No doubt many people here who turn to local media outlets for tips about money issues recognize Nathan Bachrach as half of the two-man advice dispensary called Simply Money. What Mike and Mike are to sports fanatics and Click and Clack are to befuddled car owners, Bachrach and his partner Ed Finke are to the mind-boggled masses on financial esoterica like exchange-traded funds and Coverdell IRAs.
The pair hit the airwaves in 1995 on WVXU-FM and have grown their Simply Money franchise into a trifecta on WKRC-AM radio and Fox19 TV and in Friday editions of The Cincinnati Enquirer. In a milieu good for inducing sleep, Bachrach and Finke break down financial jargon into language people can understand. Bachrach, 61, knows his stuff. Last month, Barron’s magazine named him and his Financial Network Group as the 44th best financial adviser in the country. The firm, which has 45 employees in Sycamore Township, handles $1.5 billion in clients’ money.
All is not so rosy in Bachrach’s world, though. For three years now, the nation’s second-biggest bank has been after him to make good on $2.4 million it claims he owes. Ever hear of Kenwood Towne Place, the half-finished retail-office complex on I-71 that went bust under $136 million in debt? Not only was it the region’s most spectacular real estate failure during the Great Recession, it festers on as one of the most contentious court cases in Hamilton County history. Bank of America, which loaned the project $97 million in 2007, was allowed to take over the project through foreclosure. And because each of the eight partners signed personal guarantees of the loan, the bank is asking Hamilton County Common Pleas Judge Beth Myers to force them to honor those pledges, including Bachrach’s $2.4 million.
Bachrach entered the picture when the eight-story Kenwood Towne Place was just a concept in 2003. He’s a bit player, with only a 2.5 percent stake. He owns it solely by virtue of having given his developer friend Hank Schneider the idea of doing the project in the first place. Unlike his partners, Bachrach had no skin in the deal.
“I got asked twice to be an investor,” Bachrach said during a December 2010 deposition for the court case. “I declined both times for financial reasons. A pack of paperwork got sent to my office. I called up Hank again, told him I couldn’t afford to do this. He said, ‘I don’t want any money. Just sign the paperwork,’ I was flattered.”
Tied down by his own business and media appearances, Bachrach let his partners savvier in real estate, including Schneider and Tom Neyer Jr., deal with construction and project financing. He also assumed they knew what they were doing when they brought in two shopping center developers, Matthew Daniels and Timothy Baird, as 50 percent partners. Their Bear Creek Construction would build Kenwood Towne Place.
The project seemed to thrive. Kroger unveiled an un-Krogerlike concept supermarket called Fresh Fare. Crate & Barrel, The Container Store and LA Fitness soon followed. But for reasons that are still being debated, Kenwood Towne Place fell behind on the bank loan and bills, and subcontractors walked off the job, leaving behind idle cranes and exposed steel beams. Bank of America filed its repo suit in May 2009, and the bickering over money erupted into a feeding frenzy for lawyers.
Although it won the right to take over the project, which subcontractors are appealing, Bank of America still has to fight off counterclaims that it joined Daniels and Baird in a “fraudulent scheme” detrimental to Kenwood Towne Place. Schneider accuses the bank of violating its own policies by diverting loan proceeds to offset its losses at other Bear Creek projects. He also accuses a bank loan officer of sleeping with Baird, compromising the bank’s vigilance over the loan. The bank denies the claims, but its pursuit of the personal guarantees seems anything but a slam-dunk case.
Bachrach declined to be interviewed, and his Kenwood-related troubles have never been aired out in the media outlets he works for. But in two depositions under oath, he comes across as both out of his element in the promiscuous realm of real estate development and too trusting of others. Under questioning by Bank of America lawyer David Kern, Bachrach recalled the day when his $2.4 million guarantee agreement was sent to his office.
“So you read that document before you signed it?” Kern asked.
“I saw that it was a personal guarantee,” Bachrach said. “I did not read the whole thing, but …”
“And did that cause your antenna to go up?”
Bachrach then said that Schneider told him not to worry about it because the project was a “home run. We have a guarantee price to finish the building. You’re only on for the construction guarantee. Once the building is finished, you’re off. Don’t worry.”
“And did you not worry at that time or were you concerned about signing a personal guarantee?” Kern asked.
“I did not perceive that the risk that I was taking was the risk I took,” Bachrach replied. “That would be a gross understatement.”
Bachrach didn’t learn his trade in college. His postsecondary vitae? An undisclosed bachelor of arts degree from Hofstra University and a master’s in planning from the University of Cincinnati. “I’m one of those guys who got in the investment business and was trained by my sales manager,” he said.
Bachrach also conceded that he didn’t do any “due diligence,” that is, investigating, on the creditworthiness and financial wherewithal of his partners. Nor did he know if Schneider and Neyer had done due diligence on the Bear Creek partners. “I can only hope,” he said.
If only Bachrach had paid heed to one of the cardinal rules he shares with listeners of his radio talk show. Specifically, his show of Jan. 13, 2011, called “Don’t Get Scammed,” when he said, “A big takeaway for all investors? Always do your own due diligence before you invest a cent.”
CONTACT JAMES MCNAIR: [email protected] or [email protected]