Today’s Lesson: Just Because You Hit the Winning Shot in the NCAA Championship Does Not Make You a Real Estate Guru

A Lesson A Lot of Investors Needed to Have Learned

The basketball fans, including this one will always remember the shot by Duke star Christian Laettner to win the 1992 NCAA championship for Duke (a particularly bitter memory for us Carolina graduates).  Mr. Laettner went on to have a decent if not spectacular NBA career, and along with that decided to go into the real estate business with a teammate.

The two got serious about Durham real estate in 1995 when they created Blue Devil Ventures with Tom Niemann, a 1991 graduate of Duke's business school and the son-in-law of a long-time Duke trustee. The partners spent several years amassing funding, permits and historic tax credits for West Village, their proposed refurbishment of abandoned tobacco warehouses.

Blue Devil Ventures broke ground in a March 1999 ceremony attended by then-Sen. John Edwards and Duke coach Mike Krzyzewski. West Village's first phase included a 313,000-square-foot, $36.5 million apartment complex that quickly filled with grad students and university workers.

That success prompted the partners to expand the project threefold to encompass shops, office space and more apartments. To this day, it's considered a success. Occupancy remains high, the current management company says. "They have done a wonderful thing for downtown Durham," said Bill Kalkhof, president of development advocates Downtown Durham Inc.

So naturally the three moved on to bigger and better things, and bigger and better loans from various friends and professional athletes.  And naturally things went south, leaving friends and professional athletes looking to get their loans paid back.

The development ventures outside of Durham stalled. Even before the economic downturn in 2008, lenders began filing suit against Laettner and Davis's ventures for alleged failure to repay loans. Plaintiffs in civil suits charging their various legal entities and in many cases Laettner and Davis personally with failure to repay loans have included Fannie Mae, Chevron Inc. and a Duke law professor. Davis says that he and Laettner are committed to making sure their creditors get paid.

So why aren’t lenders being paid?

In April 2010, Laettner acknowledged in a deposition in the Merriman case that he had personally guaranteed some investments. When asked why he had not paid Merriman, Laettner said: "There's not enough money available in the business to pay him back…I think the economy has a lot to do with it."

Yeah, that sounds like a person you really want to trust with your money.  How much money?  How about $30 million.

Court documents show that Laettner and Davis individually and their real-estate businesses are defendants in several civil lawsuits seeking repayment of loans worth about $30 million. The plaintiffs include sports celebrities like ex-Chicago Bull Scottie Pippen, who played with Laettner on the 1992 Olympic team. In August 2010, a state court judge in Lake County, Ill., ordered Laettner and Davis to repay Pippen $2.5 million. Through his attorney, Pippen said he had been paid half that amount and that litigation between the parties continues.

And what is Mr. Laettner doing now?  Well he’s not in real estate anymore, he’s in Fort Wayne and Bismarck and Erie.

At 42, however, Laettner serves as an assistant coach for the Mad Ants, an NBA Development League team in Fort Wayne, Ind., a position that takes him on the road from Bismarck, N.D., to Erie, Pa. Since he took the job, the Mad Ants entered Thursday's game with a record of 2-14. In interviews, Laettner has said he hopes to land a head-coaching job in the NBA.

Maybe so, but some advice here to Mr. Laettner, don’t ask Scottie Pippen for a reference.