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Wednesday, October 16, 2013

Another person burned by Copar Quarries comes forward

Businessman charges Copar with reneging on contract
Brunswick Mill fire, 2000 (CT DEEP photo)
By Will Collette

For previous coverage of Copar Quarries, click here.

Business developer John Gauvin of Saunderstown read the Progressive Charlestown coverage of the Copar Quarries and wrote “I, as the Managing Member of Old Village Mill LLC of Connecticut want to add myself as a victim of Sam Cocopard. In the summer of 2009 I went through a ton of problems with Sam Cocopard and Dan T. Tons of broken promises one after another.”

Gauvin sent me documents describing how in 2009, Sam Cocopard whose company was then called the Copar Corporation, made Gauvin an offer for a lease to restore and excavate a former industrial site – one of EPA’s “brownfield” sites, the site of the Brunswick Mills that burned down in 2000 - in Moosup, CT that Gauvin planned to develop into the Old Village Mill project.

Cocopard’s offer to Gauvin was similar to the one he just signed with Richmond Commons developer John Aiello. Copar would go onto the site of the future development to blast, mine and remove stone and gravel for sale to outside customers and, in the process, prepare the land for development.

Cocopard offered Gauvin a price of $10 a ton for the stone at the Moosup Old Village Mill site, compared to $1 a ton he promises to pay Aiello for removing stone from the Richmond Common site.

At approximately the same time that Cocopard was promising to pay Gauvin $10 a ton for stone removed from Moosup, Cocopard was promising to SELL stone to RI waste hauler Joe Vinagro for $3 a ton that Copar would mine from a site they didn’t actually own in Sterling, CT.

You may be wondering how Copar can buy stone for $10 a ton from Gauvin and sell stone to Vinagro for $3 a ton. The answer is found in an old Saturday Night Live commercial parody: VOLUME.

Copar’s offer to Gauvin specified a purchase price of $361,290 for the “exclusive mining rights of all earth, fill and rock, free of all claims and encumbrances.”

According to the agreement between Copar and Gauvin, that money was supposed to be deposited into a trust account with Gauvin’s attorney on July 1, 2009.

It wasn’t, according to a letter from Gauvin’s attorney to Copar.

Copar was also supposed to pay the Town of Plainfield $50,000 as partial payment on the property taxes that had accumulated on this stalled project. That payment was supposed to be made on July 15, 2009.

It wasn’t.

Copar was also supposed to produce a certificate of liability insurance.

It didn’t.

Copar was supposed to submit a $5,000 deposit with its initial proposal letter, but according to Gauvin, they didn’t even do that.

This left Gauvin in the lurch. As he described it, Copar “completed the deal and did not have the funds to close the deal. We defaulted him on the deal and threw his ass to the curb.”
Gauvin then had to find another contractor to fill in.

Going from Bad to Bad

This is what Gauvin hopes to build on the old mill site
In 2011, Gauvin found Julian Development of Monroe CT to take over, only to discover that he had hired another bad contractor.

In the case of Julian Development, Gauvin became wary when they failed to produce the required performance bond. After several months, in January 2012, they finally came forward with a bond from Great Northern Bonding Ltd.

By this time, Gauvin had taught himself how to do his own due diligence research and discovered the “performance bond” posted by Julian Development was issued by a Leo M. Rush, a fraudulent bonding agent who ran several bogus, unlicensed bonding companies out of a mail drop in Danbury CT.

Gauvin dug deeper and learned that bogus bonder Leo M. Rush had also issued worthless performance bonds on several public construction projects at the University of Rhode Island.

Gauvin gave his research to Derek Gomes at the South County Independent who then ran the exposé on July 27, 2013.

My favorite section from Gomes’ article is this:

When Gauvin reviewed the terms of the bond, he noticed two red flags: the bond would not take effect until December of that year, and it was for $20,000 more than the estimated cost of the project.
“Who spends more money than they have to?” Gauvin said. “[I thought] maybe this is a fraudulent bond.”
Gauvin visited Great Northern Bonding Company’s office in Danbury. When he and his wife arrived at the building, she asked a receptionist where the company’s office is located. The receptionist pointed to a mail slot – Great Northern’ s office was a mail drop, Gauvin said. According to Gauvin, the receptionist said all correspondence sent to the company’s Danbury office was forwarded to an address in Dexter, Maine and then to an address in Pelham, New Hampshire.
Of course, the bogus bond meant that Gauvin also had to fire Julian Development but by this time, a lot of damage was done. After the “Great Northern” bond was revealed as bogus, Julian Development came forward with another bond, this one from Newport Insurance which turned out to be another one of Leo Rush’s unlicensed bogus bonding agencies.

I think a major part of the problem - and also a symptom of how bad a company Julian Development is - is that just weeks before the deal between Gauvin and Julian Development, the Connecticut state courts turned down a Julian Development appeal in a major case they had lost to Shaw's supermarkets.

The court turned down the appeal and ordered Julian to pay Shaw's $7.3 million. The court also authorized Shaw's to seize all of Julian's assets. No wonder they couldn't perform their obligations under their contract to Gauvin. But Gauvin had no knowledge of this at the time.

From bankruptcy to recovery

On May 2, 2012, Old Village Mill LLC filed for federal protection under Chapter 11 bankruptcy. Gauvin faced $4.4 million in debt while only holding $1 million in assets. He owed a quarter million dollars to the federal EPA and over $100,000 in property taxes to the town of Plainfield CT.

He’s out of bankruptcy now. He greatly reduced the debt through a settlement with his lender. Now he has a new agreement with his private lender and says he is smiling a bit broader these days.”

Gauvin also says there is a FERC-licensed hydroelectric plant included in this project that will net Gauvin and his partner, US Hydro of Maryland, the ability to sell $6 million in renewable energy credits over a 15 year period.

Plus, the stone that first Copar, and then Julian Developers, planned to mine is still there and worth money.

He tells me his lawyer is carefully vetting new contractors and he’s still hopeful that the project will be completed. Gauvin says The site when completed will be a pre-approved industrial park that will provide its tenants with clean affordable renewable energy.”

Sometimes a contractor refuses to be fired - Julian working on
Gauvin's site even after he officially fired them
Julian Development is still giving Gauvin trouble even though they were the one who submitted the bogus bond. They are challenging Gauvin’s right to dismiss them from the job and, oddly, they have backing from the town. Gauvin is confident of success in fighting off Julian’s challenges and getting the project back on track.

Gauvin noted that it was relatively easy to get rid of Copar, since they never fulfilled any of the terms of their agreement with him so he never let them onto the site.

Julian Development did get onto the site, through the use of the bogus bonding and then fought like a tick against Gauvin’s actions to remove them, even necessitating the intervention of the Plainfield town police.

Prevention is the Key

Gauvin told me that he wanted to add his voice of caution about Copar Quarries and bring his dealings with Copar and Sam Cocopard out into the light. He was appalled when he heard about Copar’s deal with John Aiello to excavate the Richmond Commons site with the option to buy.

One of two worthless bonds posted by
Julian Development
Gauvin also warns about the hidden dangers of bond rip-offs like those he found and experienced. He told me that “Performance Bond fraud is an $800 million dollar a year crime here in the USA.”

He asked if our local towns of Westerly, Charlestown and Hopkinton have secured bonds from Copar to protect the town from costs and liabilities if things go wrong – a reasonable fear, given Copar’s track record.

I discovered that Charlestown did not ask for nor receive a bond from Copar. Neither did Westerly. Neither did Richmond. All three municipalities have been made to look like fools by Copar.

Area contractors have told me that getting a surety bond is as difficult as it is to get a loan. Since the bonding agency is on the hook for a lot of money, they now do exhaustive credit and background checks to protect their money. They raised doubts about Copar’s ability to get legitimate bonding given their high level of debt and regulatory problems.

The only bond I found for work being done in Rhode Island by Copar is the surety bond issued to its blasting subcontractor, Maine Drilling and Blasting. That bond is issued by the Maine branch of the Berkley Surety Group, a subsidiary of Fortune 500 company, W.R. Berkley Corp.

But I have not found any evidence of a surety bond that covers Copar.

Bad contractors can be a headache not just for their customers but for many others, including local and state governments – even when the construction projects are private, as in the case of Old Village Mill.

When local governments lack good ordinances, such as bad actor laws that bar the granting of contracts or business licenses to businesses with bad track records, predators can wreak havoc. As we've seen with Copar, their problems become the town’s problems pretty easily.

John Gauvin says the town of Plainfield ignored the evidence and allowed Julian Development’s bogus bond to slip by.

Better to keep the bad boys out of town than to
have to round them up later
For a period of 18 months, Gauvin fought with the town over the town’s failure to perform a proper review of the $240,000 bond they accepted from Julian.”

Charlestown, Westerly and now Richmond face the same complicated mess because they do not have the protection of “bad actor laws” to keep companies like Copar Quarries out. They also have not effectively enforced their own town ordinances to police Copar’s activities.

The Westerly and Charlestown governments look inept and foolish as they try to catch up and try to calm down angry citizens. Soon, it will be Richmond’s turn.

Experiences like those of John Gauvin’s show that the best way to protect the people from bad contractors is to keep them out. Simply put, it’s a whole lot easier to keep a bad company out than it is to dislodge a bad company once they are in.

But if they slip in, you have to be ready to fight, no matter how hard it is or how long it takes. Gauvin tells me that his favorite motto these days is “Be a Victor, not a Victim.”