The doors to the Albert Lea Inn on Main Street closed to customers at the end of last month after Freeborn County Judge John A. Chesterman appointed a receiver to manage the financial affairs of the hotel.

Patrick T. Finn, of Lighthouse Management Group Inc., is now the receiver for the property. Blue Dragon Properties LLC, the managing company of the Albert Lea Inn, was ordered to cooperate with the requests of Finn and to deliver the possession of the mortgaged property to him, according to court documents.

Court papers state the order took place at the end of April after American Bank of St. Paul motioned for the appointment, following the notice of foreclosure of the property.

Blue Dragon Properties was required to give the receiver all necessary keys, computer cards, security codes and access devices, along with all paper and electronic data related to the business. This data includes “lease files, property maintenance files, service contracts, keys, ledgers, licenses, financial books and records, security deposits, operating and bank accounts, and all other records in any way related to, or necessary for, the management and operation of the mortgaged property,” court documents state.

The receiver is authorized to operate and manage the property, documents continued.

Court records state the receiver will collect any rents, profits or other payments to the mortgaged property and apply that money to the payment of the receiver’s fees, security deposits, prior or current real estate taxes, special assessments, insurance premiums, expenses of operating the property, and repair or maintenance of the property.

The receiver is required to provide the court and involved parties with a monthly statement of revenues and expenses of the property. He will be paid an hourly fee of $275 for performance of his duties and will serve until a further court order.

Documents state that in April of 2007, American Bank loaned Ruben and Tonya Navarro, the principals of Blue Dragon Properties, $1.33 million to purchase the hotel. The loan was secured by a mortgage on the hotel.

American Bank alleged that Blue Dragon Properties failed to meet its obligations and in October filed action in Freeborn County District Court seeking foreclosure of the property, according to court records. Tonya Navarro filed a response to the allegations, alleging she received a predatory loan.

At the end of December 2008, American Bank filed a motion for the mandatory appointment of a receiver, of which Navarro also filed an opposing affidavit.

Documents state a meeting was held in March 2008 between the president of American Bank and Navarro, at which time Navarro requested an additional loan and requested a deferral of monthly mortgage payments for several months. At that meeting, the president of the company asked for financial statements and disclosures from Navarro and advised her that American Bank could not make a decision about the loan or the deferral of monthly payments without those statements.

“The court specifically finds that American did not make any promises to defendants Blue Dragon and T. Navarro regarding American’s ability or decision to immediately grant an additional loan or defer mortgage payments,” papers state.

The documents continued that Navarro did not submit the required financial documentation until the end of May 2008. The bank sent a letter advising her that she did not qualify for a new loan and that the bank could not defer the monthly mortgage payments.

Navarro also faces criminal charges in Freeborn County District Court including seven taxation violations, for allegedly failing to pay lodging taxes required by city ordinance.

The on-sale liquor license at the hotel was revoked by the state Department of Revenue for failure to pay state sales tax.