Lawrence City Commissioner Lance Johnson is being sued over a $1.95 million loan that has gone bad and whether a bank should be allowed to seize some of Johnson’s assets.
Emprise Bank has filed a lawsuit in Douglas County District Court alleging that Johnson improperly transferred ownership of eight pieces of Lawrence property into a trust controlled by his wife in order to “hinder, delay or defraud” the bank in its efforts to collect on the loan.
“The lawsuit alleges that some of the personal assets were transferred to others in such a manner as to try to keep them from being available,” said Robert Coykendall, an attorney representing Emprise.
Both Johnson and his attorney, Chris Sook of the Sloan Law Firm, declined to comment on the matter.
The lawsuit alleges that in February 2008 one of Johnson’s companies, RKJ Properties, received a $1.95 million loan from Lawrence-based The University National Bank. The loan later was transferred to Emprise Bank.
Emprise alleges that as part of the loan Johnson signed an “unlimited personal guaranty” that pledged many of Johnson’s personal assets as collateral for at least a portion of the loan.
The lawsuit states that RKJ Properties has defaulted on the $1.95 million loan. But when Emprise sought to collect on Johnson’s personal guaranty, it learned that he had transferred multiple pieces of property into a trust controlled by his wife, Jennifer Johnson, who also is named in the lawsuit.
Emprise is seeking to have that transfer ruled null and void. It also alleges Johnson transferred his ownership interests in three companies — Smoky Hill Properties, St. George Investors and the Lawks Group — to the trust controlled by his wife. Emprise is asking for those transfers also to be ruled null and void.
The lawsuit is not the first sign of financial trouble for Johnson, who is the president of the Lawrence-based civil engineering firm Peridian Group. In June, the Journal-World reported that Johnson was more than $150,000 behind in property taxes both in Douglas and Johnson counties.
The bulk of the unpaid taxes was related to RKJ Properties, which owns commercial real estate in Gardner. Johnson’s ownership interest in RKJ Properties brought up questions of whether he properly disclosed his financial dealings to voters prior to being elected to the city commission in April 2009.
Johnson did not list his ownership of RKJ Properties on his statement of substantial interests, a public form listing business interests of candidates for office. Johnson previously has said the omission was unintentional. RKJ was behind on its Johnson County taxes during the time Johnson was campaigning for the commission.
Johnson’s term on the commission expires in April. He has not yet announced whether he plans to seek re-election.