Home developer didn’t violate law by giving Arel discount

CONCORD – In 1998, Nashua real-estate developer John Stabile sold Maurice Arel a $339,564 custom-built home at cost, essentially giving the then-Pennichuck Corp. president a $70,000 discount.


“We’d had a long-term business relationship. The company agreed to build a house at cost for professional courtesy. I’m not publicly traded and can do that,” Stabile said Thursday.

“In business, there are times when you decide that you’re going to give a discount on your business. You make those business decisions.”

The U.S. Securities and Exchange Commission’s investigation into the Pennichuck case shows Stabile did not commit any wrongdoing, said New Hampshire Securities Director Mark Connolly.

Arel was charged with securities fraud, however, because he said in Pennichuck’s 1998 annual report that his home purchase was made under “the same as the terms which would be given to any independent third-party purchaser.”

Still, Stabile’s name is mentioned throughout SEC filings in the case because he had 10 real estate deals worth about $36 million with Southwood Corp., the real-estate subsidiary of Pennichuck. Southwood did business only with Stabile’s companies.

Jeffrey Spill, deputy director of the state securities bureau, said Southwood would transfer unappraised land to Stabile, as an individual, at no immediate cost. Stabile would then pay back the purchase price when homes sold.

Stabile’s companies were responsible for building the structures, clearing the land, doing the land development, and selling and marketing the property, Spill said.

“Mr. Stabile profited, and his companies profited,” he said.

State securities documents reveal that Stabile profited at least $2 million from the joint residential ventures. Arel failed to disclose those figures, as well.

Stabile declined to comment on any profit he made.

“In our opinion he had a fairly sharp pencil and he was a diligent businessman and got the best business he possibly could,” Connolly said. “We have no reason to investigate Mr. Stabile.”

The former Republican state senator did acknowledge giving Arel a deal on his 3,455-square-foot home at 6 Fireside Circle. Stabile built the home at cost and gave Arel a $10,000 discount.

Stabile didn’t charge Arel for the standard 10 percent home-building markup or 6 percent real estate commission, and Arel didn’t pay a $12,000 lot premium for one of the largest lots in the subdivision.

Stabile said he had a 20-year relationship with Arel, and “we had done everything with a handshake.”

As of Thursday afternoon, Stabile had not seen Arel in the past year, aside from occasionally bumping into him, he said. But they are still friends.

“Once this started, I think both of us were advised to keep our own counsel,” Stabile said.

The developer said he has given discounts on homes and buildings “numerous times,” though he doesn’t do it every day because it would put him out of business.

“When I did the Children’s Home in Nashua, I did it at my cost . . . This is not something new for me,” he said.

Stabile said he had no reason not to cooperate with the investigation and provided more than 13,000 pages of records to the SEC.

“I know people are going to want to read into the story, but I feel that I responded to this entire process as professionally as I possibly could,” he said. “I value my integrity and the opinion of my integrity very highly.”