Michael Bailey understands that planning ahead by even a day can be a lot to ask of a person in crisis.

Four people have been indicted on charges of conspiracy to commit wire fraud, wire fraud and major fraud against the United States in connection with a multi-million dollar construction contract in Florida.

The conspirators — Matthew West, Kevin Kutina, Roberto Gonzalez, and William Gonzalez — are accused of using Maxon Groupe, owned by service-disabled military veterans Roberto Gonzalez and William Gonzalez, to submit a fraudulent bid to the U.S. Department of Veterans Affairs.

The indictment alleges that in July 2016, the federal agency issued a bid request for the construction of the Cancer Infusion Therapy Center at Bay Pines VA Medical Center in Pinellas County, Florida, according to a Department of Justice press release. The contract, valued between $5 million and $10 million, was set aside for service-disabled veteran-owned small businesses.

The indictments allege the foursome falsely represented that qualified employees from Kevcon, Inc., owned by Kutina, would serve in supervisory roles, failing to disclose Maxon’s pass-through role for West’s company, West Construction, Inc.

West Construction, Inc. was ineligible for a contract reserved for a service-disabled veteran-owned small business.

Between March 2017 and January 2019, the conspirators submitted invoices for payment, resulting in the U.S. Treasury paying Maxon approximately $4.8 million. Subsequently, around $4.2 million of those funds were transferred to West, with about $1.1 million being further transferred to Kevcon, according to law enforcement.

If convicted, each defendant faces a maximum penalty of 20 years in federal prison for conspiracy and wire fraud charges, and a maximum of 10 years’ imprisonment for the major fraud against the United States count.

The indictment also seeks the forfeiture of at least $5 million, representing the proceeds of the alleged criminal conduct.

It’s hardly the only real estate-related fraud case in Florida. The Miami agent who the federal government said misused hundreds of thousands of dollars in pandemic relief money to lease her white Bentley Bentayga, rent a luxury apartment, refinish her designer shoes and have cosmetic procedures was sentenced to prison in August.

Daniela Rendon was indicted in February on two counts of money laundering, seven counts of wire fraud and one count of aggravated identity theft. In April she pleaded guilty to one count of wire fraud. The other charges were dismissed.

She was sentenced to three years and five months in prison, followed by three years of probation and ordered to pay nearly $200,000 in restitution.

Rendon allegedly falsified her revenue, payroll and IRS tax forms on fraudulent applications for Covid-19 federal relief funds to the Small Business Administration and Paycheck Protection Program during the pandemic.

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A Wisconsin couple pleaded guilty to a contractor fraud scheme that spanned the state.

Tyler Hansen, 52, of Fort Atkinson, Wisconsin, pleaded guilty to wire fraud and money laundering charges related to the scam, while Tyler’s wife, Jennifer Hansen, 43, also entered a guilty plea for money laundering connected to her involvement in the same enterprise, the Department of Justice said in a press release. 

Tyler Hansen’s fraudulent activities occurred between October 2020 and September 2022, when he operated a home improvement business under various names, including Weathersealed Wisconsin and EcoView Windows of South-Central Wisconsin.

He engaged in a wire fraud scheme by entering into contracts with customers for home improvement projects like windows, sunrooms, bathroom remodels, roofs, and doors. Upon signing these contracts, customers were required to make a 50 percent down payment, which Tyler Hansen falsely claimed would be used to purchase building materials. Instead, he diverted the funds for personal expenses, police said.

Both Tyler and Jennifer Hansen participated in a money laundering conspiracy to conceal the down payments, the DOJ said. 

They used multiple business and personal bank accounts, including those at Fort Community Credit Union, to deposit customer down payment checks. They then transferred the funds to personal accounts, making it difficult for clients to receive refunds and disguising the true nature of the money.

For the wire fraud charge, Tyler Hansen faces a maximum penalty of 20 years in prison, and the same maximum penalty applies to the money laundering charge. Sentencing hearings have been scheduled for Dec. 19 for Tyler Hansen and Dec. 13 for Jennifer Hansen.

Brazen real estate-related fraud pleas aren’t limited to Wisconsin as of late.

Late last month, Robert Kennedy, a former Boston-area police officer, pleaded guilty in federal court to two counts of wire fraud after admitting to defrauding one of those landlords by providing false information during the tenant screening process and intentionally withholding rent payments, according to a press release from the Department of Justice.

During the rental application process, Kennedy provided the landlord with the date of birth and social security number of a relative who shared his first and last name, concealing Kennedy’s sketchy credit history of collections, delinquent payments, defaults and evictions.

The landlord, based on the false information Kennedy provided, approved the application and allowed Kennedy to move in.

In addition to his first month’s rent and security deposit checks bouncing, Kennedy immediately began withholding rent payments, even though he made between $141,000 and $187,000 a year as a detective sergeant with the Stoneham Police Department. Kennedy lived in that apartment for four months, rent-free, by taking advantage of the slow eviction process, the release said.

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A South Jersey home improvement contractor agreed to a $442,000 settlement with the New Jersey attorney general for allegedly defrauding senior citizens and others who hired them to perform home remodeling projects.

South Jersey Home Contracting, based in Woodbury, and its owner James C. Barreras, Jr., who resides in Cinnaminson, agreed to the terms last month, according to a press release.

The settlement resolves the State’s lawsuit filed last fall alleging that SJHC and Barreras engaged in unlawful business practices, including against senior citizens, in violation of the Consumer Fraud Act, the Contractor Registration Act, and the Regulations Governing Home Improvement Practices.

According to the state’s complaint, Barreras and SJHC  accepted payments and then failed to complete the contracted-for work; closed their business after receiving consumer payments for home improvement work they never performed; refused to issue consumer-requested refunds after failing to perform the contracted-for home improvements; and accepted payments from consumers for work performed by subcontractors, but then failed to pay those subcontractors

Barreras and SJHC also allegedly imposed undisclosed charges and fees not included in the SJHC contract price on consumers; directed a consumer to make final payment on the SJHC Contract before completing the home improvements; failed to begin or complete home improvements on the date or within the time period specified in the SJHC Contract; and failed to provide timely written notice to consumers of reasons for the delay in work.

In addition to restitution to the 13 alleged victims, 11 of whom were seniors, Barreras agreed to pay a civil penalty of $185,000 and agreed to dissolve his company by the end of the year.

“We will not allow unscrupulous contractors to enrich themselves at the expense of New Jersey consumers, especially our senior residents,” Attorney General Matthew Platkin said in a statement.

It’s far from the only New Jersey real estate-related accusation of fraud.

In September, a New Jersey real estate investor pleaded guilty to conspiracy to commit wire fraud in a $1 million mortgage scheme.

Cabral Simpson, a 46-year-old resident of Orange, New Jersey, admitted to collaborating with co-conspirators in fabricating bank statements and fake employee verification records for prospective property buyers, the U.S. Department of Justice said in a press release.

They also transferred funds into the buyers’ bank accounts as deposits for property purchases.

Furthermore, Simpson and his co-conspirators submitted fraudulent mortgage loan applications, along with forged supporting documents and closing paperwork on behalf of these buyers, inducing lenders to issue more than $1 million in loans, which subsequently led to defaults. 

— Ted Glanzer

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Lorin Kal Buckner got 10 years behind bars for his role in a scam that victimized more than 780 financially distressed homeowners across the United States.

Buckner, 67, was sentenced in the U.S. District Court in Ohio last week after he was convicted in a fraudulent foreclosure rescue scheme. 

A jury found him guilty last November of conspiracy to commit mail fraud and wire fraud, as well as conspiracy to commit bankruptcy fraud, according to a Department of Justice press release.

Buckner was among 11 suspects implicated in the scheme.

From 2013 through 2018, Buckner and his co-conspirators exploited homeowners facing foreclosure, manipulating their desperation to enrich themselves. Their modus operandi involved luring victims into fraudulent programs, promising to rescue their homes in exchange for payments.

Affiliates recruited homeowners aggressively, identifying vulnerable individuals, from online databases and court records, who had recently received foreclosure notices. Buckner and his associates mailed more than 56,000 postcards falsely claiming they could “stop foreclosure” or “stop the sheriff sale” for a fixed fee. They also used Craigslist ads, websites, email and social media to target homeowners.

Recruiters like Buckner collected payments from homeowners and directed them to the co-conspirator companies, where they were promised various services, including negotiating with mortgage lenders for the purchase of mortgage notes at a discount, facilitating short sales, and supposedly removing mortgage liens via tender offers.

The defendants even claimed to possess “proprietary” methods and “legal tactics” to stall or completely avert foreclosure. In reality, they were inducing homeowners to file chapter 13 bankruptcies. 

The bankruptcy petitions, filed as “pump fakes” or “missiles,” intentionally concealed the conspirators’ involvement, misleading the courts into thinking the homeowners had filed the petitions themselves. Relief from foreclosure was short-lived, as bankruptcy courts dismissed their petitions. Many victims lost not only thousands of dollars but also their homes.

It’s not the only real estate-related fraud alleged in Ohio.

Last week, the Securities and Exchange Commission charged podcast host Matthew Motil with running an $11 million Ponzi scheme. The Ohio man allegedly defrauded more than 50 investors in a real estate scheme.

Motil promised low-risk, high-return promissory notes supposedly collateralized by first mortgages on homes in Ohio, according to the complaint. He allegedly promoted the investments on his website and podcast, where he said any potential investor could become a “real estate investing badass.”

Motil said he would pay investor returns from profits that came from flipping and renting the involved properties, according to the complaint. But Motil didn’t secure first lien positions as promised, the SEC alleged, and instead proceeded to sell multiple promissory notes he said were secured by the properties to multiple investors.

Among his alleged misdeeds, Motil once sold more than $1 million in promissory notes to 20 investors, each note purportedly collateralized by a property he acquired for $47,000. The complaint alleges Motil eschewed renovations to instead make payments to previous investors and fund his own lavish lifestyle, renting a lakeside mansion, buying courtside NBA season tickets and making $400,000 in credit card payments for his wife, a relief defendant in the case.

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More legal and financial problems for Rudolph Giuliani.

The IRS has placed a lien on a lakeside condominium in Palm Beach, Florida, owned by Giuliani, the former mayor of New York City and former lawyer for Donald J. Trump, the New York Times reported.

The lien was filed due to Giuliani’s outstanding income tax debt of approximately $550,000. This property is situated just three miles from Mar-a-Lago, the private club and residence of former President Trump.

Giuliani and his ex-wife attempted to sell the condominium for $3.3 million in 2019 but were unsuccessful in finding a buyer. The existence of the IRS court filing came to light through a report by The Daily Mail. Giuliani’s adviser, Ted Goodman, stated that Giuliani has a formal agreement with the IRS to address his tax debt.

Giuliani faces multiple legal battles and mounting legal expenses related to his efforts to support Trump’s bid to remain in office after the 2020 election. Among his legal challenges is a racketeering charge in Georgia for his role in that endeavor, as well as a defamation case brought against him by two election workers in the state.

Giuliani’s financial struggles became public knowledge when he listed his co-op at 45 East 66th Street for $6.5 million, Business Insider reported. The listing popped up on the market towards the end of July and comes with a complicated history, especially in recent years.

Sotheby’s International Realty’s Serena Boardman has the listing. 

Giuliani purchased the 10th-floor apartment for $4.8 million in 2002. The unit had enormous entertainment potential and it has entertained everything from podcast recordings to federal law enforcement agents when It was raided in 2021 by the FBI during its probe into Giuliani’s activities in Ukraine.

A year after the purchase, Giuliani married Judith Nelson on the lawn of Gracie Mansion. 

Giulian’s lawyer, Adam Katz, acknowledged that Giuliani was facing financial difficulties, and at one point in August, Giuliani owed nearly $3 million in legal fees. 

Additionally, he is being sued by Robert J. Costello, a former associate, for unpaid legal fees, and he recently faced a lawsuit from Hunter Biden for his role in disseminating personal information about Mr. Biden.

Giuliani has reportedly sought financial assistance from Donald Trump, believing he is owed millions of dollars for his efforts to support Trump’s election campaign. In response to these requests, Trump hosted a high-priced fundraiser at his Bedminster, New Jersey club to aid Giuliani and provide him with a financial lifeline. 

— Ted Glanzer

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Mar-a-Lago Club is a key piece in the New York Attorney General’s civil fraud case against former President Donald Trump, his sons and the Trump Organization.
And it’s Trump’s $1.5 billion valuation of the Palm Beach property that prosecutors dispute. The attorney general alleges Trump provided banks with false financial statements regarding the company’s real estate portfolio. In September a New York judge agreed, ordering to revoke the its business licenses — though that was paused by an appeals court late Friday.

To defend his valuation of Mar-a-Lago, Trump hired Lawrence Moens, the most successful real estate broker on the tony island. Moens has brokered $11 billion in sales over his career, representing Ken Griffin, Larry Ellison, Steve Wynn and other multibillionaires.

But Moens isn’t like most real estate agents. He’s someone who values his secrecy and built part of his business on it, and now has been thrust into the highest-profile legal battle in the U.S. to defend one of the most scrutinized properties in Trump’s case.

In a deposition, Trump estimated Mar-a-Lago is worth $1.5 billion based on “broker talk.” (A billion-dollar sale would mark a record in Florida.)

Moens, who has known Trump for more than three decades, puts the valuation somewhere between $750 million and $1 billion, according to his deposition. But in financial statements, Trump valued the property at as much as $612 million.

The AG alleges that Trump grossly overvalued it, defrauding lenders who extended loans based on Trump’s numbers. They point to the property appraiser’s valuations, which have gone up to only $28 million.

One thing that the AG and Moens can agree on is that they don’t agree with Trump’s valuations in his financial statements. But Moens thinks that Trump’s financial statements include values that are “off by a mile” and “too low.”

Many points stood out as my colleague Keith Larsen and I read through the depositions and court filings in the case. But what was really interesting was to hear directly from Moens, someone who has never granted us or any other publication an interview.

At one point, Moens compares Mar-a-Lago to the Taj Mahal as “one of the greatest structures there is on the planet Earth.” At another, he says that he trusts no one.

Moens almost disregards the fact that a deed restriction on the property exists — meaning it must remain a private club, unless the government were to allow a change to residential or other use. This is a sticking point for the attorney general and the judge.

“As a personal residence, it’s not impractical to think that they can afford to buy it, use it for their own family use,” Moens said of his multibillionaire clients. “They could do that because I deal with such great wealth, it’s on a magnitude that’s still unbelievable to me, guys with tens of billions or hundreds of billions of dollars.”

What we’re thinking about: The Weekly Dirt turned one year old this weekend. What would you like to read more of? Send me a note at kk@therealdeal.com and thank you for reading!

CLOSING TIME

Residential: Miami Beach DJ Henrique Jordan sold his waterfront Sunset Islands home at 2501 Lake Avenue for $27 million. A Delaware entity purchased the Miami Beach property. (More on that this coming week.)
Commercial: Monarch Alternative Capital and Tourmaline Capital Partners closed on the $250 million acquisition of the 28-story office building at 801 Brickell Avenue. Nuveen Real Estate sold the property.

— Research by Adam Farence

NEW TO THE MARKET

The waterfront mansion at 355 South Ocean Boulevard in Golden Beach returned to the market for $100 million. The owner is Edith Newman, who lived in the 32,000-square-foot, nine-bedroom estate with her late husband, former electronics company owner Joel Newman. Danny Hertzberg of The Jills Zeder Group at Coldwell Banker took over the listing. The 1.5-acre property is directly on the sand with 250 feet of ocean frontage, a home theater, bowling alley, spa, gym, wine cellar and pool.

355 Ocean Boulevard (The Jills Zeder Group / 1 OAK Studios_

A thing we’ve learned

Amazon could eventually send more than 3,200 orbiters to space, filling the sky with constellations of satellites. That’s a concern for scientists and astronomers.

Elsewhere in Florida

Politicians, lobbyists and consultants say that the publication, Florida Politics, lets politicians pay to secure coverage on the news site, according to an investigation by NPR’s David Folkenflik and Miranda Green of Floodlight, a nonprofit newsroom.
A Palm Beach condo owned by Rudy Giuliani is under a federal tax lien. The Internal Revenue Service says Giuliani, who faces millions of dollars in legal bills, owes almost $550,000 in unpaid taxes, CNN reports.
In case you somehow missed it, Rep. Matt Gaetz of Florida led the successful charge to oust Sen. Kevin McCarthy as speaker. Gaetz is said to be considering a run for governor of Florida.

The post The Weekly Dirt: A deep dive into Mar-a-Lago’s worth appeared first on The Real Deal.

Two of the biggest players in the office sector combined to sell a property in the nation’s capital for $305 million, a shot in the arm for a distressed market.

The Blackstone Group and Boston Properties sold Metropolitan Square at 655 15th Street NW to Chevy Chase-based Artemis Real Estate Partners, the Washington Business Journal reported. The Blackstone affiliate had an 80-percent stake in the property, while BXP owned the rest.

The sale of the 654,000-square-foot property works out to roughly $466 per square foot. The deal could prove to be one of the largest in Washington, D.C. this year.

BXP had a majority stake in the building dating back to 1998 before Blackstone entered the picture in 2016. Tenants at the property — the fourth-largest Class A office building in the city — include Old Ebbitt Grill. Asking rents at the property are $79 per square foot, but the building was only 58 percent occupied as of mid-2020 due to the departure of two large tenants.

From 2017 to 2020, the now-former owners conducted a $60 million renovation of the property, which was built in 1983. Upgrades were made to the lobby, building mechanics and amenity spaces.

The timing of the transaction appears to be intentional. In 2019, the D.C. Council approved temporary hikes on transfer and recordation taxes for transactions of at least $2 million. The hikes were sunset at the end of the fiscal year: Sept. 30. Split between buyer and seller, the tax savings amounted to roughly $6.5 million.

In the spring, real estate investment firm Hines bought an 11-story office building in downtown Washington, D.C. from The Lenkin Co. for $60 million. That deal broke down to $388 per square foot.

Despite making massive investments in the office market in the past, Blackstone and BXP both appear to be skeptics about its future. Blackstone has shrunk its office holdings to 2 percent, leaning into other assets such as logistics. Boston Properties, meanwhile, has worked to diversify its portfolio and recently sold a 45 percent stake in 343 Madison Avenue, a planned 49-story tower in Midtown Manhattan, though it retained a majority interest.

— Holden Walter-Warner

Read more

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The fighting could hurt ambitions of Israel and the wider region, which have received a lift from Chevron to become a hub for exporting natural gas to Europe and elsewhere.

Two experts make their cases on whether bitcoin is protected from inflationary pressures, or is more of a speculative investment.