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County sues firm over loan default

Friday, July 26, 2013 - Updated: 4:08 AM

By HEATHER NELLIS

Recorder News Staff

FONDA --Montgomery County sued Embassy Millwork of the Edson Street Industrial Park to recoup machinery listed as collateral on the company's defaulted $300,000 loan.

Amsterdam Industrial Development Agency Executive Director Jody Zakrevsky said the company is working with several investors to possibly provide additional financing to the company "to put it into a stronger position to be able to get in good terms with the county again."

"I talked to the owner of the business [Wednesday], and he's hoping to have some good news Friday or Monday," Zakrevsky said. "So right now, we're in a holding position."

Company President Michael Caruso was reportedly unavailable when called for comment Thursday.

Embassy Millwork has been pegged twice by the state as having potential regional economic significance, and promised financing in both consolidated funding program award announcements for the Mohawk Valley Regional Economic Development Council.

However, it apparently has had a tough go of it as of late, as its building was foreclosed by NBT Bank in early June, according to The Recorder legal notices published in May.

Embassy Millwork received a $200,000 grant through the state Office of Community Renewal in the state's first round of consolidated economic development funding in late 2011.

The grant, plus a $30,000 loan from AIDA, were supposed to help the company close the sale of the building, according to Recorder archives.

The award detail released by the state in 2011 said Embassy was awarded $1.3 million, but officials said that included a $1.1 million bond through AIDA in the event Embassy couldn't secure permanent funding, but the funding was said to be in place.

Zakrevsky said the company has until next summer to create 16 jobs -- a prerequisite of the $200,000 grant the company did receive -- before it will be considered in default.

Zakrevsky said none of those positions have been created.

Embassy Millwork was awarded additional funds from the state's consolidated economic development program in its second round in December 2012, but those funds have not been released.

"We notified the state in January the company was having trouble making payments to its principal lender, so they put a hold on the funds until it becomes clear whether they will recover from its downsizing," Zakrevsky said.

The $30,000 loan through AIDA has been paid back, Zakrevsky said.

Montgomery County Industrial Development Agency CEO Ken Rose says the company hasn't made payments on its county loan since February. The company paid about $32,000 of the principal balance, he said.

The loan was authorized by the county Board of Supervisors in November 2011 and started Feb. 1, 2012, according to county resolutions and legal documents.

Now the county is moving in to recover the equipment, which the loan was used to purchase, according to county documents.

Canajoharie Attorney Charles J. Tallent filed a complaint on behalf of the county at the county clerk's office Wednesday, alleging the company and Caruso "have wrongfully detained and are still detaining the collateral from the county."

Tallent was out of the office when The Recorder called Thursday afternoon, and was not anticipated to return until this afternoon, his secretary said.

The company is reportedly still operating out of its building, and Zakrevsky said the company has had steady business.

According to its website, Embassy specializes in the manufacturing and installation of locker room products and custom cabinetry and countertops. It has installed locker rooms at Rutgers University, The College of the Holy Cross, and Harvard University for their respective ice hockey teams. They tout a product called ProZone, "the ultimate sports locker," the site says.

"The odd thing is they have a good product, and their orders have been steady for the last six months," Zakrevsky said. "I think they've been unable to accumulate enough cash to purchase the building outright from the bank."

Embassy Millwork originally operated out of Scotia, and moved to the former site of Universal Custom Millwork, Inc. in the Edson Street Industrial Park in the city of Amsterdam in fall 2011.

Zakrevsky said later the aforementioned potential investor could help the company purchase the building from the bank, and make the county whole on its revolving loan payments.

"But whether they will be able to follow through remains to be seen," he said.

     

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