USOC property developer is subject of criminal investigation

Colorado Springs developer Ray Marshall, whose LandCo Equity Partners is building the new downtown headquarters for the U.S. Olympic Committee, is the subject of a criminal investigation, 4th Judicial District Attorney Dan May said Wednesday.

May said he couldn't elaborate on his office's investigation, other than to say that it was launched some weeks ago. He declined to comment on whether the investigation is related to the USOC project or other Marshall and LandCo real estate deals.

"All I will say is we're investigating Ray Marshall, and we're investigating LandCo," May said.

Reached Wednesday evening, Marshall declined to comment. His company later issued a statement indicating that the district attorney's criminal investigation stems from "a few disgruntled investors" who made allegations against Marshall in connection with lawsuits they had previously brought against him. One of those suits was settled last month.

"The allegations are baseless and unfounded," according to LandCo's statement. It went on to say, "Neither LandCo nor its principals can comment on pending litigation other than to say they are fully cooperating with the investigation and expect to be exonerated."

In recent months, Marshall and LandCo also have been hit with a series of liens related to the USOC project and a separate real estate deal in Monument. Also, Marshall has been sued twice by former business partners and faces a foreclosure action related to one of his real estate projects.

As a result, some City Council members say they've grown concerned over Marshall's ability to deliver on his portion of a $53 million incentives package that was designed to keep the USOC from moving its longtime headquarters out of Colorado Springs.

The council has scheduled a special, closed-door session Monday to discuss the status of the USOC deal, which Marshall, the city and the USOC agreed to last year. The three parties had agreed two weeks ago to renegotiate the deal.

Under the original March 31 agreement, LandCo is constructing a new USOC headquarters at 27 S. Tejon St. and remodeling a former Springs Utilities building in southwest downtown into offices for Olympic national governing bodies. The USOC building is expected to be finished July 30; the national governing bodies' space, in two months.

Marshall and LandCo also are supposed to make $16 million worth of improvements at the USOC's Olympic Training Center in Colorado Springs, which will include new housing for athletes and an expanded cafeteria. That construction, however, hasn't started and likely won't be finished by a Dec. 15 deadline.

In exchange for that work, the USOC agreed to remain in the Springs for 25 years. The organization has had a training center on Boulder Street since 1977 and moved its administrative offices to the same site from New York City a year later. When the USOC announced in late 2007 it was considering a move, Springs officials and community leaders sought to fend off other cities' incentives packages by offering their own.

Vice Mayor Larry Small said Wednesday he's seen no evidence that LandCo and Marshall, the company's chairman, won't complete their end of the USOC agreement.

Still, Small said he's concerned about the various entanglements related to Marshall's real estate and business dealings.

If LandCo can't perform, Small said, the city might consider other alternatives, which he added could include seeking one or more developers to partner with LandCo - or to take over the project altogether.

"Right now, they're in the project, and I don't see anything that's happened to date that would take them out of the project," Small said of LandCo. "I know they're having problems, but as I said, if it doesn't affect our project, I don't care what their problems are. But if their problems start becoming our problems, then we're going to have to deal with it."

Councilman Jerry Heimlicher said he's "very concerned."

"My goal is make sure that the headquarters is finished, the building for the national governing bodies is finished, and the work on the Olympic Training Center is done without additional public (financial) support," Heimlicher said.

Monday's council meeting has been tentatively set for 4 p.m. at City Hall. Small said the meeting will be with council members and city staffers; LandCo representatives won't attend, he added. The USOC doesn't plan to participate, but expects to be briefed later, spokesman Darryl Seibel said Wednesday.

Seibel added the USOC isn't worried about Marshall's ability to complete his part of last year's incentives package, hasn't heard about the possibility of his being replaced and won't speculate on what could happen.

Under the original deal with the USOC, a city agency was supposed to buy the top five floors of the new headquarters building in November after selling $27.5 million in securities called certificates of participation, but the transaction was delayed because of weak financial markets. City officials said five weeks ago they expected the certificates to be issued in four to six weeks.

The USOC has not signed a lease on the headquarters because it is not yet required to sign it, Seibel said last week. The USOC was told by city officials the certificates could be issued ahead of the lease signing, he said.

Heimlicher believes the city shouldn't issue the certificates "without a commitment " from the USOC.