SOUTHWEST HARBOR – The U.S. Attorney’s Office has filed a foreclosure suit against housing developer Pamela Gleichman of Portland, alleging she has defaulted on a $1.2 million federal loan on the East Ridge Estates housing complex for the elderly in Southwest Harbor.

The lawsuit, filed Monday on behalf of the U.S. Department of Agriculture in U.S. District Court in Portland, alleges that Gleichman failed: to make her loan payments on time; to fund a reserve account required under the loan agreement; to fund the real estate tax and insurance account on the property; to pay taxes when due; to impose and collect sufficient fees and rent payments; and to keep the property in good condition.

The East Ridge foreclosure action is just the latest trouble for Gleichman, reportedly one of the largest developers of federally subsidized housing in the nation. A 1994 investigation of Gleichman and her developing firm, Gleichman & Co. of Portland, led to an agreement between Gleichman and the Farmers Home Administration under which she was barred from receiving new federal loans for Maine projects for three years.

The FmHA, since renamed Rural Development under the umbrella of the USDA, had alleged in 1994 that Gleichman falsified information on some of her loan documents and drained reserve accounts that had been established for some of her properties.

Last November, Rural Development foreclosed on Gleichman’s 24-unit Sewell Commons project in Washburn, which was sold at auction to a Caribou company, according to Michael Grondin, a multifamily housing specialist for Rural Development.

Assistant U.S. Attorney Frederick Emery Jr., who is prosecuting the case, could not be reached Wednesday for comment.

Grondin said Wednesday that Gleichman has 29 outstanding loans with Rural Development for Maine projects alone. He could not say what the total liability is or how many other loans Gleichman has outstanding for projects in other states.

Gleichman forms a limited liability company for each housing project, Grondin said, so trying to get total figures on short notice was not possible.

Residents of East Ridge Estates are unlikely to be affected by the foreclosure, at least until 2008, Grondin said. That’s because of a condition on the property that the development remain a low-income complex for another five years.

The development is expected to be sold when the foreclosure is complete. Grondin said that should the new owner opt to remain in the subsidized housing program, the apartments would be protected for 30 more years as a low-income project.

Attempts to reach Gleichman at her Bar Harbor residence and Portland headquarters were unsuccessful Wednesday. Gleichman also could not be reached through East Ridge Estates.

Gleichman reportedly owns some 50 housing developments in the United States, for a total of about 5,000 housing units. According to Grondin, nearly all of her Maine projects are 24 or 25 units in size and serve elderly or low- to moderate-income families.

In the East Ridge foreclosure, the U.S. Attorney’s Office asserts that Rural Development holds the rights to the 3.1 acres, the housing complex and all fixtures, appliances and other property under a security agreement executed on Sept. 1, 1988, when Gleichman received a $1.24 million loan for the Southwest Harbor project.

In all, there were four agreements between the parties, according to the lawsuit, including the mortgage, promissory note, security agreement and loan agreement.

The lawsuit does not say how many payments Gleichman has missed.

The government is seeking a total of $1.44 million from Gleichman and Gleichman & Co.: $1.28 million in principal and advances, $129,830 in interest through March 25, 2003, and late fees of $27,035.

The foreclosure process started in May 1999, according to Grondin, when Rural Development called in its loan. Gleichman appealed the action twice and lost each time.

Gleichman has tried twice in the past year to get approval for ambitious new projects on Mount Desert Island. She withdrew her plans for an upscale subdivision in the town of Mount Desert after intense opposition. In that case, the abutting landowners joined together to buy the land from Gleichman to prevent the building of the project.

In recent months, Gleichman got into a legal wrangle with the owners of a prime parcel of land on Cottage Street in Bar Harbor, where she had applied for municipal permits to build a four-story multiuse building that would have included retail and professional office space, as well as condominiums.

The project was shelved after Gleichman failed to renew her option on the property and the owners decided they didn’t want to sell it to her, after all. The owners have since filed a complaint in Hancock County Superior Court asking a judge to declare that Gleichman has no legal standing or right to the property so they can freely market the land to someone else.

That case is still pending.