Renowned local businessman and retired U.S. Air Force Col. Charles Cheever Jr. has filed a lawsuit against his current Northeastside residence, Army Residence Community, a development that houses retired military officers and their spouses, widows, or widowers.
The lawsuit, filed on Feb. 2 in the Bexar County District Court, alleges breach of contract, breach of fiduciary duty, elder exploitation, and negligence. Cheever, chairman emeritus of Broadway Bank and Texas Business Hall of Fame inductee, is one of 750 residents who live at Army Residence Community (ARC). He is seeking repayment of damages and attorneys fees.
The 143-acre complex, located between Fort Sam Houston and Randolph Air Force Base, is incorporated under nonprofits Army Retirement Residence Foundation San Antonio Inc. and Supporting Foundation, which does business as Army Residence Community. It is “one of the country’s finest accredited military retirement homes,” according to its website, and “has continually evolved and grown to meet the needs of residents.”
But Cheever said the place is being financially mismanaged and that he and other residents, who are on fixed incomes, are suffering because of it.
“They feel that the assets are being misused or squandered,” said former mayor Phil Hardberger, attorney at Dykema Cox Smith who Cheever enlisted for the case.
Mark Randolph, the local attorney defending ARC in the case, could not be reached for comment on Wednesday. Randolph sent a statement to the San Antonio Business Journal:
“Mr. Cheever is a highly respected member of our community in San Antonio and in the ARC community. However, the ARC strongly disagrees with the position taken in the petition that the current management of the ARC has mismanaged the institution.”
ARC is a state-of-the-art facility with a rolling green landscape and resort-like amenities including a tennis court and a lakeside fishing dock. High-rise apartments overlook cottages, assisted living facilities, healthcare services, and other resources for residents, all of whom have served at least 10 years in the military.
Residents expect to pay more for the exclusive luxury than the military retirement provides, but the monthly fees have increased beyond reason, Cheever said.
“We’re not saying it’s illegal,” Hardberger said. “We’re saying it’s badly run.”
Randolph’s statement indicated that documents would be disclosed during the course of the lawsuit that prove the nonprofits are financially solid.
Cheever and his family have made substantial charitable donations to ARC over the years. Some donations went toward creating the Betty Cheever Memorial Chapel in 1999, named after Cheever’s mother who also lived at ARC.
Seeing how much she enjoyed the facility during her time there, Cheever said, made the decision easy for him and his wife, Nancy, to move there in 2013.
“[My mother] loved everything about it, she loved the people, she was well taken care of,” he said, adding that he’s also been well taken care of during his time at ARC so far. “… My memories of how well my mother was treated out here made me want to be part of it.”
Hardberger said that Cheever paid nearly $300,000 for his two-bedroom unit on top of about $4,700 in monthly operational fees. Other units on the development can exceed $300,000. Those payments are nonrefundable, according to Hardberger and the contract. Estates that are left behind by residents who have passed away at ARC go back to the organization instead of their families.
The alleged financial mismanagement by ARC, Hardberger said, has caused a number of former residents to move away, jacking up monthly fees for remaining retirees whose military pensions are not coming in quickly enough to keep up.
This is the primary reason why Cheever and some of his neighbors are suing the nonprofit, because they “live in an environment of fear and anxiety as a result of [ARC’s] mismanagement,” the lawsuit states.
“The negative environment has caused many of the ARC’s residents to vacate their residences, which has raised vacancy rates and reduced occupancy rates. As a result, the ARC’s management has attempted to correct its loss of revenue from the decline in resident fees by increasing the fees charged to remaining residents. Such actions have only exacerbated the problem by driving more residents away.”
Over the past three months, Cheever has led a reform effort with 300 other ARC residents. In a petition, they called for the replacement of ARC CEO Mary Garr “because of mismanagement and incompetence,” Hardberger said. They also demanded that some ARC residents be put on the nonprofit’s board of directors, which is currently made up of retired military officers and spouses of retired military officers, all non-residents of the facility.
“Both of those requests were flatly denied,” Hardberger said.
In general, ARC residents are not kept up to date with necessary financial information to grasp the organization’s overall financial condition, which is in decline, he added.
One of the key examples of the financial misuse, according to the lawsuit, “is demonstrated by the handling of reported financial malfeasance by the ARC’s Chief Financial Officer [Bruce Chittenden] … which involved an off-the-books deferred compensation plan totaling $535,000 to $750,000.”
Randolph denied that any deferred compensation was “paid under the disputed agreement and the ARC has no intention to pay any deferred compensation under the disputed agreement.”
An ARC accountant who reported the occurrence was fired, Hardberger said.
“Not until the malfeasance became known among the ARC’s residents did the ARC’s leadership initiate any reasonable action to address the matter,” the lawsuit states. The board later put Chittenden on indefinite suspension, where he remains.
The lawsuit also alleges that the ARC made duplicate payments to an undisclosed Florida-based firm for loan origination fees, resulting in overpayments of $57,000. That was not disclosed to ARC residents, either.
“[ARC management] has stonewalled any reformation of these practices,” Hardberger said, and that’s why Cheever has taken action – to hopefully improve the financial management at ARC.
Just like back in his Air Force days, “a lot of people come to Charlie as a natural leader,” Hardberger said.
Hearing one side of a story is libel, not reporting. This article falsely accuses and negativally connotates the ARC. You are creating a nasty environment and should be but on suspension for your lack of research before reporting this vicious story that holds little truth. If the residents are so dissatisfied they should be looking elsewhere for residence, where indeed the deals are much worse. Stop attacking without understanding the full truth.
Sounds like a “Defense Lawyer” or a PR hire? Where is the Name of the author? Lawsuits are what courts are for–when you cannot resolve differences “amicably”! Resident rights are few if any in the State of Texas–sometimes the Courts are the “court of last resort”.
Wade Taylor
ARC Resident
hmmmmm…sounds very much like the defendants! The article was very well written and factually portrays the situation from the residents point of view. If the management has another side, their total lack of transparency and apparent lack of communication and leadership skills prevents them from disclosing the “truth” of their side! obviously this only serves to foment further lack of trust and confidence from the residents. Indeed, many, many of us would seek residence elsewhere if we hadn’t sunk a sizeable portion of our financial resources into the ARC which is now non-refundable! If these funds ($200,000-$400,000+ each) were refundable, we feel confident that the ARC would soon resemble a ghost town!
I have been and intend to stay ‘anonymous’, mostly in fear of management reprisal, but I have watched and listened and noted what goes on here as I, among all the others, are a ‘trapped resident’, coming in as an Officer’s widow just over five years ago. I thought I was coming into a well managed and ‘safe’ and stable environment in which to spend my remaining years. Everyone knows that military men could never be seen as ‘overpaid’ for their service to their country, but their sacrifice was for the love of country and a desire to contribute to its security. I saw the word “Army” and the word ‘nonprofit’ and I mistakenly thought that would mean ‘secure and well run’ and ‘in service to’ the residents. I now do not feel the same toward those words…. and find we are in a captured ‘industry’. To your first writer who feels we have only heard one side of the story and we should be looking elsewhere to live, I say: “Over three hundred residents cannot be wrong…. and the ‘attacks’ as you call them are more reasonably the only ‘defenses’ most have here. A lot of our hard acquired assets have bought into this place and WILL NOT be refunded if we leave. The monthly maintenance costs have continually raised beyond what we were ‘told’ to expect when we signed agreements to make our home at the ARC. Many of us made our financial decisions to invest here based on what we were led to believe… in fact ‘told’ to believe, was going to only be moderate costs, ” in line with and about the same as the cost of living increases” which has been only about 1% a year. Instead, due to overspending and mismanagement, the maintenance costs on each resident has been 3 to 5% a year…. that is considerably more than the cost of living and is draining the pockets of the now retired residents. The present CEO who was hired, was ill prepared for this position, and has been in a ‘learning’ mode since she has been here…. and has attended conferences where she could learn her job, and has hired extra staff, approved expensive study’s and survey’s, and executed ‘beautification’ projects, and increased employee benefits….ALL at the resident’s expense, and without any voting resident approval or evidently cost-benefit overwatch by the Board. The president of the Board, Col Solomon, since his military retirement in 2002, has been on the ARC board too long and quite obviously the power has gone to his head…. as well as who knows what other ‘side benefits’ to his own personal business from the networking opportunity he has had. Now even the lawsuits because of the CEO and Board’s lack of responsiveness and their overspending and mismanagement will be paid by the residents…. and Col Solomon has used this in a recent letter as a type of ‘threat’ to the rest of us to ‘quiet down or obviously be charged more to live here’. More fear and anxiety. This should be criminal… and it certainly is intimidation and mistreatment of the elderly who live here. Both the Board and the CEO are digging in their heels and refusing to go and therefore will indeed run up our cost to live here. It cost them nothing to ‘hang on’. Unfortuantely, the CEO and the entire Board have no personal financial stake or cost here here. The CEO and present Board quite obviously feel themselves ‘above’ any accountability and need of response to the inquiries and concerns of the residents which only has further alienated the relationship. At this point it is irreparable and the law should make the Board and the CEO themselves pay for the attorneys themselves ‘out of their own pockets’…. not the resident’s pockets. A petition signed by close to a majority of residents has fallen on deaf ears and most of us feel like ‘victims’ now, powerless and unrepresented. We applaud the efforts of those who are attempting to stop this misuse and abuse of the elderly….. and we clearly see who is working for us and those who are working for their own ego’s and salary. All we want is new management and oversight and a chance to have some representative vote on the Board. Our hearts are breaking over this turmoil and at our age we deserve respect and consideration.
My name is Mary Karges. I live in Apt 1404 in the high rise. May I also add that I love Charlie Cheever and Nancy and have the utmost respect and gratitude for his Mother and the Cheever family who has supported the ARC most generously for 30 years.
That said, I am compelled to represent another side to what has become an unbearable situation surrounding us and which is tearing us apart. Don and I moved to the ARC in Spring 2009; we loved everything about being here. Don got sick and we were away all Summer of 2016 at the M.D. Anderson Cancer Center. I believe things started to fester while we were gone. Each day now brings more disheartening information and complaints. Quite frankly, I’m sick of it!
I appear to be a majority of one, but I want to be loud and clear: I still love the ARC. I have no intention of leaving. Now that I am a family of one, I especially thank my lucky stars that I live here. I love the food, (yes!), I love the camaraderie among my neighbors, the activities, the staff who have never stopped being attentive and helpful. Call me Pollyanna? OK, but I think now that the people have spoken, we could give those with experience and knowledge far greater than mine, a chance to take action. It is just too bad they must spend their time planning a fight in court.
And, by the way, can someone supply a number of the people who have forgone their investment in ARC by moving away due to unhappiness with management? Is it dozens? two or three? how many? Got proof? I’d love to know that figure. Also, how many people have actually decided not to move here for the same reason? Are you sure they were genuine about actually moving? If so, I do hope they have found a better deal.
My email address and phone number are in the directory. If its just hate mail, keep it to yourself. I will feel your vibes when next we meet.
Mary, I agree with you completely. Thank you for taking the time to address this very disturbing nonsense going on at the ARC now. It appears that some residents do not have enough to keep them occupied. – Visit residents in Health Care Center and laugh and joke with them; volunteer to help in children’s organizations by playing games, singing, and just talking to them; help in clothing drives for the less advantaged, etc. etc. etc. You have probably
Right on Mary. Mary and I are very happy here, and agree with you completely. We hope that a few malcontents don’t succeed in their quest to shut this place down . We are here until we die!!!!!!
Glenn and Mary Nordin.
10 plus satisfied years
When 300 residents gave a no confidence vote to the CEO/Executive director she did not take notice nor did the Board. This entire situation could have been avoided if she had just resigned and maintained some dignity. When management doesn’t listen things become intensified. I too want to live out my life in peace here at the ARC. I believe the situation is such that there can be no trust between the CEO and the residents. Therefore I applaud Charlie Cheever’s actions as the only viable alternative.
The current CEO… this is her first private sector job out of the military. She’s not up to the challenge?
A woman who has served her country with 30 years of military service, been a over commander 5 times, and continues to put up with the lack of support from a great deal of residents who don’t understand the full situation of what’s going on? I’d say she’s doing a better job than you probably could.
I beg to differ with you. A true leader would not have ignored numerous allegations of wrong doing. A true leader protects and cares for his people.
Give Mary Garr a chance. Who in the ARC thinks they could do a better job trying to satisfy all residents here. ARC residents should get involved in volunteering to help the residents in Health Care and Assisted Living instead of finding fault with the administration .
There is so many organizations to get involved in which would benefit all residents in the Army Resident Community. I, for one, came to the ARC to have the administration take care of my needs – Malcolm and I did not come here to be in charge. Marjorie Johnson
health care is a very important duty of the ARC but there also is a town to run and timely maintenance to contend with. There is no program in existence to correct this serious problem. A city manager needs to be on board that would become a separate entity from health care. Maintaining the residential area is vital and needs the guidance of a qualified non medical individual. Look at the streets and the rapid turnover of qualified yard personnel. The current yard personnel are doing a great job even though stretched to their elastic limits
Many positive things are going on at the ARC. Jane, in activities, does an incredible job. Michelle, in wellness, keeps us moving and healthy.
Elida, in housekeeping, keeps track of a very complicated schedule and provides us with great maids. These folks give above and beyond their job description. Our administration should do the same.
As much as I regret having to join in on this discussion, the recent ugly and dismissive comments made by BOD President COL Solomon about COL Cheever and unnamed residents force the issue with me. This mess lies solely in the laps of COL’s Solomon and EO Garr. COL Garr’s failure to properly manage this wonderful institution (with COL Solomon’s acquiescence) has forced the residents to take action to bring her under control.
As a newer resident, I have an imperfect knowledge of several complaints that have been made by other residents. I am sure of the following facts I have either witnessed or managed to verify (with absolutely no help from management or the BOD).
1. Mr. Chittenden attempted to place $750.000 on the ARC’s books to provide for a backdated deferred compensation plan. When this was prevented by a conscientious accountant the accountant was fired by COL Garr and, at some later date $535,000 was placed on the books by an unknown person. Col Furbish (former EO) has firmly stated that there was no deferred compensation plan for the time Mr. Chittenden placed those funds on the books. An interesting note, the BOD and ARC’s accountant were made aware by Resident Council Chairman Becker at the 6 Feb 17 BOD meeting that the $535000 entry had disappeared from the ARC’s financial report to bondholders dated 11 Nov 2016. This is interesting because the Accountant should have been the person responsible for preparing and submitting that report.
2. Since my wife and I moved here (Aug 2015) COL Garr has Made arbitrary major changes to resident rights with no warning or discussion. Some of these include severe restrictions on firearm ownership. Removing residents rights to mediation from the resident’s contract. Other changes to the residents contract which, if my lawyer read them, I would never sign.
3. As I noticed problems at my own residence, I have asked others about the ARC’s facilities maintenance program. I have determined they don’t have one. As a personal example, I recently realized the air handler system in our residence had not been serviced in the 15 months we have been here. Not even the filters had been replaced. Standard practice if for these systems is semi-annual inspection and filter replacement no less often than three months. We also had a noisy failure in our fire detector system which, early on a Sunday morning, the ARC was not prepared for. The service representative from the manufacturer said the system should have been serviced annually. Skimping on plant maintenance is an easy way to save money in the short term but, there will be expensive repercussions at some point.
I sympathize with the respondents who wish for the ARC to function as intended by the founders. I strongly share this wish. Unfortunately, the evidence shows we may not get our wish. Sandy and I came here believing the ARC would be a safe and happy place to live out our years. I think that dream can still be realized but, not without a fight. For those asking who these people considering leaving are, here we are. But first we will fight to hang on to our dream and, if necessary, we will happily join COL Cheever in a class action. Perhaps some of the charges being leveled against management may prove unfounded but, with the wonders of “discovery” we shall find out one way or another.
Mike and Sandy Covey
Someone asked “how many people have actually decided not to move to ARC”? We have decided to “postpone” moving to ARC until all this is settled. Can someone give us an update on the lawsuit etc. The entire matter is very disturbing. Thanks so much.
Someone needs to look into the metal roofing project NOW, before we all take a financial beating! The contractor has numerous shady deals and has been fined by States’ Iinsurance Commissioners. There is currently a bank fraud investigation ongoing in San Antonio. Due diligence went out the window on this matter by management.
It is not always financially feasible for unhappy residents to leave. If they sold a home in order to “buy in” at $300k+, they don’t get ANY of that when they leave. It isn’t like owning a condo, that you can sell. That money is flat gone. On top of that, they pay rent each month, while building zero equity. Then they start changing rules, raising rent, harassing residents that don’t comply, I think this suit is completely warranted! The residents should be able to serve on the board at the VERY LEAST! I have a relative living there and I have been listening to this nonsense for awhile. I think it’s about time someone sued! Many residents fear speaking openly about the negative aspects of the place bc it might deter future residents (investors) from moving in. I think it’s safe to say that most residents like living there, they are just concerned with the management. They would like to continue to live their with some assurances that the place is being managed appropriately. My understanding is that Mary left, so hopefully things can get back on track.
As an employee here at the ARC there are a lot of problems here the high rise is in bad shape there is black mold everywhere and when it start showing we just cover it with different tile no one the wiser meaning the resident it is not a safe place for elderly black mold can cause worse issues but who I’m I to say yes Col Garr is gone but now we have a person from Incarnate Word coming to run this place another person untrained to run a retirement home and as for health care come at night unannounced and see the alarms going off of patience asking for help and the nurses are no where to be found or sleeping and yes the head administrator knows these happens and yet she keeps her job too , I would never want my family here they overcharge the residents especially the ones that have no family members and have dementia they steal there belonging and the ones that know keep quiet so they can receive some of the items themselves no one cares for these elderly victims it’s time to clean house from the top to the bottom start with a whole new crew before you lose another love one to the ARC . Ps and for the residents that can’t move cause all there money has been invested in these place they will never get it back so you throw them out with nothing just like trash the way you treat them !!!
We have been considering a final move to the ARC. We visited the facility earlier this year. The amenities appear very diverse. The housing looks nice. However, our guides could not answer a number of financial questions. We would appreciate an update on the controversy expressed in this article so we are prepared to make our decision.
Comment 2:
Colonel (ret) W F Reilly Jr on April 28, 2018 at 8:50 AM said:
We have been considering a final move to the ARC. We visited the facility earlier this year. The amenities appear very diverse. The housing looks nice. However, our guides could not answer a number of financial questions. We would appreciate an update on the controversy expressed in this article so we are prepared to make our decision. email me at brflies@aol.com Thanks.
With so many complaints I’m canceling my application Inmediatly !!! Byby