A stay was granted Thursday morning on the Monday ruling by an Orange County Circuit Court judge to appoint an American hotel manager as receiver of the Crowne Plaza Orlando Universal. The hotel's Brazilian court-appointed administrator has a chance next week to prove that $4 million in corporate funds he transferred to a Brazilian cattle business wasn't done illegally.
A hearing is now set for Tuesday, where attorneys for Brazilian administrator Francisco F. Bomfim and Universal Towers Construction (UTC), the company that owns the Crowne Plaza, plan to show evidence that Bomfim's transfer of funds back to a Brazilian cattle business was within his authority as fiduciary of a Brazilian federal court.
Bomfim has managed the hotel's ownership since 2009 on behalf of the Brazilian government to eventually liquidate Orlando-based assets of former majority stakeholder João Arcanjo Ribeiro, who serves time in a Brazilian federal prison for charges related to money laundering, tax evasion and homicide, GrowthSpotter first reported June 12.
Judge Lisa T. Munyon gave the order Monday morning to appoint Mike Marshall of Maryland-based Marshall Hotels & Resorts to control UTC and its hotel, but that was an ex parte order in which no notice was provided to defendants.
Bomfim's and UTC's new attorneys with CPLS, P.A., declined to comment Thursday for this story. The firm's attorney Tee Persad previously represented Bomfim and UTC until he was replaced in early September by Brian Horwitz of ELP Global, who lasted two months on the case before being replaced Wednesday.
Bomfim and UTC's lawyers will present evidence Tuesday that the Crowne Plaza's day to day operations are well-managed already by Interstate Hotels and Resorts, that all of Bomfim's actions to date as judicial administrator of UTC have been sanctioned by the Brazilian court, that those orders have been domesticated in the Circuit Court of Orange County in a prior case, and that Bomfim won't flee Orlando until this matter is resolved.
Bomfim's attorneys argued in their new motion that UTC's minority shareholder, Constrazza International Construction, knew Bomfim had fiduciary authority from the Brazilian government to make transfers overseas, and acknowledged such at a prior annual shareholder meeting.
In Brazilian federal law dating back to 1998, a court-appointed administrator like Bomfim has the authority to invest and reinvest assets under his management.
CATTLE PROFIT POTENTIAL
In Monday's order for an American receiver, the judge confirmed evidence that Bomfim had recently transferred $4 million from hotel owner UTC to a Brazilian LLC named Universal Towers Brasil Agropecuaria Ltda., a fact Constrazza's attorney Eric W. Ludwig says he only discovered and brought to the court's attention last Friday.
Bomfim's new lawyers filed as evidence a translated business plan for that company on Wednesday. The plan, written July 1, argues the Brazilian cattle ranching business is a safe investment for public funds, and that Bomfim already manages similar cattle businesses in Brazil's Mato Grosso state.
Brazil is the world's leading beef producer and exporter, making it a strong investment for the Brazilian government's assets from UTC, not to exceed 10 percent annually, Bomfim wrote in the plan. But because Brazilian law restricts foreign companies from buying large tracts of land, Bomfim had to create a Brazilian entity in UTC's name.
Bomfim transferred $4 million from UTC in Orlando, and $1.4 million from Universal Towers Investimentos (UTI), the Brazil-based company of convicted felon and former UTC majority stakeholder João Arcanjo Ribeiro.
The money would go to buying land in Mato Grosso and up to 5,000 reproductive cattle to raise on it. After five years, Bomfim argues he would turn a 179 percent profit with the cattle operation. In a second scenario where all $4 million of UTC's money goes into new cattle, Bomfim projected a 232 percent return.
The profit would be returned to UTC in Orlando after five years, and is a better investment than what UTC is getting from investing its profits in the United States stock market, per Bomfim's business plan.
In Monday's order to appoint a local receiver, the judge agreed that Constrazza International's holdings in UTC have been diluted from 35 percent to less than 5 percent as a result of actions taken by Bomfim that violate the original shareholder's agreement.
Bomfim's attorneys filed minutes as evidence Wednesday from a July board meeting of UTC, when investment in the Brazilian cattle operation was approved, albeit by Bomfim alone.
Bomfim has total control of UTC as its board director, president and treasurer ever since November 2010, when Constrazza's Zilberto Zanchet was removed as secretary and vice president.
Constrazza's arguments in the case are rooted on the assertion that Zanchet was unjustly removed from an authority position in UTC back in 2010, and that his stake in the company has been irreparably damaged since.