Barclays Bank Issues Stop Payment Order on Riverhead Resorts Check

London-based Barclays Bank has put a stop order on the $3.9 million check that was to pave the way for the Riverhead Town Board to ultimately reinstate its contract with Riverhead Resorts to purchase 755 acres at Enterprise Park at Calverton.

According to Morton Weber of the Weber Law Group, which represents Riverhead Resorts, Barclays was "extremely upset" that an up-close photograph of the actual check appeared on the website of the Riverhead News-Review, a weekly newspaper covering Riverhead.

The picture was taken by a News-Review reporter during a photo opportunity before last Wednesday's Town Board meeting. The ceremonial photo-op featured Weber handing over the actual check to Supervisor Sean Walter as the town's outside attorney, Frank Isler, and Councilmen John Dunleavy and Jim Wooten looked on. A closer image of the check itself also ran, which became a cause for concern, Weber said.

"The bank realized that their security had been compromised on the Internet because all of the bank's codes were on that check," Weber said Monday morning. "The photo could be easily enlarged to show everything, including codes for the company whose account it was."

Accordingly, Weber said, Barclay's is insisting that a new account be opened for Solutio Finance Ltd., the London-based company that is arranging financing for Riverhead Resorts. Setting up the new account, Weber said, could take three to five days. But after the account is set up, Weber said, the $3.9 million would be wired to an escrow account maintained by Isler's law firm.

"What I'm saying to you is that a wire transfer is going to replace the check, and it was represented to us that we would have it very promptly," Weber told Riverhead Patch. "Everybody understands that a wire has to replace the check. Everybody understands what happened to the check. That was a major mistake."

Weber said he would know by Wednesday or Thursday whether the money had been wired.

Messages left with the Riverhead News-Review were unreturned.

Timing is important because the Town Board is expected to vote at its next meeting – Nov. 16, at 7:00 p.m. – on whether to approve "an agreement in principle" to lower Riverhead Resorts' purchase price from $155 million to $108 million.

The resolution, if approved, would not officially lower the purchase price. That could only be done after Riverhead Resorts goes through another qualified and eligible sponsor hearing, as called for by state law whenever property within an Urban Development Zone is up for sale.

The resolution would, however, express the Town Board's willingness to schedule a second hearing. And importantly, passage of the resolution would trigger the $3.9 million being released from escrow and transferred to the town as a nonrefundable payment, which would go toward the purchase price when and if a closing takes place.

Riverhead Resorts had originally insisted that any money deposited with Isler could not be released from escrow until the town board actually approved a resolution legally establishing a new purchase price.

When the Town Board rejected that request, Riverhead Resorts softened its position, saying that it would take the risk of having the money released from escrow based only on the town board's voting on an agreement in principle to change the price and to schedule a qualified and eligible sponsor hearing.

Weber said that the $3.875 million would be wire and cleared in time for the Nov. 16 town board meeting. If the money clears, Walter, Wooten and Dunleavy have said they would vote to approve the resolution, which would then release the funds from escrow.

Councilwoman Jodi Giglio and Councilman George Gabrielsen are already on record saying they will vote against lowering the price and, therefore, would not approve the agreement in principle included in the resolution.