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Foreclosure Among The Upper Class

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By LAURA KINSLER, The Tampa Tribune

Published: November 4, 2007

Updated: 11/03/2007 11:55 pm

TAMPA - Once, they were dream homes, with views of the golf course, a marble-floored music room, servants' quarters and a taste of the good life behind the gates of some of Tampa's most posh communities.

Now, they sit abandoned, with overgrown lawns, leaky roofs and deep-green, algae-filled pools. They are empty and overpriced. All are in foreclosure. One has been declared a public nuisance by Tampa Code Enforcement, and two others have active cases against them.

All were bought sight unseen by a South Florida investor who is suing his former business partners and lawyer for fraud and identity theft.

The five transactions took place between February and June 2006. All involved the same team of real estate agents and a broker from Florida Executive Realty. In each case, the homes were purchased by Atlantic Coast Investments, which is partially owned by Boca Raton businessman Alan Nathan, and deeded the same day to Nathan's partners at inflated prices.

"That's what we call a standard land flip," said Doug Pollock, president of Information Data Services. "You have simultaneous closings, but the only funding is on the second transaction."

Pollack investigates problem mortgages for the lending industry. Florida leads the nation in cases of mortgage fraud, and experts say rapid appreciation in home values has made the state even more susceptible to questionable real estate deals. Now that the market is cooling, lenders fear they will be on the hook for a flood of bad mortgages.

Different lenders were stuck with bad loans for the five Tampa area homes - two in Tampa Palms and one each in Avila, The Reserve and Hunter's Green - bought and sold by Atlantic Coast Investments.

Nathan not only was managing member of the investment company, but also a co-owner of the title company that closed the deals and the mortgage company that prequalified his partners' loans.

Atlantic Coast Investments sold two of the homes to Nathan's wife, Suzan Barros, the same day his company bought them. Barros, a licensed real estate broker in Boca Raton, paid at least $200,000 above the original seller's price. In her mortgage notes, Barros is listed as a single woman.

Barros obtained two loans - each for more than $1.1 million - in less than two weeks.

Terri Marie Price, a mortgage broker with a felony conviction for insurance fraud, also bought two of the Tampa properties from Atlantic Coast Investments and received loans in the same week.

Using The Lender's Gap

By securing loans from different lenders, Price and Barros were able to borrow twice the amount for which they were prequalified. Price could not be reached for comment.

"It's called using the lenders' gap," Pollack said. The borrower buys a second, similarly priced property before the paperwork goes through on the first loan. The lenders assume the borrowers are shopping for loans and don't realize they're actually buying two properties at the same time, he said.

Pollack also said Barros should not have been approved for either of the loans because she and Nathan have outstanding court judgments against them for more than $600,000. A basic search of public records in Palm Beach County would have revealed the debts.

"It's up to the title agent to see if there are liens and judgments against the borrower," Pollock said. "The bank relies on the title company to do that."

In this case, the husband owned the title company. "That's very suspicious," Pollock said. "It would be of extreme interest to any investigator."

Lenders have hired him to investigate similar cases - flips when the buyer borrows substantially more than the value of the property, keeps the difference and then defaults on the loan.

Collectively, the mortgages for the five Hillsborough houses totaled $900,000 more than the sale prices for the properties. Nathan and his associates, however, maintain they never received that money.

When homes are in poor condition, outdated or otherwise not as valuable as neighboring properties, a bank nevertheless might approve a high-dollar loan because it bases the home's value on other sales in the neighborhood.

The Hunter's Green house, for example, was right on the golf course but was extremely outdated, real estate agent Matthew Urbanovsky said.

"My clients were pretty desperate to sell," he said. "They had already left the state."

Records show that the sellers listed the house, 17505 Edinburgh Drive, in November 2005 for $574,000 and dropped the price $20,000 a few months later. They sold to Atlantic Coast Investments in June 2006 and received a cashier's check for $470,000. The same day, Atlantic Coast resold the house to Price for $620,000.

The same house was resold three months later to another South Florida investor using the same title company and went into default.

Foreclosures With A Difference

Although the recent spate of questionable real estate deals in the Tampa Bay area has involved mostly moderately priced homes, these five transactions targeted estate homes in some of New Tampa's swankiest gated communities.

The Reserve has been home to Wade Boggs, former Tampa Mayor Dick Greco and tennis star Pete Sampras. Tampa Bay Buccaneers coach Jon Gruden and New York Yankees shortstop Derek Jeter are among the celebrities who own homes in Avila. Billionaire Eddie DeBartolo Jr. lives down the street from the abandoned house.

Hunter's Green, another New Tampa golf course community, is popular among professional hockey players and high-ranking city officials. Code Enforcement Director Curtis Lane lives two doors down from the Edinburgh house, which has broken windows, a neglected pool and an overgrown lawn. His department has cited the owner and is on the verge of levying hefty fines.

"That's right by my house," Lane said. "I knew there was something fishy about it. I look at that mess every day."

Lisa McColl lives across from the Edinburgh house. "My husband got so fed up with it, he finally went over there and mowed the lawn," she said. He's been mowing it ever since.

Who Are The Victims?

Cost isn't the only thing that differentiates these sales from other foreclosures in Hillsborough County. In this case, Alan Nathan and his partners acknowledge the mortgages were phony, but they say they're the ones who were defrauded.

Nathan, Barros and Gordon Cone, a business partner who bought one of the Tampa Palms houses, have filed a 740-page lawsuit against their former attorney, Jill Newman, former investment partners Maurice and Linda Bates, and about 50 other people or businesses involved in the sales.

The lawsuit maintains that Newman, the Bateses and their alleged co-conspirators used the buyers' identities to set up sham companies to buy investment property and forged their signatures onto a cornucopia of legal documents.

Nathan and his partners said they thought they were entering into joint ventures with the Bateses to buy 20 "undervalued" houses and turn them for a quick profit.

According to the lawsuit, Newman and the Bateses used "dummied up and/or forged documents including but not limited to contracts, appraisals, mortgage documents, title documents and closing statements and in some if not all cases two sets of documents were used."

Cone's first name is misspelled twice on his Tampa Palms mortgage note.

Brad Monroe is the broker for Coldwell Banker, which represented the original sellers.

"It didn't smell great when we did it because they insisted on using an out-of-town title agency," he recalled. "Everything was mailed to us, already signed and notarized."

Calls to the notary who stamped all the documents were not returned.

"In hindsight, I should have seen the signs," Monroe said. "I agreed to it because the attorney did the closing."

The Florida Bar legal department said Newman "has a clean record" and never has been publicly disciplined. This month, she lost her eligibility to practice in the state because she stopped paying Bar membership dues.

Attempts to reach Newman by telephone, e-mail and regular mail were not successful. Her home and office telephone numbers have been disconnected.

The plaintiffs said they never received copies of the sales contracts, didn't attend closings and didn't get keys to the houses.

Participants Prove Unreachable

Real estate agents Karen Lansdale and Lyn Acer, both with Florida Executive Realty in New Tampa, represented Atlantic Coast Investments in all five purchases.

"Everything we did is way, way aboveboard," Lansdale said.

She refused to comment further. Acer did not return telephone calls.

Cone agreed to an interview. He said he was recruited by Nathan to join the investment group. He remembers signing one paper, but he doesn't know what it was and he didn't get a copy. He said he has not seen the house and never met Lansdale.

"It's been a heartache dealing with this," Cone said. "It's a mess."

American Home Mortgage filed a foreclosure lawsuit against him Sept. 14. Countrywide Bank and Aurora Loan Services foreclosed on the Barros properties in June.

Both Barros and Cone countersued their lenders, saying they "had to have seen that documents for the closing were forged, altered, and not complete" and that the amount of the loans "far exceeded the value of the property."

Bobby MacKinnon, a local real estate lawyer who specializes in title work, reviewed the legal documents related to the sales and the civil cases. Suing the lenders for fraud is a highly unconventional move, he said.

MacKinnon said that if the deeds were forged, as Barros maintains, she could not legally sell the properties because she didn't have clear title. As a licensed broker, she should have known the deeds were invalid.

But the Nathans did try to sell the properties.

They hired local agents from Exit Extreme Realty and listed the Avila house in July 2006 for $1.5 million, even though real estate agent Debbie Ozgol advised them it was worth about half that amount. They later dropped the price to $1.38 million.

They also listed the house in The Reserve for $1.1 million. Ozgol said the house needs a new $100,000 roof.

MacKinnon also found the timing suspicious. Some of the earliest purchases took place in December 2005. Nathan's company still was buying homes in Tampa six months later.

"Why would he have continued to buy property if the defendants weren't making any of the mortgage payments?" MacKinnon asked.

Whatever role the Bateses played will have to be sorted out in court. The Tribune could not find a current address or phone number to reach them.

Maurice Bates filed a one-page response to the lawsuit, denying any responsibility. The handwritten letter had no return address, and process servers have been unable to find him.

Reporter Laura Kinsler can be reached at (813) 865-4844 or lkinsler@tampatrib.com.

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