While construction continues in Austin at the Circuit of the Americas and the race date in November gets closer, the litigation seems to be as active as the preparations for Formula One. In a new press release by Thunderhill Ranch Holdings LLC, it appears as if a law suit is now being filed over what it claims is forgery and unfair dealings against Accelerator Holdings LLC. If that name sounds familiar, that was the holding company that Tavo Hellmund, Bobby Epstein and Red McCombs formed to create the Circuit of the Americas. As a minoirty owner of the circuit, Accelerator Holdings LLC was the very organization that Hellmund sued to attempt to capitalize on McCombs’s buy-sell agreement.
Here is an excerpt from the press release from Thunderhill Ranch Holdings LLC:
AUSTIN, Texas, July 30, 2012 /PRNewswire via COMTEX/ — Texas entrepreneur Hillary A. Ryan, principal of Austin’s Thunderhill Ranch Holdings L.P., has filed a real estate fraud lawsuit against his former financial manager and two real estate holding companies based on claims of a secret deal to acquire a tract of land near the new Circuit of the Americas Formula 1 track in Austin.
Named as defendants in the lawsuit filed in the 126th District Court in Travis County are G.H. “Kam” Kronenberg III and San Antonio holding companies Accelerator Holdings LLC and Land Accelerator LLC.
In his prior role as Mr. Ryan’s financial manager, Mr. Kronenberg was responsible for identifying and evaluating investment opportunities. According to the lawsuit, Mr. Kronenberg was working on Mr. Ryan’s behalf in June 2010 to purchase slightly more than 78 acres of property adjacent to the land where the Circuit of the Americas facility is now located.
After the purchase contract was signed, the lawsuit says, Mr. Kronenberg advised Mr. Ryan that he planned to exercise an option to terminate the contract based on Mr. Kronenberg’s view of the slim chances for the Formula 1 track, and his belief that even if the facility were built, the property would be “frozen out” of the overall Circuit of the Americas development.
However, according to the lawsuit, Mr. Kronenberg knew the facility was likely to be built, greatly increasing the land’s value. The lawsuit says Mr. Kronenberg then secured a contract extension and provided an assignment to purchase the property to another of his clients, Accelerator Holdings LLC. According to the claims, the assignment document contained a forgery of Mr. Ryan’s signature. The tract eventually was purchased by another of Mr. Kronenberg’s clients, Land Accelerator Holdings LLC.
Currently, the land has skyrocketed in value as an integral part of the overall Circuit of the Americas’ development. The lawsuit includes claims of breach of fiduciary duty, fraud, tortious interference with an existing contract, and conspiracy by the defendants.
The amount of litigation surrounding the creation of the circuit has been substantial considering the circuit has not been built and hasn’t hosted a single race. The amount of money spent on the project is rumored to be well over $300M and the amount of litigation has to have been equally substantial bringing into question the sustainability or viability of the circuit and the track economics.