Paul S. Nicolosi: 303 N. Main St. foreclosure could have been avoided
By Stuart R. Wahlin
Although not in time for last week’s deadline, Paul S. Nicolosi responded to a request by The Rock River Times to comment regarding the lawsuits between his companies and those of Matthew and Peter Provenzano.
Asked whether the back-and-forth lawsuits are indicative of a feud, Nicolosi responded, “I do not consider this a feud, but rather a partnership freeze-out dispute.
“The MF Cherry Valley lawsuit is really nothing more than their attempt to put pressure on us in the partnership freeze-out,” he alleged. “We had other investors in the MF Cherry Valley project, and they, unlike the Provenzanos, attended the partnership meetings for MF and were a part of the decision-making process to forgo the investment in light of the dramatic shift in the real estate market.”
Nicolosi noted no one wants to put time and money into a project only to have to walk away from it, but that it’s a “normal part of the risk for real estate investing.”
Nicolosi suggested the only feud is alleged infighting among the Provenzanos.
Nicolosi indicated that around the time he was asked to step down as manager of Main Street Partners, LLC—another partnership with the Provenzanos (see “Part I: Bad blood in the old Gas & Electric Building” in the Aug. 26-Sept. 1, 2009, issue)—for the purpose of simplifying access to a tax credit, “The tension between Peter and Matthew Provenzano became evident.
“These tensions seemed to grow over time, and Peter called a meeting of the partners in March of 2007,” Nicolosi alleged. “Peter was not a regular attendee at partnership meetings. His message at that meeting was essentially the fact that he wanted to renegotiate the terms of our partnership. It seemed to me at the time that his motive and intent were to reduce the benefit to Desert Creek for the work it had done to bring the [303 N. Main St.] building to its current state. The implication was veiled, but transparent enough to be clear that perhaps we would not be allowed to be listed as a member to the LLC if we did not agree to reduced rights.
“One of my main tasks was to obtain permanent financing for the building, and throughout 2007 until our freeze-out in early August, my staff and I in fact did so,” Nicolosi alleged. “We had two hard prospects for the building’s long-term financing on favorable terms. Either of these would have fully taken out AMCORE, and would have likely avoided the foreclosure our partnership now faces.”
Specifically, Nicolosi reported having negotiated with the Workforce Investment Board (WIB) for nearly two years before ultimately securing WIB as a tenant of 303 N. Main St., which also serves as headquarters for Provenzano-owned SupplyCore, Inc.
After the heated meeting, Nicolosi indicated, tension seemed to ease.
“In fact, in May of 2007, Peter and Matthew suggested that they become partners in The Buckley Companies,” Nicolosi noted. “Non-disclosure documents were signed, and our respective accountants and CFOs over the next several months set out to value the business and determine if suitable terms could be reached, whereby JJP would become an active third partner in The Buckley Companies.”
The following August, Nicolosi arrived at a Main Street partnership meeting to find that Matthew Provenzano was peculiarly absent.
“Only Peter and his CFO, Matt Marshall, and one other gentleman were in attendance. Matthew’s absence was unusual,” Nicolosi recalled. “At this meeting, for reasons still unknown to me, Peter announced that he was going to freeze our businesses out of the opportunity they had been working on for nearly two years. Following the meeting, I had many discussions with Matthew, who was very angry with Peter, and the tension between them became open. Our lawsuit ensued from Peter’s unilateral action taken to freeze my companies out of the partnership.”
Nicolosi added: “I have always maintained that Peter’s conduct had more to do with the tension between Peter and Matthew, and between Peter and his parents regarding Peter’s behavior at SupplyCore, than anything that Desert Creek had done or failed to do. This proposition appears to be substantiated with the lawsuits that Matthew and his parents brought against Peter in October of 2008.”
The lawsuits stem from an apparent power struggle for control of SupplyCore.
“In that case, it is clear that Matthew and the Provenzanos’ parents feel as though Peter has treated them heavy-handedly, unfairly and outside of his rights under SupplyCore governance documents,” Nicolosi alleged.
Until recently, the contents of the case file have been sealed from public view, and Nicolosi alleged the matter itself “was made to be kept a secret.”
Nicolosi reported he later intervened in the case, which resulted in the unsealing of documents pertaining to the apparent internal strife among the Provenzanos.
“In our opinion, the review of this file confirms our proposition that Peter has a propensity to treat his partners, even his own family, with heavy-handed tactics similar to those he has attempted to use on Desert Creek Capital,” he added.
The Rock River Times has hinted the conflict between Nicolosi and the Provenzanos may have been exacerbated by the backing of opposing Republican candidates for Winnebago County state’s attorney.
“Your suggestion that there may be some connection appears to be correct,” Nicolosi acknowledged, noting that the race should, however, be viewed in the larger timeline of events. “The appointment process for the state’s attorney’s race was in the early to mid-summer of 2007, before the freeze-out meeting in August 2007. In fact, this meeting was the morning of the swearing-in of my brother.”
Nicolosi’s brother, Phil, sought to retain the seat after being appointed to replace Paul Logli as state’s attorney.
Peter Provenzano, SupplyCore president and CEO, backed challenger Chuck Prorok, who ultimately won the primary, but lost in the general election.
“Also, during the summer of 2007, Peter and Matthew Provenzano assisted and supported in having Phil’s appointment considered,” Nicolosi added. “I believe that the facts and timing would suggest not that the state’s attorney appointment had anything to do with the partnership problems, but rather that Peter’s efforts to win advantage in the partnership case led him to flip on his support of Phil, and aggressively campaign for his opponent in the primary.”
Afforded an opportunity to rebut Nicolosi’s comments, Peter Provenzano submitted the following statement: “As a result of the pending litigation, I will not respond to Mr. Nicolosi’s self-serving statements. Individuals who read the article will just have to consider the source. My top priority is and always has been to look out for the best interests of SupplyCore, its employees, its stakeholders, and its role as a strong corporate citizen in our community. As a major employer in the Rockford area, a supporter of the Department of Defense and all the branches of the military, I’m most concerned with making sure that SupplyCore maintains its commitments to provide jobs and excellent service to the people who depend on us.”
Matthew Provenzano declined to comment on this series.
From the September 2-8, 2009 issue
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