Chris Blair honoured his grandmother's memory and helped his wife's cousins at the same time.
The Vancouverite used a $1 million inheritance to earn a $400,000 profit in 2003 on an investment in South Granville's Shaughnessy Mansions, developed by brothers Tony, Tom and John Pappajohn.
So when the Pappajohns asked him if he wanted to roll his money over into another development – Jameson House at 838 West Hastings – he agreed.
Blair told Business in Vancouver that he said yes only because "they just finished paying me off 400 grand. I was under the mindset that, all right they're family, they've legitimized their deal, they did what they said they were going to do."
The Pappajohns' 37-storey West Hastings residential, office and retail development was to be a $180 million monument to patriarch James Pappajohn. In the spring of 2006, Blair loaned $1 million to the Pappajohns' 5255 Investments Ltd. and $1.25 million to their Jameson Development Corp. for three years with two six-month extension options.
He also agreed to advance $250,000 in February 2007 and received two $25,000 payments in June and July 2008. Blair said he trusted Tony Pappajohn so much that he named him the trustee of his estate. But the two $25,000 payments in June and July 2008 are all that Blair has received. Construction on Jameson House ground to a halt in the fall of 2008 amid the global credit crunch. The Pappajohns' companies received court protection under the Companies Creditors Arrangement Act.
Blair, who was unsecured, agreed to waive the 12.5% interest in an October 15, 2009, agreement with James Holdings Ltd., 5255, Jameson and Tony Pappajohn. He also agreed to extend the repayment deadline to April 10, 2010, and May 3, 2010, respectively. In the meantime, on January 1, 2010, the Pappajohns contracted Blair for a $400-an-hour consulting deal capped at $500,000. That agreement was never activated.
From November 2009 to March 2011, Blair received $42,500 from a separate arrangement. He also opened a line of credit in May 2011 and extended a $100,000 loan to the Pappajohns' company. That, plus 10%, was paid off a year later.
"The only reason I went forward with the Pappajohns is because I broke bread with them at my table, they've sat at my dining room table, we've been family for 28 to 30 years," said Blair.
Bosa Development eventually took over Jameson House and completed the Norman Foster-designed project in 2011.
Blair said he is owed $2.4 million and balked at the $75,000 offered via the Pappajohns' lawyer in February because the Pappajohns proposed Blair drop all claims.
"I would've openly accepted it, been grateful for them, thanked them profusely and would've sat back for the next six or eight months to wait to see how their future calls are going with the rezoning of their next project," he said.
Jameson Development Corp. and Marcon are completing their 61-condo Sesame joint venture at East 2nd and Renfrew.
Tony Pappajohn declined comment on Blair's claims.
"It is a private matter and is subject to a confidentiality agreement," he said in an email.
Judi Cunningham, the executive director of the UBC Business Families Centre at the Sauder School of Business, said intra-family lending can bring relatives together or tear them apart. She acknowledged the emotional risk and reward inherent in family projects, but basic tenets should not be discounted.
"I hope that families don't do it out of obligation, that they do it because either they think it is a good investment or they really, truly understand they went to help that family member and if they lose that money, they are going to be OK with it," Cunningham said.
She said a solution to intra-family tensions lies in the family bank concept, where affluent families can agree on a formal process for weighing the merits of intra-family investments.
"Members of the family can do business plans and write proposals to the bank, to say, 'Listen, I have this venture that I'd like to invest in,' and they have to go and do presentations and the family assesses whether this is a good investment. There is usually a panel that oversees the proposals."
