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Judge rules that Morgan case doesn't bar property sales

Rochester developer Robert C. Morgan is already free to sell or transfer his properties without interference from government prosecutors, even without a desired court order, a federal court said this week.

Attorneys for Morgan and other developers had sought the court's intervention because they said the government's words and actions were hindering their ability to sell a Pennsylvania apartment complex and complete a suburban Rochester construction project.

Morgan, his son, his former finance chief and a Buffalo mortgage broker are accused of bank fraud, wire fraud, conspiracy and money laundering in a wide-ranging indictment that was handed up on May 21. The indictment identified 12 properties and alleged they could be forfeited to the federal government if Morgan is convicted of deceiving banks into providing substantially more in mortgages than justified by the properties' actual values.

Defense attorneys said those assertions by prosecutors were scaring away potential buyers and lenders. So they asked the court to intervene and order the government to stop.

U.S. District Court Judge Elizabeth A. Wolford ruled that there already is no court-ordered "restraint" that would prevent a sale, transfer or other transaction to a third party because she has not issued any foreclosure orders or seizure warrants against any properties.

She also noted that federal prosecutors have admitted that as well, both in written filings and in oral arguments in her Rochester courtroom last month.

Rochester developer Robert C. Morgan, photographed arriving  at the Robert H. Jackson U.S. Courthouse in Buffalo. (John Hickey/News file photo)

Wolford also said Morgan's attorneys hadn't shown that prosecutors actually told any independent third party that they could prevent a transaction. And the government said it has since stopped discussing the Morgan properties with third parties, the judge said.

So Wolford said there is no need for her to issue the formal court order that Morgan's attorneys had sought when it is "apparent from the record" that no one has been empowered by the court to take anything.

She did, however, chastise government prosecutors for using "imprecise" language in communications with Morgan and third parties that "at times, incorrectly portrayed the suggestion" that the government could object to a sale or seize proceeds from it.

Meanwhile, attorneys for both sides reached compromises to resolve concerns around the two properties at question – the Union Square Apartments now under construction in the Rochester suburb of Chili and the Eden Square Apartments in suburban Pittsburgh. Defense attorneys had said Canandaigua National Bank had balked at releasing any more loan dollars to continue the Union Square project, while the Eden Square sale had been put on indefinite hold.

The agreements between the government and developers lift the threat of foreclosure or asset seizure on both properties, and allows a sale of Eden Square so that Morgan can pay off some investors.

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