3 partners in Bangor FDIC target> Agency seeks $1.2 million stemming from default

A Penobscot County Superior Court justice this week authorized the federal government to recoup nearly $1.2 million from three well-known Bangor businessmen after they defaulted on a strip mall project three years ago.

The decision Monday by Justice Andrew Mead gives the go-ahead to the Federal Deposit Insurance Corp. to recoup $1,174,208 from Sheldon Hartstone, once a prominent developer, and his two partners in HMZ Associates, William Zoidis and Robert McGary. Zoidis owns Pilots Grill in Bangor and McGary runs F.H. McGary Optical Co.

But a spokesman for Zoidis and McGary said that while the two are personally responsible for the debt, their businesses aren’t on the line. Separate businesses are exempt from being taken by the FDIC. Stephen Morrell, attorney for the two, also said their homes under state law could not be taken from them to satisfy the debt.

What that leaves, Morrell said, he doesn’t know, but he said his clients are willing to work with federal authorities to pay off the debt.

“Our hope is that we can work out an arrangement with the FDIC, yes absolutely,” Morrell said.

Domna Giatas, attorney for the FDIC, hadn’t seen the court’s decision Tuesday. Giatas said it was unlikely that the FDIC would drop the matter. At the same time, she wasn’t sure what the next step would be.

“To be quite frank with you,” she said in a telephone interview Tuesday afternoon, “I haven’t even begun to discuss the options with the FDIC.”

Giatas said options could include placing liens on property or holding a hearing to determine which assets the three have to make restitution for the deficit.

The three owe such a substantial debt because as partners in HMZ they borrowed $1.8 million from Maine Savings Bank in two transactions, one in 1989 and another for $1.7 million in 1990. When Maine Savings went under in 1991, Fleet Financial Group acquired its assets, including the promissary notes.

And in what Hartstone said became overzealous efforts to collect the debt, Fleet and its collection agency Recoll in October 1992 forclosed on HMZ’s Centre Mall, located on Stillwater Avenue in Bangor.

One year later, when the mall was auctioned and then bought by Fleet Bank of Maine, the property was appraised at $975,000, below the $2.1 million owed by HMZ. The difference, nearly $1.2 million, is what Mead decided this week could be recouped by the FDIC, which took over the HMZ defaulted loans in March.

The Centre Mall was one of 15 foreclosures filed in recent years by Fleet against Hartstone, and one of a handful involving all three, said Hartstone, who owns Fairmount Hardware and Home Center in Bangor.

Hartstone said he hopes the FDIC will consider working with the businessmen to collect the debt. He said that’s something Fleet should have done in the first place, but didn’t. Hartstone said that, based on court documents, Recoll spent more than $600,000 in lawyer, auctions, appraisals and other fees, to collect the debt or sell the property.

“I’m upset at the way they handled it,” Hartstone said. “They could have done some other things.”