Who in the World is Kale Roscoe? The Shady Past of Innovista’s Latest Developer
ho is Kale Roscoe? He’s the man charged with delivering private development to the University of South Carolina’s ambitious Innovista experiment, one in which thus far only taxpayer-funded buildings have been built. 16
Update At 3:03 p.m. on Tuesday, Aug. 4 — as Free Times was going to press and just one day after Innovista developer Kale Roscoe and director John Parks were interviewed for this story — USC issued a statement cutting its ties with Roscoe. The statement reads, in part: “The University of South Carolina and the Research Campus Foundation have notified developer Kale Roscoe that they are ending the relationship with Innovista Holdings LLC, the developer of a private building in Innovista.” The statement gives no indication of the reasons for ending the relationship.
By Ron Aiken Chosen in May 2008 to secure financing for private developers to construct Horizon II and Discovery II after the initial developer failed to produce, Roscoe, a Michigan native, was brought in to jump-start development on the recommendation of Innovista director John Parks, who worked with Roscoe on the University of Kentucky’s Coldstream Research campus while Parks was director there. In short, Roscoe is the man hand-picked by the university to make Innovista — envisioned by former USC president Andrew Sorensen as a live-work-play “innovation district” that would expand the school’s footprint to the Congaree Riverfront while positioning cutting-edge university researchers alongside the high-tech private companies their research supports — a reality. It’s a tall order, considering that Innovista currently lags three years behind its initial timetable for private development, leaving tracts of land empty and careers hanging in the balance. So, given the keys to the most important development USC has undertaken in decades — the failure of which could have negative repercussions for everyone affiliated with the project — one would think Roscoe’s credentials to develop it successfully would be
impeccable. A careful investigation of Roscoe and his background, however, paints a portrait of a disgraced former auto body shop owner and franchisor who has been involved in no less than 70 lawsuits in one Michigan county alone; pleaded guilty to federal felony tax evasion in 2002; and whose last attempt at developing a research campus project at the University of Kentucky with Parks has left one promised five-story building scheduled for completion in 2007 sitting unfinished to this day, another unbuilt and at least four pending lawsuits still active in Kentucky courts. Roscoe’s history of breach of contract suits, spanning three decades and showing no signs of slowing, raises many questions. Among them are why was someone with a highly questionable record given the enormous job of saving Innovista? And why did no one check his background, especially when the very first hit on Google for “Kale Roscoe” is a link to an exhaustive two-part exposé by a Michigan business magazine that details in depth a man the state of Michigan rebuked for “deceiving and defrauding his customers”? Both Parks and Roscoe say USC officials were aware of Roscoe’s conviction for felony
tax evasion and that due diligence was done in bringing him on board. When confronted with the entirety of his record, however, Parks acknowledged he was not aware of the extent of Roscoe’s legal troubles, troubles that began as early as 1984 and which continue to this day.
“Kale can paint a car as well as anyone.” Few people in the world know Kale Roscoe as well as John Prosser. For a period of about five years in the 1980s, Prosser was Roscoe’s vice president for franchise development during the rapid and remarkable expansion of Kale’s Collision, a franchise of car-repair shops launched by Roscoe just two weeks after the State of Michigan forbade him from operating a repair shop directly following a series of consumer complaints that reached the desk of then-Michigan Secretary of State Richard Austin, who revoked Roscoe’s license to repair automobiles on Oct. 7, 1984. Among the state complaints against Roscoe that led to the revocation of his body shop
August 5-11, 2009 | free-times.com
operator license were: “unfair and deceptive repair practices, charging for repairs not performed, parts not replaced; representing as ‘new’ parts that were ‘used,’ and the failure to make repairs by the promised date.” He also was cited for lending out to customers cars brought in for repair by other customers. Prosser says Roscoe, who he met through a friend at a Jaycees meeting, never shared any of that information with him when he lured him away from a successful sales job to partner on selling Kale’s Collision franchises. “I never knew that the state had forbid him from owning and operating repair shops, only that here was a guy who had come up in the automotive repair business — Kale can paint a car as well as anyone — and had the good idea to introduce professionalism to a business that usually was run by the guys doing the actual dirty work,” says Prosser, who now is the vice president of two companies servicing the health-care industry and still resides in Michigan with his family. “[Roscoe’s] idea was to clean it up, make it look professional with spotless tile and typically a young, enthusiastic person wearing a suit and tie doing an assessment using a computer, which was a very novel approach at the time and really caught on.” With that idea — and unaware of Roscoe’s previous run-ins with Michigan authorities — Prosser sold franchises across the country with tremendous success. It was only over the course of time, however, that Prosser began to question whether Roscoe truly was the man he portrayed himself to be. “As the point person selling these, the franchisees, people with their life savings invested in some cases, would come to me asking why things hadn’t been done, and then when I’d take those concerns to Roscoe he would give me excuse after excuse,” Prosser says. “With franchise law, there are
m free-times.com | August 5-11, 2009
Architect’s rendering of the proposed Discovery Plaza, only the publicly financed portion of which, Discovery I, has been built.
strict regulations on how you operate, with specific dates for deposits, closing dates and a schedule regarding all the other variables you needed to provide so they could open the doors. “So when these commitments on our part weren’t being honored and things were not going as they should, there emerged a repeated pattern of missing schedules and I became more and more disillusioned with him. Eventually that tension — I’d call it a betrayal of trust — was too much and I was
Roscoe would grind the gears of justice to a virtual halt and make a system that’s supposed to help aggrieved parties instead work in his favor by firing attorneys and orchestrating delay after frustrating delay. What is clear is that the number of lawsuits filed against Roscoe over the entire course of his professional career is staggering. In Oakland County, Mich., alone, he has been involved in 71 lawsuits from 1985 — just a year after he began selling franchises — all the way up to 2009. And attorneys who have litigated against Roscoe say there are many more cases in the counties surrounding Oakland whose records are not online and weren’t immediately available for this story. One case typical of those brought against Roscoe was that of Akiko McGhee and Earnest Allen, both of whom were represented by attorney Kerry Phillips of Pontiac, Mich. Roscoe, who court documents show often collected the lucrative franchise fees before any buildings went up or the land or permits were obtained, took substantial fees from both parties and, according to the court documents, failed to deliver on his end and then refused to return their investments when they’d had enough and wanted out. “In both cases, I remember we had to press Kale all the way to the wall to instigate litigation and were on the verge of trial before we were able to get my client’s franchise fees
“Someone down there has some explaining to do.” — David Gorcyca, former Oakland County, Michigan, prosecutor forced to file a lawsuit against him, along with dozens of others, because I had stopped getting paid. “The net result was that the jury took a couple hours to deliberate and I won my cases against him personally and as a corporation. The court found my contract with him to be worth $8.8 million, but by the time I filed in 1989 and it eventually went to trial in 1993 — Kale is extremely adept at firing attorneys and delaying court cases; I have no idea how he got so good at it — the company was bankrupt and there was no money. I finally got some money from him, but only after another several years of trying to track down his real estate holdings and collect.” Two 1991 articles in Corporate Detroit expose the shenanigans that were the norm for Kale’s Collision during its run, detailing exactly how, when faced with litigation,
back,” Phillips says. “He had taken fairly large sums of money for franchise fees [$25,000 from Allen and $31,000 from McGhee], and when the time came for him to deliver he did not deliver on his commitments, and when they pressed him for their money he refused and forced them to institute legal proceedings to get them back. “Fortunately, we were able to get my client’s fees back. But we weren’t alone. There were many, many more. My advice to anyone dealing with him is to be very, very careful; he’s pretty darn good at [working the legal system], and I’d be very careful even contemplating entering into an agreement with him without doing a lot of due diligence.” By the 1990s, Roscoe was so involved with near-constant litigation from angry franchisees that he was on a first-name basis with then-state Assistant Attorney General Robert
Ward and franchise administrator Marilyn McEwen of Michigan’s Consumer Protection Division, who on one occasion confronted him with selling the same franchise to three different people and for doing so at a time when he wasn’t legally registered to sell them. One person in a unique position to comment on Roscoe is former Oakland County prosecutor David Gorcyca (pronounced “gore-ska”). In a twist of irony, Gorcyca represented Roscoe in the losing suit against Prosser only to later have to sue Roscoe himself to collect his attorney fees. Prosser says he ran into Gorcyca last fall at a restaurant opening and had an illuminating conversation. “I went up to him and told him who I was, and [Gorcyca] just shook his head and said, ‘Oh my gosh, [representing Roscoe] was one of the biggest mistakes of my legal career.’ It made me feel a lot better about knowing I was in the right.” When reached last Tuesday, Gorcyca, who left his position as county prosecutor and joined a private firm in December, wouldn’t elaborate on that statement but did confirm that, after representing Roscoe in that and a number of other cases, he eventually had to sue Roscoe to collect his fees. When told Roscoe still was involved with multiple lawsuits over breach of contract allegations, Gorcyca said he wasn’t surprised. “I haven’t seen Kale in 12, 13 years, but I represented him in a myriad of different civil and collection suits, so that doesn’t surprise me a bit,” Gorcyca says. “Let’s just say he didn’t always pay his bills on time; I had to take him to court to get my fees, and I know for a fact there was an abundance of attorneys who represented him.” Gorcyca also confirmed there were many cases involving Roscoe in the counties surrounding Oakland. “They’re all there in the public record, and I know because I represented him in some of them,” Gorcyca says. When told of Roscoe’s position as lead developer on the most important project at the University of South Carolina — one he already is behind schedule on — he was shocked. “Really? That’s incredible,” Gorcyca says. “It’s apparent to me that the governing board there did not do due diligence in checking out his background, especially in this day and age when all you have to do is Google someone. “Someone down there has some explaining to do.”
I Fought the Law, and The Law Won Fast forward to the mid 1990s following the collapse of Kale’s Collision (though
some franchises exist independently to this day), and Roscoe had reinvented himself as a commercial real estate developer with the money he’d made. In that capacity, Roscoe again found himself the target of investigating attorneys, this time, however, of the federal variety. The focus? Felony tax evasion. “Between 1994 and 1997,” a statement from then-U.S. attorney Jeffrey Collins reads, “Roscoe was involved in commercial real estate development and consultation. Roscoe also acted as the managing member of a real estate partnership involved in the development of a multi-million dollar medical center in Oakland County. “During this time period, Roscoe willfully attempted to evade the payment of taxes on $355,762 of taxable income received from his involvement in real estate development. Roscoe utilized partnership funds for personal expenditures and converted investment funds into cashier’s checks for personal use.” Again after years of chasing Roscoe, on April 25, 2002, he finally pleaded guilty to evading $131,158 in taxable income for the
m free-times.com | August 5-11, 2009
Innovista director John Parks, left, stands with former USC president Andrew Sorensen at the Discovery I building in January, 2007.
year 1997. That meant Roscoe was in front of federal investigators from 1994 to 2002 — a whopping eight years under attorney’s microscopes. Asked if he shared the information about his tax felony with University of Kentucky officials, Roscoe acknowledges he didn’t, but that it later came out. “Unfortunately, before I dealt with it we received a letter from the U.S. Attorney’s Office, and that letter was circulated to UK when I was there and so we disclosed all that,” Roscoe says. Parks recalls getting such a letter and confronting Roscoe about it. “I found out about it and asked him about it and we did our due diligence there on that,” Parks says. “We did the background on all that.” When asked if, as part of that due diligence, Parks knew about the more than 70 cases in Oakland County alone that dated from 1984 to 2009, Parks said he did not and was quick to defend his associate. “No, I didn’t know about those,” Parks
says. “I don’t know all his court-case scenarios. But I know most developers I’ve dealt with have had some sort of court action at one time or another.” During the years in which he was being investigated by federal prosecutors, Roscoe was still branching out in real estate while continuing to fight protracted court battles in Michigan stemming from Kale’s Collision cases. Just how he managed to develop confidence from significant investors — not to mention key university personnel — time and again given his background is a mystery only those with personal experience dealing with him can shed light on. “When I met Kale in the early 1980s, he was just a visionary guy with a great concept, very creative,” Prosser says. “I’d have never aligned myself with him without seeing those favorable qualities. “It’s such a juxtaposition — he’s obviously a talented person, but yet also obviously his life reflects a lot of other things that aren’t very favorable. For as much pain as he caused me, I have to be straightforward in that I was seduced by the aura of this man. “I considered him my friend and felt terribly betrayed by his machinations. It was a horrible thing. The fact is that he understands and preys on that part of human life that operates on trust. Bluffs, cons, scams, whatever you want to call them, they all go back to trust issues. People like that prey on the good part of a person’s heart that wants to trust other people. “I really think people don’t look [into Roscoe’s background] because he’s just so bloody charming that it never crosses their mind.”
My Old [Unfinished] Kentucky Home Having finally settled with the IRS and managing always to stay one step ahead of attorneys on other pending cases, Roscoe eventually expanded his interests into the university development business at the University of Kentucky through PCMG, LLC, a commercial property company with holdings in Michigan and Kentucky of which Roscoe was the owner. According to a document from the University of Kentucky Board of Trustees dated June 13, 2006, PCMG is listed as the owner and managing company of the IBM building on the research campus. Roscoe also is personally listed as the managing member of 150 Bull Lea, LLC, which is described as the owner and managing company of the Coldstream Center, which was sold by the university to 150 Bull Lea on March 21, 2006 for $10.4 million.
In that board document, Roscoe is granted the approval to lease the lot with the purpose of building a new, two-story, 40,000 squarefoot corporate headquarters for Exstream Software, Inc., now a division of Hewlett Packard. That building was completed and the tenant still occupies the building. Another document dated Jan. 11, 2005, shows a lease agreement between the university and another LLC created by Roscoe, Lexington Dark Star, calling for two additional multi-tenant buildings to be constructed totaling some 250,000 square feet. This property was to be Roscoe’s last big splash at UK — the one he worked directly with John Parks on — and the biggest disappointment. After leasing the lot in January of 2005, in October of that year he and the university announced a $50 million development anchored by Kentucky data protection firm asiGuardian. The deal would allow the construction of the both five-story buildings to be developed by yet another Roscoe LLC, Lexington Holdings. Together, the two buildings were to be called the Lexhold International Center for Technological Innovation, and a picture archived on the asiGuardian web site shows a picture of Parks, Roscoe and company representatives posing together, smiling and breaking ground with shovels and hardhats. However, less than a year from the date those photos were taken, delays in Roscoe’s construction timetables spooked the firm, which pulled out of Coldstream and instead relocated to another facility in downtown Lexington. “It was a difficult decision to make; we were originally to have been in our facility and operational by the summer of 2006,” said asiGuardian president Donne Clemmons in a release dated Oct. 17, 2006. “Another 12 to 18 months of delaying our business plans only lets our competition get a bigger jump on us, which just isn’t something I’m comfortable with.” Having lost its anchor tenant, Roscoe’s project has languished in the years since, with only one of the two proposed buildings having been built, a five-story shell with only one floor currently occupied and the rest in need of costly upfitting. That means that before coming to USC to take over Innovista’s development, Roscoe’s most recent university development experience is two years and one building behind schedule and counting, and the one building that was erected remains unfinished. Asked to characterize Roscoe’s development success at Kentucky with the aforementioned LexHold project, Parks credited Roscoe and didn’t mention just how far behind the project is.
Discovery I, located near the Colonial Life Arena.
“From my perspective, he was developing and doing a good job and basically performed on all the things we needed him to perform on,” Parks says. Contacted twice for this story, current Coldstream director Tina Carpenter refused to comment on the record about Roscoe or Parks and would only verify factual information. Unbuilt buildings aren’t the only business Roscoe has left unfinished in Kentucky. A search of Kentucky court records shows four civil lawsuits against Roscoe and his LLCs are still ongoing relating to his development work there, cases Parks says he also was not aware of. An acoustical, mechanical, insurance and electric company all have breach of contract suits active, according to Brian Mattone, an attorney in the Fayette County attorney’s office who laughed at the mention of Kale Roscoe before declining to comment for the story, only providing information on the status of the cases in question.
Innovista Picks Parks, Gets Roscoe
From Kentucky, Roscoe’s trail follows the one Parks himself took east across I-40 to Asheville, down I-26 and straight into Columbia when Parks was announced as the new director of Innovista in January of 2007, which was right about the time the wheels were coming off Roscoe’s LexHold venture. Not long after being hired, Parks and the university in March of 2007 announced the first major private-sector tenant for the as-yet unbuilt Horizon II center, Duck Creek Technologies, an insurance software company led by former Policy Management Systems Corporation CEO Larry Wilson, who was sued by the Securities Exchange Commission in 1997 for improper accounting practices in a case that brought the previously successful multinational corporation to the brink of ruin before it finally was sold in 2000. The Duck Creek development never happened, however, and Innovista’s private-sector development floundered over the next year under former lead developer Craig Davis of Raleigh before Roscoe was brought in to take over for Davis (along with, to a lesser degree, Robert Heath of Philadelphia) in May 2008, upon Parks’ recommendation and with the USC Board of Trustees’ approval. When reached by phone Monday, Roscoe says USC officials were aware of his legal problems when he was chosen. “I fully disclosed the information about my tax issue [at USC] as well,” Roscoe says. “It’s easier for me to get it out on the table
m free-times.com | August 5-11, 2009
and say, ‘Here, I made a mistake, this is what it was. “It wasn’t like I didn’t file [a federal return].” Roscoe instead chose to classify his felony conviction — which included charges of converting investment and partnership funds for personal use — as “just some things left off the tax form that should have been [included].” Parks confirms that USC officials were informed of the felony tax evasion conviction, one similar to the charge that last month that helped claim the job of USC Board vice chairman Samuel Foster II along with charges of bank fraud. “Yes,” Parks says of his informing the USC board of Roscoe’s past. “I think we had that discussion several times.” Asked whether he thought those legal entanglements would affect his ability to develop Innovista, Roscoe said he didn’t think so. “Except for having to answer questions about it, it hasn’t impacted the success of my development.” It certainly didn’t appear to at first. Almost immediately after being hired in May, Parks and Roscoe were ready for another big announcement together. On July 24, 2008, The State’s Jeff Wilkinson reported that Roscoe was “close to signing leases” with IBM and with Regus International, a British software developer. In an interview with Wilkinson, Roscoe’s optimism was clear.
“The university wants to see action, and we want to do the work,” Roscoe said. “You can rest assured we will put the buildings up.” Those two leases never materialized, although there was good news for Roscoe and Innovista in January, when local firms VC3 and T.M. Floyd announced plans to move into Horizon II as part of a technology consortium called the Consortium for Enterprise Systems Management that includes partnering with IBM and BlueCross BlueShield South Carolina to train people on mainframe computing technology. However, that commitment on the part of T.M. Floyd and VC3 is dependent on certain dates and conditions being met, and as time has dragged on it has put pressure on both firms. “I was in Columbia last week and met, kind of hat-in-hand, with all of our locally based tenants to let them know we have a line on our funding and are trying to re-orchestrate things to get them moving,” says Roscoe, who stated he had obtained a funding commitment from BB&T “three weeks or so ago.” “[The private tenants have] assured me they’re still interested in participating.” What remains is that more than a year after being brought on board to lead private development, only a construction trailer sits on Horizon II and Discovery II and USC officials have indicated they are nearing the end of their patience with Roscoe, who told Wilkinson nearly two months ago that he
was “working through last minute details.” It would come as no surprise to his former franchisees that that “last-minute” has stretched from June 6 to August 5, and USC officials to this day still are wringing hands in deciding how to deal with Roscoe’s delays as the ambitious experiment that is Innovista teeters between success and disaster for its privatesector component. For Roscoe, it’s nothing he hasn’t been through before. When the State of Michigan revoked his auto repair operator’s license in 1984, he brazenly continued to operate the body shop in Redford, Mich., that gave him his start for three more years, defying court orders and exasperating investigators with delays and appeals, leading the state attorney general’s office to issue the following answer to his final appeal in July 1987, one that just as easily could describe the saga that has been Roscoe’s slick career. “Each day, while the slow judicial process takes one step further toward final resolution of this case, [Roscoe] will be operating his business, deceiving and defrauding his customers.” Only in this case, instead of a dinged-up car, what’s at stake for USC — and is in Roscoe’s hands — is nothing less than the future of Innovista. Let us know what you think. Email firstname.lastname@example.org or email@example.com.
Who is Kale Roscoe? He’s the man charged with delivering private development to the University of South Carolina’s ambitious Innovista exper...
Published on Jun 27, 2011
Who is Kale Roscoe? He’s the man charged with delivering private development to the University of South Carolina’s ambitious Innovista exper...