At one point, Curtis Carlson Nelson, right, appeared destined to run his family’s business empire — founded by his grandfather Curt Carlson, left, and later run by his mother, Marilyn Carlson Nelson.

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Curtis Carlson Nelson says the bank issues have been “settled.”

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More trouble for Carlson grandson

  • Article by: DAVID PHELPS
  • Star Tribune
  • February 7, 2011 - 3:28 PM

A new chapter has emerged in the troubled business life of Curtis Carlson Nelson, the onetime heir apparent to one of Minnesota's most storied family-owned companies.

The plot twists are strewn with unflattering allegations against Nelson, including millions in unpaid debts, missing Krugerrands, bounced checks and a failed startup in the automotive industry, all amid accusations of fraud and deceit.

Not so long ago, Nelson appeared destined to run the family's vast business empire, which includes Radisson hotels, TGI Friday's and Carlson Wagonlit Travel. Now he's at the end of a legal tussle with Edina-based Crown Bank, which accuses Nelson of vastly overstating his net worth for a $3 million loan in 2008 and for a $1 million personal guarantee for a second-party loan in 2009.

Crown Bank claims that Nelson offered an overinflated appraisal of a family coin collection to cover his obligations. The coins once belonged to his late grandfather, the legendary Curt Carlson -- founder and embodiment of the Carlson hospitality and marketing conglomerate that still bears his name.

The bank says Nelson produced the coins and an appraisal that said the collection was worth at least $2 million. When bank officials attempted to settle Nelson's debts with the coins, they were told that the bank possessed "junk coins" worth less than $40,000. Valuable Krugerrands, said to be a part of the collection, were not found.

"The amount of [Nelson's] debt is significant," Crown Bank vice president John Lindquist said in an affidavit. "Crown Bank would not have agreed to loan Mr. Nelson $3 million or would have required sufficient additional collateral to secure the loan."

Nelson declined to be interviewed for this story, but through a spokesman, he released a statement that said everyone will be made whole, adding that the final details of a settlement with Crown bank are being worked out.

"All outstanding matters between myself and Crown Bank have been settled to the satisfaction of all parties and with absolutely no admission of fraud," Nelson said in the statement.

Meanwhile, an order for judgment of $3.8 million was filed last week in Hennepin County District Court to begin the collections process against Nelson.

Family troubles

Nelson, now 47, had worked his way up through the company and became chief executive of Carlson Hospitality Worldwide in 1996. He became president and chief operating officer of Carlson Cos. in 2003.

"He worked hard in the company to learn the business and get ahead," said Kirby Payne, co-president of HVS Hotel Management, a Rhode Island company formerly based in Minneapolis. "When I dealt with him, he was very focused and on issue. He was well on his way [to the top of the company], but due to unfortunate circumstances associated with health issues, his career with the company was put on hold."

Nelson's mother, Marilyn Carlson Nelson, decided to restructure the company's executive team in 2006, leaving an unhappy Nelson without a path to the top job. The tension between Nelson and his mother and the Carlson board escalated. At one point, Nelson was temporarily barred from the company's corporate campus.

In 2007, Nelson sued his mother and Carlson Cos. for his share of the family fortune, claiming he had been denied his path to the top by a "hostile" board of directors, most of whom are other family members. The company's response to the lawsuit revealed drug and alcohol problems for the younger Nelson, as well as performance issues. The suit was settled in 2008.

Family business consultant Tom Hubler said it is not unusual for members of successful family businesses to venture out independently to try and show their own business acumen.

"Psychologically speaking, everyone needs to leave home," said Hubler, who does not advise any member of the Carlson family. "You need the emancipate yourself and develop a career inside the organization and if you leave, you face the same sort of challenges. The X factor is whether his judgment is impaired or he made a bad business deal."

Bank's 'due diligence'?

After a couple of brushes with the law for driving under the influence, Nelson has kept a low profile until Crown Bank took legal action.

The loans in question were initially secured with shares of Visible Customer Holdings, a start-up automotive loyalty company aimed at dealerships and their customers. But Visible Customer went out of business and filed for a Chapter 7 bankruptcy last summer, revealing liabilities of nearly $12 million. Nelson, who was CEO of Visible Customer, is also being sued for defaulting on a separate $300,000 loan that he guaranteed for Visible Customer in 2009 and $576,000 in unpaid fees to a consulting firm.

"While I continue to believe strongly in the underlying concept of the business, the twin blows of the worst economy in generations and an auto industry in free fall made the company economically unsustainable," Nelson said in his statement to the Star Tribune.

Crown Bank officials said they believed Nelson's net worth was in excess of $18 million when it made the loan to him in July 2008, but the value of his assets fell to $11.7 million by March 2009. The due date of the loan was extended twice, once after Nelson offered his grandfather's coin collection as additional collateral, according to the bank.

Bank officials said they were assured the coins were worth at least $2 million and included Krugerrands. Lindquist said Nelson told him "that he had forgotten that certain coins were included in the collection, which likely increased the value of the collection to $3 million or $4 million," according to court records.

Nelson's attorneys counter that Crown Bank executives were well versed about Nelson's financial position, including "significant liabilities" when they approved the loan. The bank "failed to undertake any true due diligence" and "presumably granted the loan based on Nelson's [Carlson] ancestry," Nelson's attorney said in a filing that opposes the bank's attempt to seize property from Nelson.

For now, Nelson remains in default. Crown Bank received a "prejudgment attachment" ruling in Hennepin County District Court that essentially prevents Nelson from disposing of assets until the bank can obtain a property judgment in the case.

Asked about future moves or investments, Nelson didn't reveal anything specific. "My plan," he said, "is to continue as an entrepreneur and private investor."

David Phelps • 612-673-7269

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