The real estate company spearheading the construction of a luxury housing development near Coalville, Wohali Land Estates, filed for bankruptcy in federal court last week with a reported debt totaling more than $13 million.
The company had already been named as defendants in four separate civil lawsuits related to alleged financial mismanagement and voluntarily submitted a petition declaring Chapter 11 bankruptcy on Friday. Court documents appear to indicate Wohali Land Estates hopes to reorganize the business to handle, and eventually pay off, its existing debt rather than disbanding the company — and abandoning the project altogether.
Wohali also listed six pieces of “real property” requiring ongoing attention throughout the bankruptcy proceedings, including maintenance of the golf course; securing the site around the construction of a public roadway; public infrastructure improvements, such as municipal sewer upgrades, because of the “general health and safety risk affecting the public”; basic utility services; securing, protecting and continuing work on structures at-risk from inclement weather; and stabilizing construction zones on the golf course to prevent erosion.
The real estate business estimated it had between 100 and 199 creditors who were owed between $100 million and $500 million, providing an additional list detailing that the company owes approximately $12,908,637 to its top 20 creditors alone.
Two of the companies listed as Wohali’s top creditors — Eave Solar and Knight Trucking — had already filed lawsuits against Wohali Land Estates demanding payment for provided services earlier this year.
Eave Solar, a company committed to “delivering cutting-edge solar technologies” in Utah, filed its lawsuit against Wohali in July with allegations that the business was owed approximately $489,492 for work on six different lots within the development.
The complaint detailed documentation of the solar company’s attempts to contact Wohali for payment, including six preliminary notices filed in February and March with the State Construction Registry, a government agency intended to “protect public health, safety and welfare by promoting a fair working environment for construction projects in Utah.”
Knight Trucking, a transportation services company with a terminal in Salt Lake City, similarly claimed in a separate lawsuit that Wohali failed to pay around $119,255 for the business’s work hauling materials to and from the construction site between Jan. 10 and May 28.
Thomas Cottone, who is a founding member of Wohali Builders, also filed two lawsuits against the company, a key executive and one of the business’s investors earlier this year. In addition to financial mismanagement allegations, Cottone claimed the executives engaged in coordinated retaliation efforts to defame him and remove him from his position on the board after he attempted to voice concerns and reestablish oversight through further financial controls.
John Kaiser, the Wohali executive named as a defendant in Cottone’s litigation alongside investor Matthew Galioto, has been working to bring his vision of the multimillion-dollar project to life in eastern Summit County for the past eight years. Cottone, however, claimed Kaiser and Galioto accused him of misconduct “in a series of emails, meetings and calls with the project’s investors” after Cottone encouraged the development company to agree to an audit, improve financial controls and provide transparency regarding business transactions.
Cottone said his reputation was “irreparably tarnished” as a result, and he was subsequently removed from his leadership position with the project.
Throughout the lawsuit, he also alleged Kaiser has a history of fraud connected to similar development projects across the country, including a 2015 civil case in Arizona in which Kaiser was ordered by a judge to pay defrauded investors $515,000.
In 2013, Kaiser testified against his former business partner, who was ultimately convicted of defrauding investors in New York. The criminal case was Kaiser’s introduction to Galioto, an FBI investigator who worked the case and used him as a witness.
“On information and belief, it is highly irregular and against standard practice for a law enforcement officer and his former source — in a complex fraud action involving real estate developments — to enter into a substantial business relationship, also involving a development project, with a key witness,” the lawsuit said.
Cottone became involved with the project in 2017. He grew the investor pool to 65 members and $25 million in contributions, as well as securing a $79 million loan, before he voiced concerns about financial mismanagement in late 2022. He was then ousted from the company and the project in retaliation for becoming a whistleblower, Cottone’s lawsuit alleged.
“Cottone would later learn that months before Kaiser shut him out, he also tried to inhibit Cottone’s ability to maintain the required checks and balances — and justify his own obstruction — by initiating a smear campaign against Cottone amongst Wohali Builders employees, generally accusing Cottone of being a bad guy who was untrustworthy and committing nefarious and potentially ‘illegal’ acts,” the complaint said.
Cottone asked for a total of $195 million in damages — $65 million for each claim of defamation, invasion of privacy and interference with Cottone’s economic relations — as well as attorney’s fees.
The libel lawsuit involving Kaiser and Galioto has a motion hearing scheduled for 2 p.m. on Nov. 18.
Kaiser, who referred to himself as the company’s “manager” in court documents, signed the voluntary bankruptcy petition on behalf of Wohali Land Estates.
Neither the bankruptcy case nor the three other civil cases have court hearings scheduled as of Monday afternoon.
Filing Chapter 11 bankruptcy gives Wohali time to reorganize the company’s finances with oversight from a court-appointed trustee before entering into a debt repayment plan. If Wohali successfully engages in the process and completes its repayment plan, then the business will resolve its debts and continue operations.
However, if Wohali fails to reorganize its finances, then the business will likely be forced to liquidate its assets and disband the company.