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JCIDA to take legal action against Watertown businessman accused of misusing $40,000 loan to start pizzeria

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The Jefferson County Industrial Development Agency will hire an attorney to get back a $40,000 loan it made last winter to a Watertown businessman who stopped paying on the loan almost as soon as he received it.

In the fall of 2011, Richard Lagano told the agency he would use the loan to start a used-car dealership called American Auto, to be located on Route 37 north of Route 342. He made only three payments on the loan before abandoning that plan without contacting the agency. About the same time the payments stopped arriving in April, Mr. Lagano and Rick D. Pitre opened Family Pizza at the Cheney Tire Plaza on State Street. Although they made extensive renovations to the pizzeria, it went out of business less than month after opening.

Since that time, Mr. Lagano hasn’t expressed any intention of making good on the loan, said Lyle V. Eaton, the agency’s chief financial officer. Multiple letters were mailed by the agency to his residence at 313 Franklin St. in Brownville. A final notice stating the loan was in default was sent July 31.

JCIDA acquired a second mortgage on Mr. Lagano’s house in Brownville as collateral for the $40,000 loan, Mr. Eaton said. It also accepted as collateral automotive equipment Mr. Lagano claimed that he owned when he submitted his plan for the car dealership, but the agency learned in April that Mr. Lagano’s business partner at his auto garage, Shawn J. McMurray, filed a civil lawsuit in state Supreme Court stating he owned the equipment that was put up for collateral. In addition to a $50,000 judgment, Mr. McMurray is seeking to reclaim miscellaneous equipment, personal tools, three automobiles and a boat that Mr. Lagano hasn’t returned, according documents filed in the Jefferson County clerk’s office.

In addition to the $38,227 loan principal owed by Mr. Lagano, the agency is owed about $1,600 in accrued interest and late charges assessed each month. Mr. Eaton said the last time he was personally contacted by Mr. Lagano was in July, when he complained about an article in the Times regarding the outstanding loan.

“He indicated that he thought I was anything but a nice guy because I had given information,” Mr. Eaton said.

He said the agency will hire a lawyer in the beginning of 2013 to pursue a foreclosure on Mr. Lagano’s house. The issuing bank has the first position on the mortgage, which will give it the authority to collect its debt before the agency does if a foreclosure occurs.

Nevertheless, he said, the agency has the authority to lead the foreclosure process. Because of the many steps involved, foreclosing on a house can take six months to a year to complete.

“We have the right to foreclosure on the mortgage, but any money received would go to the bank first,” Mr. Eaton said. “Getting back our debt will depend on how much equity the house is worth,” which would be determined by an appraisal of the property.

As for where the $40,000 went, Mr. Eaton said, the agency has no definitive answer. But he knows Mr. Lagano started the pizzeria at Cheney Tire Plaza about the same time the used-car dealership was scrapped in April.

“I went out there to check on the debt, but by that time he had already started this pizza shop and was in there with his partner,” Mr. Eaton said.

Thomas J. Cheney, who owns the Cheney Tire Plaza, said the pizza shop in the plaza was leased to Mr. Lagano and Mr. Pitre by an undisclosed second party. The former pizza shop there, Roberts Family Pizzeria, already had failed. That shop was started by Michael J. Roberts Sr., who still owes JCIDA about $14,000 on a $15,000 loan it made to start the enterprise in 2010.

“I wasn’t involved because I wanted to get the pizza shop out, but the fellow who leased it owned the equipment there,” Mr. Cheney said of Family Pizza. “They put a lot of money into the building and made a lot of renovations, but were closed in less than a month.”

Meanwhile, Mr. Lagano is scheduled to appear Thursday in state Supreme Court for a hearing before Judge James P. McClusky to resolve the civil lawsuit alleging he used property owned by Mr. McMurray as collateral for the JCIDA loan. Attorney David P. Antonucci of Watertown, who is representing Mr. McMurray, said Tuesday that Mr. Lagano already has made three appearances in court without an attorney. At its discretion, the court could decide to give Mr. Lagano another chance to find an attorney, or decide to enter a judgment against him and determine the property belongs to Mr. McMurray.

The lawsuit claims Mr. Lagano agreed to share space at his auto garage with Mr. Murray, who needed space to store his equipment. According to an oral agreement, Mr. McMurray agreed to repair vehicles for Mr. Lagano at his garage in return for use of the storage space. But when Mr. McMurray terminated that agreement, Mr. Lagano allegedly refused to return his property.

Mr. Lagano “still has not retained an attorney,” Mr. Antonucci said. “I think he’ll be in court again going, ‘I didn’t know what to do; I didn’t do anything wrong.’ He’s been there three times without an attorney, but you have no right to an appointed attorney at a civil court proceeding.”

As for the property Mr. Lagano used as collateral for the JCIDA loan, he said, “My understanding is the IDA isn’t going to contest the right of the equipment with us.”

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