Members of the Woodmoor Pines Golf and Country Club near Monument consider the club to be their neighborhood’s crown jewel, a recreational gathering spot that’s near and dear to their hearts and their property values.
So it’s no surprise that in 2008, when it faced financial straits for the second time in recent years, some of the members dipped into their retirement savings to rescue the club, putting up more than $1.5 million.
But at least some of the money they thought was going into their club apparently ended up in the rough. Today, a receiver appointed to oversee club affairs claims in court filings that the members were misled and that their money was misspent.
Altogether, up to $10 million in bank loans, accounts payable, payrolls and more are in dispute.
The man at the center of the battle: Gene Hoffman, a Tampa, Fla., businessman who had been brought aboard as general manager by the club’s owners in 2003.
Hoffman, who rents a home in the Woodmoor area from club owner Ken Adelberg, disputes the claims and said he’s in litigation with the owners.
“They’re trying to take it (Woodmoor Pines) away from me. Since I’m in a lawsuit with them, I have no further comment,” he said.
A Business Journal review of court records, interviews with the owners, members and others reveals how the club’s members and Hoffman ended up swapping their golf clubs for daggers.
The Woodmoor Pines Golf and Country Club, established in 1969, has been struggling for years. It went through bankruptcy in 2002, emerging only after Adelberg, who lives in the Philadelphia area, paid $3.75 million to Pueblo Bank and Trust to acquire the club along with other investors.
Hoffman, who had met Adelberg on the golf course in Florida, moved to Woodmoor after he convinced the owner to name him GM, Adelberg said.
Adelberg and Hoffman established KDGC Holdings LLC as the company that owned the property. Hoffman separately established Oxford Resource and Management to run day-to-day operations of Woodmoor and a second nearby course, Kings Deer Golf Club.
Years of neglect had left Woodmoor in need of updating. The list of capital expenditures was long and included replacing the course’s irrigation system.
The club coffers for those types of expenses had long been near-empty, so Hoffman began soliciting members for loans and even equity positions.
Among those approached by Hoffman were fellow golfer and Florida acquaintance John Alexander and Vic Harshberger, a retired Kraft Corp. executive who had moved to Woodmoor in 2008 with his wife. The Harshbergers bought a house on the golf course and settled in to enjoy a comfortable retirement. The country club was a big part of their plan.
Harshberger said Hoffman persuaded him to invest $600,000 in the club to help pay for the improvements. And Alexander said Hoffman convinced him to loan the club $274,000 to pay for part of the new irrigation system.
Alexander and Harshberger were eventually joined by at least four other members and area residents who made the club loans.
They did so, they said, to protect their community and ensure the quality of their retirement. Hoffman excited members with notions of club expansion and upgrades.
The interior clubhouse, he told them, would be redesigned and the pro shop would be upgraded, the roof repaired, and food and beverage facilities would be renovated. Also, a marketing campaign would be launched to attract new members.
As part of the strategy, Woodmoor Pines in 2005 acquired neighboring Kings Deer, in a move designed to increase the club’s value to members who could now play at both courses.
Membership swelled from 700 to 1,200 members in a year’s time.
All of this bolstered investors’ confidence in Hoffman.
Harshberger said he believed the club was on a new and sustainable course.
“I agreed to become a small equity partner for $600,000 in order to help the club in order to help stabilize it financially,” he said. “I never thought this would happen.”
By mid-2009, however, Harshberger had begun to question why he wasn’t receiving regular financial performance statements from the club. Also, many of the upgrades never got done.
Other creditors also became concerned.
Denver-based Colorado Community Bank, owed about $4.3 million by the club, asked for an emergency receiver to be brought in.
On Nov. 20, 2009, Fourth Judicial District Court Judge Larry Schwartz appointed Colorado Springs accountant Jerry Hilderbrand to serve as the receiver. Hilderbrand fired Hoffman the next day and appointed another local accountant, Joe Zalewski, to begin an audit of the books.
Rather than neat records, the new team found hundreds of invoices stuffed into file folders with yellow sticky notes attached that provided little or no information about payments made or received, Hilderbrand said.
“When we started our investigation, there were literally no financial records,” Zalewski said.
On April 22, Hilderbrand issued a report to the court, alleging Hoffman had misled members and drained the club’s finances.
Hilderbrand said Hoffman was “siphoning off a six-figure tab in food and beverage alone.”
“It is my opinion that the documentation … provides sufficient evidence of an intentional conversion of monies to sources outside of Woodmoor,” he said in his report.
Again, Hoffman refutes the allegations and declined to comment further.
Hildebrand and Zalewski also learned that Hoffman had been the subject of a federal bank and mail fraud case in Virginia, and that he served 15 months in prison beginning in 1995.
Hoffman’s company at the time, Hills Bros. Shoe Co., was found to have defrauded elderly mail-order customers out of more than $1 million between 1991 and 1992.
Adelberg said he was unaware of Hoffman’s dealings and trusted him.
“Everyone trusted him,” Hildebrand said of Hoffman. “It’s the worst case I’ve ever seen.”
No charges have been filed against Hoffman in the Woodmoor Pines case. Hilderbrand, however, said he submitted a 900-page report about his findings to the FBI and the IRS. An investigation, he said, is under way.
Adelberg said he and the other creditors don’t hold out much hope of recovering their money.
“We are both as a group and individually suing him,” he said. “But there are so many judgments filed against him. There are also lists of IRS liens we’ve found filed against him all over the country.”
The investors have formed a new group, Tri-Lakes Golf, which purchased the troubled club in August. A new management company, Legend Management, is headed in part by Harshberger in the chief operating officer role and Zalewski, who now serves as chief financial officer.
“We expect it to take 18 to 36 months to turn things around,” Harshberger said.
Deferred maintenance on heavily used facilities such as the club’s swimming pools, tennis courts and restaurants continue to be a drain. There’s also the matter of obligations assumed under the now-dissolved KDGC, which Harshberger and the others say they’ll try to offset by offering ownership stakes to some of those owed the money.
But they’re optimistic.
“We’re on the way back up — like the phoenix that rises from the ashes,” Zalewski said.
Adelberg, in the meantime, is trying to evict Hoffman from his rental.