Liko Smith sets June 1 deadline for deal with Kate Wickstrom: Red Ginger fundraiser a flop

By Jacob Wheeler

Sun editor

The window for the mysterious West Coast businessman Liko Smith to acquire and re-open the Sugar Loaf Resort and ski hill appears to be closing — and fast. Smith wrote on his blog’s “Weekly Update” (www.likosmith.com/friends.html) three days ago, and confirmed during a phone conversation yesterday that June 1 — next Tuesday — may be the date when he decides to pack up and leave Leelanau County for good.

“I’m losing my window here,” Smith said, while driving downstate. “I’m gonna take a look at my projects in Las Vegas the first week of June. Because if (Kate Wickstrom) doesn’t sign by June 1, I don’t know what’s going to happen. I’ve got a lot of stuff coming in on Wednesday. … There are so many deals and opportunities in Vegas. I can spend the next year playing softball with my kid and still make a decent living.”

[Read our exclusive April 15 interview with Liko Smith here; and read about Smith's ties to Remo Polselli here]

Smith’s bid to acquire the hotel and ski hill from Wickstrom — and the Sugar Loaf golf course, sewage treatment plant and accompanying real estate from businessmen Ed Fleis and Brian Sculthorp — has encountered a series of snafus this month. The 39-year-old former Samoan boxer now says that he has scaled back his plans and only intends to buy from Wickstrom.

As Smith puts it, Fleis and Sculthorp have stonewalled him with strategies similar to their negotiations, and ultimate rejections of deals, with previous bidders for Sugar Loaf. ‘We’ve done this two times before with two other buyers, we’ll keep doing it until we get paid,’ Smith quoted them as saying. In his lengthy blog post (it felt like reading “War and Peace”) Smith also narrates how Fleis, Sculthorp and Wickstrom have played financial and legal hardball against each other for the past decade, which has doomed Sugar Loaf’s chances of reopening.

A deal with Wickstrom was supposed to be inked on May 5, but that date has come and gone. Since then, Smith says, Wickstrom has made numerous additional demands of him, resulting in what he calls “a Mexican standoff.” On May 5, Smith says he brought in a salvage crew to clean up the hotel and turn on the electricity and water, but Wickstrom refused to sign the deed because “she believed she was not going to make any money on the sale.” The crew was turned away.

Smith says that he offered Wickstrom half the salvage proceeds in cash ($50,000 according to his estimates), a 10-percent share in Sugar Loaf (which he valued at $10 million), lifetime employment as an onsite maintenance man for her father Wally, and that he would rename the “Top of the Loaf” bar “Wally’s”. Through her attorney, Wickstrom has asked Smith for $200,000, and $3,200 to reimburse her father Wally to cover gas and expenses for seven visits he made to the resort.

In short, Wickstrom and Smith have engaged in a standoff for most of this month.

Smith says that recent phone calls with former Sugar Loaf owners John Sills and Remo Polselli (a longtime business associate of Smith’s, and convicted felon for tax evasion) encouraged him not to give up on the deal. “You have to see it as a ski resort first and a hotel second, and you have to market heavily to bring in the business, but re-use the exiting lifts, and you’ll see it come back,” Smith quoted Sills … though he admitted during our phone conversation that the equipment is probably worthless and may not even be licensed in October.

But for the first time this week, Smith’s words, both in person and online, have adopted an air of defeatism — that the deal might not get done, and that he might not be a Leelanau County resident for long. “Unless Sugar Loaf is opened this year; it will most likely not open for another 10 years and maybe never again,” he wrote on his blog.

Liko Smith and his young wife Sarah (they say they first learned of Sugar Loaf while on a honeymoon in northern Michigan in March) recently moved into a townhouse next to the vacant resort, which describe as a ghost town:

“Every night, I see a closed-down hotel and ski resort 100 yards from my front door. I am forced to experience it every night. … It is sad at best, and absolutely heartbreaking at worst. … The town of Cedar is a ghost town in the evenings. I walk the town of Cedar every day and in the evenings I sit at the Tavern and skull a few beers. Until you’ve done this, you can’t see the gravity of the situation.”

The couple describes their living situation at the townhouse as reminiscent of that of a developing country: “Kate Wickstrom has made no repairs to the water well that also feeds the town homes for over six years,” Smith writes. “So there is sand seepage into the water system and it is in dire need of repair and upgrade. When we turn the water on here, it is white with sand and we have to boil it out of the water in order to make soup or use the water for pasta.”

Red Ginger flop

But when it comes to ugly standoffs after reneging on financial agreements, Wickstrom, Fleis and Sculthorp are not alone. Liko Smith held a fundraiser on April 30 at Red Ginger, a restaurant next to the State Theatre in downtown Traverse City, which he hoped 100 potential investors would attend and fork over $100 per person to hear “his vision” for Sugar Loaf.

By all accounts, the Quad Fund mixer in the restaurant’s Lotus Room was a flop. Smith estimates that 40 people attended: Red Ginger puts the tally at closer to 20.

A Red Ginger representative, who insisted on remaining anonymous, said that Smith initially sought to rent out the entire restaurant (on a busy Friday night) and take control of it — this after using Red Ginger’s logo on his blog and invitations, which made it look as if the restaurant was backing Liko Smith (a charge it categorically denies).

Instead, Red Ginger suggested its banquet facilities upstairs, for a renting price of $1,500. The restaurant required a deposit before the event, but according to the representative, Smith said that, at the time, he had no cash, no checkbook, no credit card, and that he had just lost his debit card.

“I told him I’d never done this before where I haven’t taken someone’s money, but I asked him to sign the contract and guarantee me that you’re good for that minimum amount,” said the representative.

Attendance at the fundraiser was a disappointment, Smith refused afterwards to pay the $1,500, a near shouting match ensued (alleges Red Ginger), and Smith was ultimately banned from the restaurant. Red Ginger ultimately reclaimed over half of that amount — in part because it collected the credit card charges from people paying $100 at the door.

The Red Ginger representative said he was baffled by Smith’s initial refusal to pay a deposit. “Liko, you told me you own hotels,” the representative said. “So this idea of signing a contract with a minimum amount due is nothing new to you, right?”

During a phone interview yesterday, Smith said that Red Ginger didn’t provide the food service that it had promised. “There were a bunch of California rolls, and not many people drinking,” he said. “It was the cheapest [crap] they could put out. … It was nowhere near $500 in food value. … They said they’d provide three different types of appetizers, drinks, and that would guarantee 100 people.”

“They told me ‘You’re talking a $10 million deal (for Sugar Loaf), but you can’t even pay us $1,500?’ But I’m getting tired of people expecting me to throw money around, just because I’m from Vegas and California. … I’m here to say that I’m not an outsider now. I live in Cedar; I drink at same tavern, I golf the same courses.”

The question is: how much longer will Liko Smith stick around in Cedar? And more importantly, will Sugar Loaf ever re-open?

This entry was posted on Thursday, May 27th, 2010 at 1:17 pm and is filed under Investigative Article, Talk of the Town. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.