Lorain needs to recoup money from loans

The city of Lorain is doing its due diligence by going to court to seek repayment of loans it made to businesses years ago.

During the last week of October, the city filed at least two lawsuits in Lorain County Common Pleas Court.

One of the complaints alleges candy maker Thomas M. Faroh, owner of Faroh’s Candies & Gifts formerly located at 657 Broadway, borrowed $40,000 from the city Aug. 9, 2010.

Faroh, who lives in Strongsville, somehow still owes $35,496 on the loan from more than eight years ago.

It is inconceivable that Faroh only has paid back $4,504 on the $40,000 loan.

For years, Faroh’s candy store has remained a Lorain favorite for chocolates, nuts and a variety of trinkets.

But again, he’s paid just over $4,500 in eight years.

If Faroh would have paid the city back monthly in that span, it would have averaged $46 a month on a $40,000 loan.

Faroh had closed his shop in the city several years ago, but returned in 2009 and opened a pop-up shop for the holiday season.

The next year, Faroh opened a store full time.

Faroh has retired, and the building at 657 Broadway was sold to a new owner.

Spectrum Consulting Services, which operates a school and job training program for those dealing with autism and special needs, has purchased the recipes and rights to the name.

And now, Spectrum, 300 Broadway, sells the sweets as Spectrum Presents Faroh’s Finest Chocolates, which are made as part of the job training program for young adults.

Faroh could not be reached for comment on the loan.

Faroh, however, is not the only business owner who defaulted on one of the city’s loans.

One business borrowed over $100,000 and likely will never pay the loan in its entirety.

In March 2005, 610 Broadway LLC, borrowed money from the city.

The city lawsuit is seeking $105,638 from the company.

Lorain Assistant Law Director Don Zaleski said 610 Broadway LLC stopped making payments and the city is suing for the balance.

Zaleski said the city also is seeking to foreclose on a condominium in the Gardens of Charleston that was guaranteed as collateral for the city loan.

The lawsuit against 610 Broadway LLC also names as defendants Inga and Donald E. Longwell Jr. of Grafton.

Donald Longwell said Nov. 2 that the loan note that the city has sued for was discharged in United States Bankruptcy Court.

He said he will talk to his bankruptcy lawyer, but the city legally can’t try to collect something that was discharged in Bankruptcy Court.

Longwell said the project dealt with converting the Gardens of Charleston condominiums into apartments.

When the 2008 financial crisis hit, Key Bank was the lender, but the bank said it would stop financing if the developers could not rent four units.

Longwell said renovations were underway, but the bank stopped financing the project, virtually shutting it down.

Longwell said he and his wife, along with defendants Kenneth S. and Cynthia J. Bublinec of Sheffield Lake, all went through Bankruptcy Court so the city will have a federal issue trying to collect on discharged debt.

Records from U.S. District Court-Northern District of Ohio confirm bankruptcy filings for the Longwells in 2009 and Bublinecs in 2010.

After the city stopped working with Lorain Development Corp. and corporation President Doug Rangel in 2016, Longwell said he called city officials three times hoping to resolve any outstanding issues and never heard back.

But for future loans, the city administration said there will be tougher rules for paying back the money.

This seems to be an ongoing problem.

In August 2017, the city filed at least three lawsuits seeking to collect a total of $190,753.42 from three businesses that have outstanding loans for business development.

The lawsuits also were filed at Lorain County Common Pleas Court.

Lorain Safety-Service Director Dan Given and the city Departments of Law and Building, Housing and Planning have said those loans were part of a group of 25 outstanding loans worth more than $1.18 million.

The legal actions, however, were the latest steps in a continuing review of Lorain’s business development loan portfolio.

And more than a year later, the city filed more lawsuits seeking to recoup the funds.

But it appears the city won’t be able to collect the $105,638 from 610 Broadway LLC on the defaulted loan.

It also may not be able to collect the $35,496 from Faroh.

Nevertheless, the city must stay on top of this and try to get back every cent that is owed.