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Cafe D'Roma lawsuit postponed; spending spree apparently over.

MELANIE STEELE'S day in court, originally scheduled for last Tuesday, was postponed until August after she presented a statement from a doctor who said she had been undergoing unspecified treatment.

In the meantime, her attorney, James R. Pender, has filed a motion to dismiss the Pulaski County Circuit Court lawsuit that accuses the dotcom millionairess of reneging on a deal to buy Cafe D'Roma in Little Rock because no contract was ever filed in evidence.

The plaintiffs' attorney, Judson Kidd, said no contract was filed because Denny and Lourie Hamilton naively allowed Steele, a regular customer, to keep the $85,000 promissory note in order to have it notarized.

"It's a strange story, and it's been financially devastating to the Hamiltons," said Kidd. He said he could "win it in a minute if we could ever get to trial," despite Steele's sworn statement that no contract ever existed.

The Cafe D'Roma deal appears to have come in the final throes of a multimillion-dollar spending spree that began in February 2000 and ended abruptly on July 30, 2001, when Steele bought the last of 12 houses.

Steele's home phone number is unlisted, and none of the half-dozen different numbers listed for her one remaining business venture -- Bainum Boutique in the lobby of the TCBY Tower -- was working last week. Pender wouldn't answer any questions about his client's alleged deal to buy the Hamilton's restaurant.

According to the Hamilton's complaint, filed in September, Steele agreed on July l3 to buy the business. Four days later, they claim, she took possession of the leased premises at 2701 Kavanaugh Blvd., where she briefly opened a cosmetics store, and signed the promissory note to pay $85,000 plus interest by Aug. 6, 2001.

No payment was ever made, the Hamiltons allege. By the time Pulaski County Judge John Ward hears the case on Aug. 9, the payment will be a year overdue.

"What I'm afraid is all the money is gone and we'll end up with a judgment on paper only," Kidd said.

Another Little Rock business, MDH Builders Inc., has been waiting much longer for a check from Steele.

Mike Hill, the president of MDH builders, said his company's $9,500 claim against Steele dates back to mid-2000.

Steele paid Hill $1 million, plus a $50,000 bonus that went to her real estate agent, for Hill's house at 28 Bretagne Circle in the toney Chenal Valley subdivision. Then, he said, she wrote him a check for the $129,500 house she wanted to replace the 1,000-SF house at 6500 Osage Drive in North Little Rock, which she had purchased for $80,000. (She had rented the house and lived in it for a few months before buying it.)

Steele immediately gave the property to Lamar Hoskins. (She reportedly has told people that she and Hoskins later married, but as recently as March 8 she executed a deed transfer in which she identified herself as "an unmarried person.") Steele and Hoskins ordered many changes to the original house plan, Hill said, including the only circle driveway among the modest homes on the east side of Osage.

For those additional costs, Hill said, Steele consistently refused to pay. He finally filed suit in Pulaski County Circuit Court in January 2002. Steele never answered the complaint, and on April 26, Judge Ellen Brantley entered a default judgment for the disputed amount plus another $850 in interest, costs and attorney fees.

A third business that filed suit against Steele was much luckier. She paid a $17,000 debt to the Arkansas Times Limited Partnership shortly after the publisher of the weekly Arkansas Times filed suit on March 1.

Linda Phillips, who worked on Steele's account for the Times, said Steele was in arrears on advertising for her Bainum shop that appeared between August and October 2001. In January, according to Phillips, Steele agreed to pay off the balance at $2,000 a month, but she hesitated when the newspaper asked her to sign a promissory note.

After she was served with the lawsuit, she asked Phillips to come to her store and pick up the check. The Times waited more than a month to dismiss the complaint because the check was written on an out-of-state bank -- Prudential Bank, payable through Bank One of Columbus, Ohio - and took some time to clear, according to Phillips.

Buying Spree

Steele, 40, a native of North Little Rock, began attracting attention early in 2000. She paid cash for nearly $2 million worth of residential real estate in Pulaski County in a matter of days and contracted to buy the Continental Building at 100 Main St. in Little Rock for a reported $5.2 million in cash.

In a city the size of Little Rock and in a state with the average per-capita in-come of Arkansas, extravagant spending like Steele's was news, especially when the source of such indisputable wealth was a mystery.

She bought hundreds of thousands of dollars worth of cars -- she's partial to Cadillacs, Mercedes and Range Rovers, most of which she gave to friends and family members. The Arkansas Democrat-Gazette reported that she left a $10,000 tip for a waiter at Cafe D'Roma more than a year before she allegedly decided to buy the restaurant. An interior designer said Steele was the best thing that ever happened to the home-decorating business in Little Rock.

She opened a coffee shop with Internet access for customers, Avanti Cybercafe, in the River Market, and a vintage clothing store, Avanti's Attic, above it. (Both closed in mid-2001.)

While she has never talked to Arkansas Business, she told the Democrat-Gazette in late 2000 that she had cleared $14 million by selling her stock in an Internet grocery delivery company in San Francisco called Webvan. The company, which eventually went the way of many high-flying dot-coins, was founded by bookstore mogul Louis Borders, whom Steele claimed to have been close to marrying.

Real Estate Deals

Steele backed out of her plan to buy the Continental Building, assigning her contract to the Stephens Group Inc. instead. But she hadn't soured on real estate completely; she kept buying houses, sometimes two at a time.

In February 2000, she had purchased five houses: Hill's house on Bretagne; a house in Sherwood in her widowed mother's name; a house near Dallas for use by a sister, Andrea Thrasher; the house on Osage that she had rebuilt for Hoskins; and a house in the gated Canal Pointe community in which she lived briefly before giving it to a friend, Holly Dee Vines. She also bought a vacant lot next door to the Canal Pointe house.

Between March 2000 and July 2001, according to Pulaski County real estate records, Steele, the Living Trust of Melanie Steele or BLLC, a company she incorporated, bought six more houses. A seventh, purchased in the name of her sister, Lia Steele, undoubtedly was bought by Melanie Steele.

Rumors that she also bought homes in Colorado, California and who-knows-where-else could not be confirmed.

She gave one of the houses, at 33 Chenal Circle, to members of Hoskins' family.

She has retained ownership of only two of the 13 known properties:

* the house in the Dallas suburb of Flower Mound, which is held by her living trust; and

* the last house, her current residence at 3 Cantrell Road, which she bought on July 30,2001. For the first time, she leveraged that house with a mortgage: $325,000 on a house for which she paid $335,000.

She seems to have stopped buying cars as well. None of the six cars assessed in her name (two Mercedes sedans, two Range Rovers, a Cadillac DeVille and a Volvo) or the seven assessed in Hoskins' name (a Range Rover, a Mercedes, a DeVille, a 1984 Rolls Royce and three antique Chevrolets) is newer than a 2001 model.

Six of the properties have been sold, most within a matter of months after she bought them and invariably at a loss. The real estate losses range from $7,000 on the vacant Canal Pointe lot to $224,000 on the Bretagne house she had purchased from Hill.

Her actual loss on the Bretagne house is undoubtedly much higher. Barely nine months after buying it for $1.05 million, Steele listed it for sale at $2.8 million. The real estate agent who listed it, Suzanne Best of Adkins McNeill Smith & Associates, said at the time that Steele had made significant improvements to the house, including a new kitchen, a heater for the swimming pool, exterior lighting and custom window treatments. (She had also installed a couple of Egyptian-style sphinxes in front of the house, which created something of a tourist attraction.)

It took almost a year and a half for the house to sell, and when it did -- in March to Bryan and Sherrill Hosto -- the sales price was $826,000, very nearly $2 million less than Steele was asking back in the fall of 2000.
Melaine Steele Real Estate Transactions

Houses Steele, her living trust or Date Purchase Mortgage
B LLC Purchased Purchased Price Amount

28 Bretagne Court, Feb. 10, 2000 $1,050,000 --
Little Rock

Lot 4, Canal Pointe (vacant) Feb. 11, 2000 $92,000 --

4613 Windmill Lane, Feb. 16, 2000 $269,900 --
Flower Mound. Texas

33 Chenal Circle June 12, 2000 $650,000 --

8 Lombardy Lane, Feb. 21, 2001 $193,000 --
Little Rock

4907 Hawthorne Road, Feb. 26, 2001 $235,000 --
Little Rock

2 Lombardy Lane, Feb. 21, 2001 $220,000 --
Little Rock

3 Cantrell Road, July 30, 2001 $335,000 $325,000
Little Rock

Houses Steele, her living trust or
B LLC Purchased Date Sold

28 Bretagne Court, March 8, 2002
Little Rock

Lot 4, Canal Pointe (vacant) May 25, 2000

4613 Windmill Lane, --
Flower Mound. Texas

33 Chenal Circle Feb. 9, 2001

8 Lombardy Lane, July 20, 2001
Little Rock

4907 Hawthorne Road, Sept. 9, 2001
Little Rock

2 Lombardy Lane, Nov. 14, 2001
Little Rock

3 Cantrell Road, --
Little Rock

Houses Steele, her living trust or
B LLC Purchased Buyer(s)

28 Bretagne Court, Bryan and Sherrill Hosto
Little Rock

Lot 4, Canal Pointe (vacant) Susan Collins Smith

4613 Windmill Lane,
Flower Mound. Texas

33 Chenal Circle Keith W. and Robyn A. Richardson

8 Lombardy Lane, Charles David and Suzie Williams
Little Rock

4907 Hawthorne Road, Clark H. and Katherine F. Raborn
Little Rock

2 Lombardy Lane, E. Stuart and Alice Y Estes
Little Rock

3 Cantrell Road,
Little Rock

Houses Steele, her living trust or
B LLC Purchased Sales Price

28 Bretagne Court, $826,000
Little Rock

Lot 4, Canal Pointe (vacant) $85,000

4613 Windmill Lane,
Flower Mound. Texas

33 Chenal Circle $600,000

8 Lombardy Lane, $165,000
Little Rock

4907 Hawthorne Road, $220,000
Little Rock

2 Lombardy Lane, $185,000
Little Rock

3 Cantrell Road,
Little Rock
Houses Steele bought Date Purchase
and gave away Purchased Price

6500 Osage Drive. North Little Rock Feb. 10, 2000 $209,500 *
1820 Canal Pointe, Little Rock Feb. 11, 2000 $385,000
41 Chenal Circle. Little Rock Dec. 5, 2000 $473,000

Houses Steele bought
and gave away Date Sold Recipient

6500 Osage Drive. North Little Rock Feb. 10, 2000 ** Lamar Hoskins
1820 Canal Pointe, Little Rock Feb. 11, 2000 Holly Dee Vines +
41 Chenal Circle. Little Rock Dec. 11, 2001 Alfred L. Hoskins

Houses Steele bought Mortgage Mortgage
and gave away Amount Date

6500 Osage Drive. North Little Rock $84,000 March 1, 2002
1820 Canal Pointe, Little Rock -- --
41 Chenal Circle. Little Rock $128,000 March 1, 2002

*Includes $80,000 paid for lot and original house, which was then moved
and replaced by a new house costing $129,500, according to the building
permit.

**Date of original quitclaim. Two subsequent quitclaim deeds have been
filed to correct errors in the original.

+Resold in October 2001 to Maryann C. and Jack East III for $337,500.
Houses Steele is believed to have purchased Owner's name

1212 Country Club, Sherwood Bettina Steele (mother)

2501 Justin Matthews, North Little Rock Lia Steele (sister)

Total spent on real estate since February 2000 $4,499,900

Total recouped on sales $2,081,000

Houses Steele is believed to have purchased Date Purchased

1212 Country Club, Sherwood Feb. 10, 2000

2501 Justin Matthews, North Little Rock March 10, 2000

Total spent on real estate since February 2000

Total recouped on sales

Houses Steele is believed to have purchased Purchase Price

1212 Country Club, Sherwood $160,000

2501 Justin Matthews, North Little Rock $357,000

Total spent on real estate since February 2000

Total recouped on sales

Sources: Legal documents filed in Pulaski County and Denton County,
Texas
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Article Details
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Title Annotation:Melanie Steele
Comment:Cafe D'Roma lawsuit postponed; spending spree apparently over.(Melanie Steele)(Statistical Data Included)(Illustration)
Author:Moritz, Gwen
Publication:Arkansas Business
Article Type:Statistical Data Included
Geographic Code:1U7AR
Date:Jun 3, 2002
Words:2113
Previous Article:Forum wows venture sector.
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