to be unsuccessful with their motion to appoint a receiver, that they sua sponte changed their request to the injunctive relief ultimately issued by the trial court," Mitchell argues in the initial appellate brief.

The brief claims Carolyn Wilson had only 29 hours to present evidence that would have rebutted the minority shareholders' new arguments for the temporary injunction.

"Nor was Carolyn Wilson afforded the opportunity to trace her business dealings on behalf of TWC or the other business entities and explain how they were legitimate exercises of her management authority," Mitchell argues.

Even if Nielsen's conclusions were based on facts, Mitchell claims the minority shareholders produced no evidence that Carolyn Wilson's actions have caused them irreparable harm. He argues the minority shareholders have other remedies.

The dispute appears headed to a jury trial.

"It is evident from the pleadings, monetary damages are what (the minority shareholders) have sought against (Carolyn Wilson) for these alleged braches of fiduciary duties, including self-dealing," Mitchell argues. "All these damages represent adequate remedies at law and therefore the court abused its discretion by granting the injunctive relief. Moreover, none of the aforementioned pleadings demonstrate sufficiently that (the minority shareholders) will be irreparably harmed or that they have suffered a potential loss that is not compensable by money damages."