Feb. 11, 2007 - The snowy-haired gentleman with the soft Dundee burr might have been painting a word picture of Riverhead officials' fondest dreams last week as he described what he had in mind for a vacant stretch of old Navy land up the road:
A $750-million destination resort with a 50-story indoor ski mountain that would make Calverton the home of Long Island's tallest building. An aqua park and Olympic-caliber training facilities. An environmentally friendly design that would create thousands of jobs and vault the region to the forefront of sports tourism in North America, serving world-champion athletes, preschoolers, weekend warriors and the disabled at a price they could afford.
Tom Stewart, the 68-year-old Scottish entrepreneur pitching the visionary resort, has established a consistent business record over the past quarter century, Newsday has found: Dramatic press conferences and public announcements. Extraordinary projects offering something for everyone. And no visible means of financial support.
Stewart would be the first to admit he's neither a builder nor a financier - "I don't know what a bank guarantee even looks like," he said. Yesterday, he acknowledged that he's tried to build the same type of resort in cities all over the world, only to be scammed by business partners a half dozen times. None of his projects have yet been built.
But after a decade pursuing this resort dream, he believes his company, Stewart International Marketing, has finally reached a breakthrough to credibility after securing what he says is a deal with the Turkish government to build the world's largest indoor ski mountain on 200 acres in the Aegean city of Afyon.
Still, Stewart admitted he wasn't entirely truthful last week when he told the Riverhead Town Board that he was the chairman of Stewart International Marketing. In fact, he hasn't been chairman since 2004, when his estates were sequestrated by the sheriff of Dundee in a Scottish bankruptcy, and he left the board. This week he described himself to a Scottish newspaper as an "ad hoc" consultant. But he said the company, in which he owns a two-thirds stake, has appointed him to act on its behalf and "outside the country, I can call myself anything I want."
Riverhead Supervisor Phil Cardinale isn't so sure. "I would expect him to be chairman, because that's how he signs his letters," he said Friday.
And while Stewart last Wednesday pledged to invest $100 million of the company's own equity into the Riverhead project, he acknowledged the company's business filings don't indicate Stewart has $100 million in equity to invest. Its net assets as of 2006 were 254,229 British pounds, or about $500,295. That will change with the next filing, Stewart said Friday.
"The new accounts will show they have equity in the region of one hundred-and-something million," he said.
But a trail of financial failures and half-started enterprises follows Stewart and his North American chief executive, Delbert Freedline. Over the past decade, the two have announced the same type of indoor ski resort, and a variety of other athletic and economic development ventures, from Connecticut and the shores of Lake Erie to Lugano in Switzerland, Paris, Scotland, Poland and now Turkey.
"What it finally came down to for us was, 'Show us the money,'" said Matthew Galligan, town manager of South Windsor, Conn., where Stewart International Marketing's proposal for an $810-million indoor ski mountain preoccupied local business and government officials for three years before unraveling in 2000.
Scaffolding business folded
Stewart, a former hockey coach, admits he hasn't chalked up many financial successes. He built up a scaffolding business in the 1970s before the firm went into liquidation in 1983, according to the Dundee Courier newspaper. He owned and coached the Dundee Rockets ice hockey team in the early 1980s, but it went belly-up in 1987, according to press accounts. The Scottish Ice Hockey Association banned him from management or commercial involvement with the sport that year, for reasons it would not disclose.
But Stewart said the team wasn't insolvent and describes his banning as the result of local sports politics. He said the ban was later lifted. He has made several public overtures to buy other sports teams or launch sports ventures over the years in Great Britain, Switzerland, Poland and elsewhere, none of which has borne fruit.
Freedline, the Connecticut-based operator of a convention business, has a similar financial record. He forfeited his business in 1991 and declared personal bankruptcy in 1992, records show. He said the problems were caused by a client who failed to pay his bills. Freedline then promoted an $800-million public-private proposal to redevelop downtown Hartford that fizzled when the private money didn't materialize, the Hartford Courant reported.
In 1995, after securing a $1-million renovation of an old airplane hangar from Pratt & Whitney, he opened a trade show and exhibition hall called the Aero Center in East Hartford, a project embraced by officials as an economic development boon. But Pratt, which owned the property, kicked Freedline off the site after two years when he fell more than $100,000 behind on his rent, he acknowledged.
In March 1998, Stewart and Freedline joined forces in South Windsor, Conn., with a proposal for a snowdome similar to Riverhead's, on 160 acres just off Interstate 291.
Stewart promised to identify his backers as the project went forward, according to the Courant. As the cost of the project mushroomed, he asked for a $150-million subsidy, $60 million in tax breaks and a special legislative act to bypass the local approval process. But official enthusiasm faded and partners backed away after Stewart and Freedline repeatedly failed to show financing commitments, according to the Courant and Galligan, the town manager, and they allowed their options on needed parcels to expire.
But Freedline and Stewart said they were actively working with underwriters and spent $250,000 to prepare a direct private offering of securities for the venture when land-use problems, including wetlands and a holdout landowner, conspired to render their fundraising pointless.
In 2000, about the time the Connecticut proposal was unraveling, Freedline approached economic development officials in Erie, Pa., proposing a ski mountain complex on the shores of Lake Erie. Freedline asked for 100 acres on the waterfront, said Jake Rouch, executive director of the Erie Regional Chamber and Growth Partnership. Lawmakers tentatively put $40 million in the capital budget for him, too, but officials viewed the project as "hopelessly overaggressive," Rouch said.
"Very candidly, we humored the idea along, but ... we didn't comprehend how you were going to cover the debt service and the electric bill, let alone payroll," Rouch said. "... A business that is reliant on a big chunk of grant funding to make the model work is an immediate red flag."
They last heard from him in January 2001. Freedline said he abandoned the effort after a strenuous but unsuccessful search for sites in the area, which is his hometown.
A few months later, Stewart was in Scotland, where he announced he was planning to build the world's largest ski mountain in Monifieth, a small town on the east coast, featuring a hotel, chalets and dormitories for 1,000 athletes and would operate a children's sports academy charging just one British pound per day.
"The finance is in place," Stewart told the Dundee Courier. "All we need is the planning permission."
When local officials expressed skepticism, Stewart insisted the project was solid, saying Mile Rock Funding of Erie, Pa., had brokered the funding.
The financiers were Victoria Fintrade of Nottingham, and they demanded fees in advance for arranging funding, Stewart said yesterday.
Business records show Mile Rock Funding is a business name owned by Reed and Vickie Larson, who filed for bankruptcy in October 2005. Reed Larson held a seat on Stewart's board from 2001 to 2003, records show. The Larsons could not be reached.
A month after his Monifieth announcement, Stewart held a splashy press conference at the Dundee Hilton to announce he had secured $700 million in funding for a sports, leisure and retail complex outside Paris.
That was also Victoria Fintrade, Stewart says. "They stood up at the meeting and told the whole project team it's funded, but we've never seen the money and he [the Victoria Fintrade financier] disappeared to Spain," Stewart said. British government records confirm that Victoria Fintrade took more than $2 million British pounds, or $4.1 million, in processing fees and insurance deposits from numerous clients without ever obtaining any funding for them. The company is insolvent and its directors have been disqualified from doing business. Its links to Stewart International Marketing could not be independently confirmed yesterday.
Two years later, Jagadish Raja, chairman of a Virgin Island-based venture capital company, Celestial Overseas Ventures, announced he was prepared to provide hundreds of millions to Stewart's ski projects. Raja, a Dubai resident, joined Stewart's board, but his millions never materialized, Stewart said.
Supposed investor accused of fraud in India
In 2005, Raja was being sought for extradition by Indian authorities in a fraud scandal, having been accused of siphoning off some $2.5 million in economic development funds to private accounts for his sister-in-law and others, according to news accounts. She was jailed in October 2005; as of last November Raja was "still at large," the Indo-Asian News Service reported.
Though Stewart cited the Monifieth project for Riverhead officials, he admits he hasn't raised any money for it nor submitted an application to build it, though he believes officials would approve it now to boost the area after a recent plant closing that left 2,300 unemployed.
Turkish officials announced last summer that studies would begin on Stewart's proposal in the city of Afyon, where railroad lands have been set aside for a SnowValley resort geared to attract foreign tourists.
Last Wednesday, one of Stewart's local attorneys, Mitch Pally, told the Riverhead board that construction in Turkey would begin next month. His partner, Morton Weber, told Newsday on Thursday that he had the deed to 200 acres of Turkish land. When Stewart's Riverhead qualifications are reviewed, he said, "we will have one of the Turkish ministers and maybe the Turkish ambassador have a conference with Supervisor Cardinale."
But by Friday Weber and Pally were less certain where the project stood. They also were unaware Stewart was involved in a bankruptcy proceeding and not the company chairman until asked about it by Newsday.
After a flurry of e-mails across several time zones, they produced a copy of a letter on Turkish government letterhead yesterday, attesting that Prime Minister Tayip Erdogan attaches high importance to the Afyon project and has directed that it be finished "immediately."
Turkish government officials could not be immediately reached for comment.
Cardinale said he hopes Stewart succeeds in clarifying his bona fides for a project he calls "intriguing." But he's learned to keep his guard up when it comes to economic developers from far away.
Stewart, partners see failures as learning experiences
For their part, Stewart and his partners view the past decade of failed efforts as a learning experience. It has allowed them to hone their vision for a sports center that will transcend pure pursuit of profit and create an experience that benefits society on many levels.
"Our primary purpose is to attract and empower children," Stewart told the Riverhead board last Wednesday. On Friday, he added he hasn't been paid for his efforts to date, although he does have the ownership stake. "I don't take one dime," he said. "I can assure you I donated all my time and all my moneys to assure the success of a project called SnowValley being located anywhere."
But some veterans of his pitch say however pure Stewart's heart, communities pay a price every time they throw their efforts behind dreams that don't come true.
In Connecticut, a wealthy family was inspired by Freedline and Stewart's pitch and jumped in, designating their own land for the project and spending more than $1 million on development costs, according to Galligan and Stewart. Records show one family member, Jean Shepard III, joined Stewart's board and the family owns a 30 percent stake in the company to this day.
"I have seen the names and I have no doubt that it can be done," Shepard told the Hartford Courant in 1998.
He did not return calls for comment this week.
Tom Stewart and his partners have proposed at least a half-dozen receational ventures, most of them ski facilities, around the world. Here are some of those locations:
S. Windsor, Conn.
Calverton (Enterprise Park)
Stewart's Long Island team
Rubenstein Public Relations
Gary Lewi, above, and Jane Rub- enstein are representing Stewart's company with local media.
Weber Law Group
Melville-based attorneys Morton Weber, above left, Mitchell Pally, right, and Don Secunda will shepherd contracts and approvals.
Woodbury-based full-service consulting engineer handles site development, civil, structural, environmental and traffic engineering and construction management.