Firm Sued Over Loan and Alleged Lease Deal

The chairman and chief executive of Gradco Systems Inc. has been accused in a $6-million lawsuit of trying to help negotiate a “usurious” loan and then backing out of a proposed real estate deal when the loan was rejected.

The lawsuit was filed Jan. 25 in Orange County Superior Court by Richard Boureston and Alton Laguna Partners, a limited partnership set up to develop office property for Irvine-based Gradco. Boureston is a general partner in Alton Laguna.

An attorney for Gradco, Lance Cote of Irvine, said Wednesday that the lawsuit is “factually and legally meritless. The only reason it was filed was to coerce Gradco into leasing . . . space.”

The complaint contends that Gradco, a manufacturer of paper sorters and collators for office copiers and printers, backed out of an agreement to lease office space after Alton Laguna would not agree to a usurious loan that involved an unusual “facilitation fee.”

According to the lawsuit, Gradco Chairman Keith Stewart told Boureston early last year that he would sign a long-term lease with Boureston’s company if Boureston were to build an office to fit Gradco’s needs.

Alton Laguna found a land parcel in the Irvine Spectrum area, which Stewart and Gradco agreed to lease, the lawsuit states. Gradco negotiated lease terms with the plaintiffs, who were spending money on the project, the complaint added.

In May, Stewart allegedly told Alton Laguna that Stewart and his attorney wanted a company called CBB to invest in the development. But Alton Laguna’s lawyers advised against a direct investment for tax reasons and instead suggested that CBB loan construction funds to Alton Laguna.

Eventually, Gradco’s attorney recommended that CBB loan Alton Laguna $3 million as a portion of the temporary construction loan for the project, the suit states. When a permanent loan was obtained from traditional lenders, CBB was to get back its $3 million plus a “facilitation fee” of $1.8 million, or 60% of the loan amount, according to the suit.

Alton Laguna ultimately decided that it did not need CBB’s $3 million. But by that time, conventional lenders who had been told of the proposed loan “were suspicious that Stewart had a personal interest in the CBB transaction,” the lawsuit states.

Stewart told Boureston that the Gradco lease of the new building did not hinge on the CBB loan, the lawsuit states. Even so, shortly after Alton Laguna’s rejection of the loan, Gradco Secretary Newton Lee Jr. told Boureston that Gradco would not enter into a lease for the new project, according to the suit.

The suit alleges that Gradco, Stewart and Lee acted in bad faith in dealing with Alton Laguna. It also alleges that Stewart, Lee and CBB conspired to “suggest that plaintiffs borrow money from CBB for a usurious fee . . . to acquire new space for Gradco. The fee, once paid, would personally benefit the individual defendants as well as CBB.”

The lawsuit, filed by the Irvine law firm of Layman, Jones & Dye, seeks damages for alleged breach of contract, intentional interference with potential business advantage and loss of the parcel’s increased value. Attorneys for the plaintiffs declined to comment.