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ReadyAir added Cafaro as partner


Published: Sat, March 25, 2006 @ 12:00 a.m.


The owner's criminal background didn't prevent him from receiving state CDBG funds.
By ED RUNYAN
VINDICATOR TRUMBULL STAFF
VIENNA -- ReadyAir took on a powerful new partner, Anthony Cafaro Sr., in the final stages of loan talks with Trumbull County last year -- after the county had declined the financing four times.
County officials eventually agreed to lend the fuel and service provider at the Youngstown-Warren Regional Airport $200,000.
County officials now wonder if they will ever see that money again.
ReadyAir made its first loan payment in November but failed to make the others. The company filed for bankruptcy earlier this month.
Cafaro stockholder
An April 27, 2005, letter from ReadyAir to the county says Cafaro, president of Cafaro Co. of Youngstown, one of the nation's largest shopping center developers, had become a 1 percent stockholder.
This was a new development, because documents contained in ReadyAir's loan application showed that Robert Moosally of New Castle, Pa., was sole owner a month earlier.
"I had a small, passive investment," Cafaro explained.
"I got a call from my friend, Bob Moosally, and I invested some money in it," he said. "I had no involvement or management in the business."
Cafaro said he considered the money a loan to a high school friend, and Moosally gave him the 1 percent in return -- though he didn't ask for it.
"I really don't know anything about his business. I don't know for sure what they do, but if I can help a friend, I'm always willing to do that," he said.
More help from higher up
Moosally also got help in 2004 and 2005 from the Ohio Department of Development and office of U.S. Rep. Tim Ryan of Niles, D-17th.
Alan Knapp, Trumbull County Planning Commission director, said meetings were held in which Julie Michael Smith of the development department and Barb Ewing from Ryan's office tried to find a way to build a new road at the airport -- and a hangar for ReadyAir on that road. That project didn't happen.
But while working on it, Smith advised Knapp that she had checked with officials in Columbus and determined that Moosally's criminal background -- which includes convictions for bank fraud -- would not prohibit him from receiving Community Development Block Grant funding for a new hangar or for a loan.
Armed with that knowledge, Trumbull County's revolving loan fund committee voted 5-0 on Aug. 26, 2005, to recommend the $200,000 loan, which came from CDBG funds. County commissioners voted 3-0 to approve it Sept. 2.
Lewis Kostoff, the loan committee's chairman, said he felt strongly about approving the loan because the ReadyAir hangar was in deplorable condition.
The company told the committee that ReadyAir wanted to be prepared to offer fuel and other services when the airport secures a regular carrier, said Kostoff, a pilot. He said he's frustrated with the lack of airport activity and hoped the loan would improve conditions there.
Criminal background
Kostoff said information about Moosally's criminal background was in the loan packet. But Kostoff said he's a volunteer and didn't think it was his job to research Moosally's background on his own.
ReadyAir's 10-year county loan was at 3 percent interest. The company said it would create 10 full-time equivalent jobs in two years and preserve 10 jobs. ReadyAir said the loan would help to improve the hangar and buy additional equipment. The total project was estimated at about $500,000.
Moosally's attempts at getting a county loan began in early 2004, about the time ReadyAir first began airport operations. It requested $300,000 to install a "fuel farm" to fuel airplanes. The loan committee declined that request at three meetings from February through June 2004 for not meeting various requirements.
The committee still turned down the loan in March 2005, but by this time ReadyAir no longer wanted it for a fuel farm. That's because in October 2004, ReadyAir signed a contract with Ross Development of Cortland to hangar aircraft and provide fuel in exchange for financing the fuel farm. Ross Development lent ReadyAir $140,000.
By March 2005, ReadyAir wanted the county loan for hangar improvements, but the loan committee needed more information. Over the next few months, ReadyAir would attempt to provide this -- from a personal guarantee of loan repayment to an explanation of Moosally's criminal history.
ReadyAir also was able to meet one of the county's minimum thresholds: that the county's loan would make up no more than half of the total funds being borrowed. This came courtesy of $400,000 in loans from Sky Bank and the Small Business Administration on June 28, 2005.
Second mortgage
To get the $400,000, Moosally had to provide Sky Bank with a second mortgage on his home at 2810 North Beaver St. Ext., New Castle, Pa. A personal financial statement he gave to Trumbull County in March 2005 shows the home valued at $280,000 with a mortgage balance of $210,000 through National City Bank.According to Lawrence County records from June 2005, however, the house had an assessed value of $154,900 and a fair market value of $167,292.
Moosally and his wife, Patricia, made several mortgage changes between May and July 2005, Lawrence County records show.
On May 20, 2005, she obtained a 30-year loan of $265,000 on the house with Argent Mortgage Co. of Orange County, Calif. On June 18, 2005, she paid off the National City mortgage.
On June 29, 2005, she put her husband on the deed -- one day after Sky Bank approved ReadyAir's $400,000 loan.
According to the Small Business Administration, ReadyAir was approved for loans of $360,000 and $40,000 on May 11, 2005. The SBA does not lend money -- banks make the loans, and the SBA guarantees repayment for companies that qualify. For loans of more than $150,000, the SBA can guarantee repayment of up to 75 percent.
Loan criteria
Among the SBA's loan criteria are the company's repayment ability, good character, management capability, collateral and the owner's equity contribution. All owners of 20 percent or more of a business are required to personally guarantee SBA loans.
Knapp said he examined ReadyAir's application and believed the company provided reasonable documentation on its revenue projections, assets and business plan. "What was on paper was believable. What happens in reality is sometimes different," he said.
ReadyAir stressed that its airport niche would be to offer fuel at lower prices than Winner Aviation. It said Winner had a monopoly for nearly 10 years and was charging enough for fuel to drive away airport business.
ReadyAir reasoned that by offering low fuel prices, it could lure more local and out-of-area aircraft.
ReadyAir lost money in its first few years. The partnership's tax return showed it lost $2,812 in 2002 and $78,089 in 2003. ReadyAir didn't provide a 2004 return, saying that it hadn't been finalized.
In 2002, ReadyAir was owned by Hudson River Associates LLC of Moosally's home address; Steve Larchuk of Clinton, Pa.; and George Rozinak of Cranberry Township, Pa. By the end of 2003, however, Larchuk had sold his interest to Hudson River Associates. A March 2005 letter showed that Rozinak also had transferred his interest to Hudson.
A May 3, 2005, letter from James Misocky, assistant Trumbull County prosecutor, summed up the state of ReadyAir's loan application. It said the company would need to provide a personal financial statement for Moosally, a two- to three-year projection of company finances, an explanation of Moosally's criminal history and a personal loan guarantee from Moosally.
In the next few days, Moosally sent letters trying to meet these requirements.
His crimes
Moosally was convicted of defrauding the former Union Savings & amp; Trust Co. of Warren of more than $1.2 million in 1985 by overstating the future income of his construction and development firm, J.B.C. Investment Co. Vindicator files show he was convicted on two counts of making false statements and one of interstate transportation of a forged check. He served 29 months in prison.
In his letter to the county, Moosally explained one conviction had to do with a fire at a business of his in which he signed checks from insurance companies improperly. He gave an even shorter explanation for his conviction on filing false bank applications.
"I had several 90-day notes involving real estate which I purchased in the late 1970s. With the rise in interest rates and decreases in the value of the real estate I had to continually renew my notes to the bank. I did not amend the stated real estate that secured the notes and therefore was charged and [pleaded] guilty to false bank applications," he wrote.
According to FBI affidavits, the false statement charges stemmed from Moosally's providing eight accounts receivable invoices as collateral for loans of $750,000 and $525,000 that turned out to be false.
ReadyAir was welcomed at the airport in 2003, when it signed a contract to operate in Hangar 2, said Steve Bowser, director of aviation. The port authority favored having an additional fuel handler there.
Airport officials learned of Moosally's background just before signing the ReadyAir agreement. By then, plans had progressed to a point where it would have been difficult to turn back, Bowser said.
runyan@vindy.com
Contributor: Laure Cioffi of The Vindicator's Pennsylvania staff.


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