The Buzz

Bank, U.S. Rep. Cleaver settle lawsuit over car wash

Bank of America on Wednesday settled its yearlong legal dispute with U.S. Rep. Emanuel Cleaver over a loan he obtained more than a decade ago to buy a car wash.

But the settlement — announced just moments before the dispute was to go to trial — still leaves Cleaver, his wife, Dianne, and Cleaver Co. LLC on the hook for more than $1.2 million in future payments to the bank.

In a statement, the Kansas City Democrat said the troubled car wash was recently sold and the proceeds were used to pay off part of the original loan. But he said he and his wife still face payments on the debt, perhaps for years to come.

“We recognize our responsibilities and continue to work in good faith to resolve this issue and meet all of our legal obligations,” Cleaver’s statement said.

“We are saddened the business wasn’t successful.”

Cleaver’s office identified the car wash buyer as Rick Kochuyt, listed as a “car wash specialist” for Block and Co. Inc., a real estate firm. Cleaver’s office said the purchase price was roughly $464,000.

The settlement helps the Cleavers avoid a potentially embarrassing public trial. And, if they meet the required payments, taxpayers won’t be required to pay part of the outstanding loan, as once feared.

In 2002, Cleaver and his wife obtained a $1.3 million loan to buy the Grandview Auto Wash at 12204 Blue Ridge. The Small Business Administration, a federal agency, guaranteed roughly 75 percent of the loan.

But the car wash struggled. A year ago, Bank of America sued the Cleavers for defaulting on the debt, which it said had grown to more than $1.6 million.

That meant the SBA — which is partially funded by taxpayers — faced a potential payment of more than $1 million for its loan guarantee.

The SBA, and taxpayers, won’t lose anything if the Cleavers pay off the remaining debt. Details of the Cleavers’ payment plan for the outstanding balance were not made available Wednesday.

“It is important to point out that the loan was secured for a personal investment as a private citizen, after I was mayor and before I ran for Congress,” Cleaver’s statement said. “We will continue working to do all we need to do and move forward.”

The SBA press office did not respond to several requests for comment.

Cleaver earns $174,000 as a member of Congress. In his latest financial disclosure, he claimed additional income of $21,454 from his City Hall pension and a $9,664 salary from Missouri Annual Conference of the United Methodist Church.

He also earns some investment income. He listed no income for his wife.

His net worth, according to the Center for Responsive Politics, was between $448,013 and $1,269,999 in 2011.

Wednesday’s settlement was reached just moments before Jackson County Circuit Judge Marco Roldan was to hear arguments in the bank’s lawsuit, which it filed more than a year ago.

The Bank of America, through a spokesman, declined to comment. Attorneys for the bank and the Cleavers did not respond to emails and phone messages seeking comment.

Cleaver was not in court when lawyers presented the settlement to Roldan.

The presiding judge ratified the agreement in a two-page order Wednesday afternoon.

Cleaver has faced criticism about his management of his car wash-related finances for years. In 2004, he revealed he had failed to make some property tax payments on the facility.

But the struggles have not damaged his political career. In 2012, he easily won re-election to Congress.