"Greek" Alumni Seek To Void Dubious Sale Leaseback Of College Fraternity House Now Facing Imminent Foreclosure; Criminal Probe Possible

In Springfield, Missouri, the Springfield News Leader reports:

• Seven months after a group of Alpha Gamma Sigma alumni sued over what they said was the illegal sale of their fraternity house, the property is threatened with foreclosure. Should that come true, the eight students in the house must find a new place to live. It would also mean the 38-year-old organization would lose its place on the Greek Row. [... T]he agriculture fraternity's house is set for a trustee sale Tuesday, said Leland Gannaway, an attorney for Citizens National Bank of Springfield. The bank has loaned nearly $200,000 on the house. Officials at Missouri State University said they'll find space for the eight fraternity members should they be evicted.

***

• Meanwhile, the Springfield Police Department is looking into the matter. "Based on preliminary reports, we believe there is enough information to start a criminal investigation," Lt. David Millsap said.

• The disputes apparently stem from a 2005 sale of the house to two individuals, who at the time were on the board of directors of Alpha Gamma Sigma of Springfield, Inc. The corporation owned and managed the assets of the fraternity. [... Charles] Marshall, then the president of Alpha Gamma Sigma of Springfield Inc., said no formal vote was taken [approving the sale]. Interested members agreed to the sale over phone calls.

• Other alumni, nearly four years later, now argue the sale was invalid because the deal was not authorized by the corporation's board of directors, according to the petition they have filed in the Greene County Circuit Court. Since the sale, Marshall said he and [co-owner Robert] Ferber remodeled the property and leased it [back] to the fraternity. County records show the duo soon refinanced the initial note with a $120,000 loan from Citizens National Bank and, in 2006, borrowed another $78,895 against the fraternity house from the same bank.

For more, see Fraternity house faced with foreclosure.

For story update (9-2-2009), see Bank buys fraternity house at auction (Members will be able to work out lease arrangement).