The recreational-vehicle company CEO whose failed dream left Marion responsible for a $2 million loan has started a new RV company 90 miles away.
Charles David Hoefer Jr. was president and CEO of Earthbound RV when its Marion factory shut down in late 2012, less than three years after the city backed a $2 million revenue bond whose proceeds benefitted Earthbound — and became the city’s liability after the company defaulted on the loan. Earthbound also defaulted on a promise to create 100 to 300 new jobs by 2012.
Hoefer incorporated a new RV company called Global Caravan Technologies (GCT) in January, state records show.
The company has set up shop next to Dallara IndyCar Factory in Speedway, outside of Indianapolis. The two companies are currently collaborating on a “futuristic green super-luxury RV,” billed as the world’s first carbon fiber RV, according to a recent press release from GCT. “Redefining ultra-luxury travel for the world” is GCT’s motto. The company plans to unveil more fuel-efficient, high-end products this winter, according to its website.
GCT has the benefit of learning Earthbound’s failures.
“What took place in Marion did give me the advantage to see where all the challenges were with trying to move forward,” he recently told the Indianapolis Business Journal. “What we’re doing here doesn’t even share a footprint with what we were doing in Marion.”
Meanwhile, the city of Marion’s latest audit cites a $200,000 bond payment due last December that Earthbound RV failed to pay. Records show the company made a single $100,000 payment toward the $2 million loan before closing down.
Hoefer could not be reached for comment, but at least two city council members said they would support the city’s attempting to recoup lost costs from him.
“I’m shocked, honestly, that they have defaulted on their commitment to us and now they’re going to try to make a go of it in another community without making us whole,” said Madonna French, R-Ward 2. “I think we should pursue in some fashion recouping our commitment that they walked from. I definitely feel like we should.”
Paul Thompson Jr., D-At large, agreed.
“I feel like they still owe us,” he said.
Jim Brunner, R-Ward 3, echoed those comments.
“I know how it makes anybody feel. We got left holding the bag,” he said. “Is that how America works?”
Brunner deferred to the city’s legal department, though, regarding whether the administration should pursue Hoefer.
Marion Corporate Counsel Don Gallaway did not respond to requests for comment on Monday or Tuesday. Neither did Mayor Wayne Seybold, whose assistant said he is out of town for a conference.
Thompson blamed the administration for not doing its homework prior to agreeing to lend Earthbound money.
City officials downplayed the October 2009 personal bankruptcy of Charles David Hoefer Sr., who founded Earthbound and was its first CEO, for example.
Former City Development Director Darren Reese said the risk was worth the potential reward and cited a number of safeguards the city would use to protect taxpayers in the deal.
Reese’ successor, Lisa Dominisse, did not respond to a request for comment Tuesday.
Bankruptcy court records show Hoefer Sr.’s total assets were $918,000, while his total liabilities were $5.3 million. Further, in the “nature of debts” section of the bankruptcy paperwork Hoefer Sr. completed, he checked off the “debts are primarily business debts” box, rather than the “debts are primarily consumer debts.” The courts discharged his $4.2 million in debts in April 2010.
While it remains unclear whether the city has any recourse at that point, bond legal documents don’t appear to rule out that possibility.
As for the city’s safeguards, the administration forfeited one of two houses put up as collateral. Hoefer Sr. owned both properties.
In January, officials revealed the first home, in Syracuse, was sold in April 2011 to help keep Earthbound going. The administration approved of the sale but did not inform the Marion City Council, which voted to approve the $2 million loan. The house sold for $700,000, according to Kosciusko County property records.
The second house, in Middlebury, came into the city’s possession last year, Gallaway has said. But as of June, the city had yet to sell it. Gallaway said the administration had been waiting for winter to pass before putting the property on the market, which he said in June he was in the process of doing via a local real estate agent. Property records show the five-bedroom house remains in Hoefer Sr.’s name.