Florida Attorney General Takes Action Against Foreclosure Fraud Firm

Defendants unlawfully deceived homeowners into paying hefty up-front and monthly fees for legal services not supervised or approved by licensed attorneys.

Pam Bondi - FL AGTALLAHASSEE, FL – August 19, 2016 – Attorney General Pam Bondi today filed a court action to stop a group of non-lawyers operating an illegitimate foreclosure defense and loan modification law firm. Adam Forman, Joseph Hilton, aka Joseph Starr, Victor Spagnuolo and others, all of whom are not lawyers, operate the Asset Protection Law Firm, Heritage Law Group, Liberty Law Group, Consumer Legal Resources, Consumer Legal Advocates, Legal Referral Services, Galler Lehman Law and Selective Housing Solutions. According to the filing, the defendants, through these law firms, unlawfully deceived homeowners into paying hefty up-front and monthly fees for legal services not supervised or approved by licensed attorneys.

“Florida homeowners facing the stress of foreclosure should not have to worry about scammers posing as lawyers and making false promises of relief to get what little money the homeowners may have. Thanks to the great work and dedication of my Consumer Protection Division, we will continue to fight foreclosure rescue fraud and protect homeowners,” said Attorney General Bondi.

The Attorney General’s Office filed the action in cooperation with the Coral Springs Police Department, Boca Raton Police Department, the Broward County State Attorney’s Office and the United States Secret Service, which are separately investigating possible criminal charges for the unlicensed practice of law. 

The Attorney General’s Office received 37 complaints from consumers about the defendants’ deceptive and unfair practices, including allegations that the defendants made misleading representations regarding the law firms’ expert legal services, charged unlawful up-front fees prior to the services being completed, failed to protect the consumers’ homes from foreclosure and failed to obtain loan modifications as promised.

The complaint seeks an injunction barring the defendants from engaging in future loan modification, foreclosure defense and legal services, and also seeks full restitution for consumers harmed by the defendants’ activities.

To view the complaint, click here.

Homeowners can follow these tips to safeguard against deceptive and unfair trade practices in the mortgage and foreclosure process:

  • Never pay any up-front fees and avoid any high-pressure sales tactics. Fees may only be collected after services are completed;
  • Try talking to lenders or a lawyer before contracting with any third-party company for rescue or modification services; and
  • Call the Florida Attorney General’s fraud hotline at 1(866) 9-NO-SCAM or file a complaint online at MyFloridaLegal.com, if a homeowner believes to be taken advantage of by a disreputable company.
13 replies
  1. George Edward Chuddy
    George Edward Chuddy says:

    Illegal Platting Palm Coast

    There was also yet another ‘Palm Coast Predicament ‘ – Bartons claims of Illegal Platting. Regretably I do not have copies of all of those.

  2. George Edward Chuddy
    George Edward Chuddy says:

    More Palm Coast Predicaments Fraud Corruption

    From: The Daytona Beach News Journal, Section B, FLAGLER, Bunnell, Flagler Beach, Palm Coast, Daytona Beach, Florida, August 20, 1975, pp. 1B-2B.

    **’Palm Coast Predicament’

    ITT Performance Bonds Received Routine OK

    Palm Coast – Since December, 1969 when the ITT Community Development Corp. (CDC) recorded the first plats for this giant development, the Flagler County Commission routinely has approved a total of 112 performance bonds pledging more than $83 Million in roads and drains for some 110,000 lots according to courthouse records examined by New-Journal reporters.
    In addition, the commission routinely has approved 117 performance bonds from the Atlantis Development Corp. a CDC subsidiary, pledging better than $95 million to render adequate potable water supply service and sewers to all those lots.
    These bonds, required of developers everywhere to guarantee completion of promised projects, recently have come under critical scrutiny of investigators probing alleged corruption of contractors and company officials here.
    The criticism centers on two areas: The utter lack of surety backing all but one of the bonds, and the timing of their approval shortly before a July 1973 state deadline requiring that new developoments undergo an elaborate and expersive environmental screening process.

    The first problem area concerns the basic purpose ostensibly served by requiring performance bonds: To ensure that a developer will actually make promised improvements.

    Each of the 229 bonds, stapled to a blue cover sheets and carefully embossed with a corporate seal, state that the CDC or Atantis are ‘held and firmly bound’ for sums ranging up to $3.4 million for completion of each of the 89 Palm Coast subdivision units.
    However, virtually none of the nearly $180 million promised in the bonds is in fact being held in escrow or backed by a surety bonding.company, an examination of the bonds by News-Journal reporters has shown.
    “Legally, thse bonds are only as good as the company,” said Flagler County Atty. XXXX XXXXXXXX when reporters asked about the bonds, he declined to speculate on what would happen if Palm Coast runs into financial trouble.
    In fact, only one of the smallest bonds for $61,152 is now backed by surety, a guarantee from a neutral third party that the money would be available, in this case for six streets in Palm Coast section 3B.
    “A Surety is someone or something to fall back on if the principal fails to meet the obligation’, explained XXXXXXXX. “if the principal fails and there is no surety, well, you follow your own line of reasoning.”
    XXXXXXXX was approinted County Attorney in May shortly after X.X.XXXX , who had been county attorney during most of the period the bonds were being approved, resigned for health reasons April 30.
    The one bond backed by surety is a result of XXXXXXXX’X skepticism about the earlier bonds. When CDC officials sought to modify an April, 1970 bond he insisted on a surety. On July 17, the Flagler County Commission approved the modification, backed by surety from Fireman’s Insurance Co. of Newark, N.J.
    “I wanted to get more security for my client than heretofore existed,” XXXXXXXXX explained simply.
    XXXX , XXXXXXXX’X predecessor, apparently had tried in the beginning at least, to get similar surety on the CDC bonds. A new story in September, 1971 of the commission’s acceptance of three bonds totaling $711,645 noted that XXXX “repeated his position that any performance bonds should be backed by a surety company.” The commission , however, overfuled him.
    When asked if he ever changed his mind during the three and one half years when CDC and Atlantis continued to bring bonds without surety to the commission for approval, XXXX firmly stated: “I never changed my mind.”.
    “I pointed out to the commission that the bonds were’t backed by and surety and I made no further comments. It was none of my business, I don’t approve bonds,” said XXXXXX . :”I pointed it out to my clients and my job was done.”
    XXXXXX said the commission already had set a precedent of approving such bonds before he became County Attorney in mid-1971. “I didn’t push my point of view,” he said.
    The County Attorney in 1969 when County Commissioners first were faced with and accepted performance bonds without surety was XXXXXXXX XXXXXXX, now in private practice in Bunnell.
    Although in a position to shed some light on the precedent referred to by XXXXXX, of accepting performance bonds without surety, XXXXXX declined to comment when asked about the first bonds by a New-Journal reporter.
    “I dont’ think I want to become insolved,” XXXXXX said Monday, adding he would not comment unless requested to by an official body, perhaps the County Commission.
    XXXXX XXXXXXX , now chairman of the Flagler County Commission, recalled last week he objected to the nonsurety performance bonds all along, ‘but I just never got anywhere.”
    “I questioned it when we were working up the subdivision regulations, might have been in Devember, ’71’,” XXXXXX said, “And I had a runin with XXXX XXXXXXXr (CDC) Project Director. XXXXX XXXXX and I guess I raised enough hell by myself that they finally came down here with a confidential financial statement proving what the company’s net worth was at the time. They had enough money then, but, they also didn’t have very many bonds posted then.”
    In Devember, 1971, CDC had issued less than $12 million in promises, about seven per cent of what was to come, according to courthouse records.
    The concern of XXXXXX and XXXXXX about surety for performance bonds is shared by other governemental bodies, the City of Daytona Beach included.
    Daytona Beach subdivision regulations insist that performance bonds be executed by surety companies approved by the U.S. Treasury Dept. for writing bonds on federal project. The city will also accept a cashier’s check or cash for 100 per cent of the construction cost, to be held in excrow until completion.
    XXXXXX XXXX, the Palm Coast public relations director, declined to answer questions from News-Journal reporters last week as to why CDC and Atlantis didn’t offer surety for the promises.
    Meanwhile, reacting to earlier stories in this series, XXXXXX XXXXXXXX, attorney for contractor X.X.XXXXX, pointed out Tuesday that his client is not a defendant in any suit by CDC. XXXXXXis named, XXXXXXXX affirmed, as a coconspirator in three civil suits filed against XXXX XXXXXX, former CDC chief engineer; XXXXXXX XXXXXX Co.; and XXXXXX XXXXX, Inc. which allege kickbacks and pricefixing
    **Part seven of this series will appear in Today’s Evening News. The Concluding part will appear in Thursday’s Morning Journal.
    Sixth in a series of eight articles
    By Stephen Doig and Ronald Williamson, , New-Jorrnal Staff Writers.
    FROM: The Daytona Beach News Journal, Morning Journal, FLAGLER Bunnell, Flagler Beach, Palm Coast B, Daytona Beach, Florida , Wednesday, August 20, 1975 pp. 1B-2B.
    ( I have XXXXX the names of those still here / families still here as a courtesy to them)

  3. George Edward Chuddy
    George Edward Chuddy says:

    More Palm Coast Predicaments

    CDC Probe Figure Fired
    Daytona Beach Morning Journal Thursday, August 21, 1975
    From our Flagler County Bureau
    Palm Coast – An ITT-Community Development Corporation vice president who has emerged as a figure in the current Palm Coast investigation was fired last week for ‘Conduct prejudical to the company,” a corporate spokesman disclosed Wednesday.
    Although Gordon Kipp, Florida public relations director at Palm Coast, wouldn’t comment on Eli Pritchard’s firing, he did confirm that the New York based official had refused to testify at a deposition in New York last week. Kipp said Pritchard was fired after the deposition hearing.
    A defense attorney who attended the Pritchard deposition hearing, scheduled the same day as one for former CDC Pres. Norman Young, said Pritchard took the Fifth Ammendment and would only testify only to his name and his address.
    John Barton, former chief engineer on the Palm Coast Project being sued by CDC for alleged kickbacks, charges in a countersuit that Pritchard and another CDC vice president pressured him to sign illegal documents so the company could register 80,000 lots before a state imposed deadline requiring extensive study on large developments.
    Barton named Dan Cooper as the second vice president who pressured him to sign the illegal documents. Cooper was fired by CDC last month, shortly after Young was ‘kicked upstairs’ from his post as president to chairman of the CDC Board.

  4. George Edward Chuddy
    George Edward Chuddy says:

    Florida State Attorney and Palm Coast

    They are always called ‘ The Palm Coast Predicaments ‘:

    Palm Coast Predicament
    Boyles Mum, But Rumors of State Probe Persist
    Last in a series of eight
    By Stephen Doig
    And Ronald Williamson News-Journal Staff Writer
    Palm Coast: Quiet and almost unnoticed behind the barrage of claims and allegation of corporate corruption at Palm Coast and depositions being taken from two dozen persons involved with the development at all levels, a State Attorney’s investigation into possible criminal charges is going on.
    State Atty. Stephen Boyles, as usual reticent about discussing investigation, has given polite ‘No comments” for the last three weeks to reporters asking about possible criminal charges arising out of the probe. Boyles has not even admitted his office is involved.
    However, deposition testimony and sources in Flagler County have hinted at the scope of the months probe, reportedly involving several of Boyles’ assistants and investigators. And, in several press releases to the News-Journal, Community Development Corp. claims it initiated and is giving ‘close cooperation’ to Boyles and will press for criminal charges against anyone involved in the alleged kickback scheme.
    Illegal acts are openly alleged in several of the suits, hinted at in others and claims of other illegal acts are going on the record at the deposition takings where five attorneys are questioning witnesses. But no known criminal charges have been filed regarding the actions at Palm Coast.
    One area covered in the civil suits filed by CDC-apparently with no criminal overtones-is the ‘inadequate, improper and substandard’ work allegedly done by the three contractors with the approval of the former chief engineer at Palm Coast, John Carton. Outside independent engineering firms are reinspecting the contractor’s work at Palm Coast and CDC has said it would remedy any deficient work discovered by the reinspection. Defense attorneys have subpoenaed the unfinished report.
    One CDC exception to the alleged substandard work done by contractors is ‘individually build homes’ even though Joseph Mange Inc., Jacksonville, one of the two contractors being sues ( a third, Lowery Brothers, Inc., is named only as a coconspirator in $3 million suits again Halifax Paving Inc., and Mange) carried on extensive work in home construction.
    Contractors, in deposition, have made no such distinction for homes, but charge that CDC’s specifications for virtually all Palm Coast work were minimal and the work they did was up to those specifications.
    There may be no illegal acts involved in the ‘Substandard’ work, but it is a matter of paramount importance to the 1,200 residents of the development. Answering a question from a Palm Coast resident at the last meeting of the Palm Coast Civic Ass., Gordon Kipp, a CDC spokesman, said: “The homes are not included in the suits because they are covered under separate individual warranties.”
    Kipp told the resident: “If you bought your home from the company, then it is covered for structural defects for one year: – if the defects are reported within that time.
    Notwithstanding the seven civil suits, current dispositions and gathering of documents relating to charges and allegations, the CDC internal investigation and the low profile State Attorney’s investigation, those involved keep repeating that the surface has only been scratched in this affair.
    Indeed, only a little of the contractors’ and Barton’s side of the story has been recorded. Although their depositions have begun, none of the four hearings thus far have been completed in one day and most of the long questioning periods have been taken up by Stanley Bartel, CDC attorney on direct examination. Crossexamination of the men and their wives will be by each of the four defense attorneys. That could take days.
    And what of the story of Norman Young, former CDC president, who was deposed in New York last Week? And what will be the testimony of former CDC Vice Pres. Dan Cooper who faces a deposition here Sept. 3? And Eli Pritchard, a CDC vice president fired last week, who reportedly refused to testify, other than his name and address, at a deposition by defense attorneys in New York last week?
    As the charges and countercharges continue to grow, and as many of the pioneers who live in the young Palm Coast development nervously wonder what the result will be , one investigator gave his private assessment of the situation: “You could safely say it’s the biggest thing ever to hit this part of the state”.

  5. George Edward Chuddy
    George Edward Chuddy says:

    U.S. Federal Investigative Units and Palm Coast

    Then there was also this ‘ Palm Coast Predicament ‘ – The Federal Investigative Units were here from the United States Department of Justice – the enforcement arm of the United States Federal Trade Commission. They prepared the Federal ‘ Consent Agreement ‘ known as F.T.C. Docket C-2854.
    This Federal Document provided for Consumer REDRESS for me / we early purchasers:

    August 1976
    Mr. and Mrs. George E. Chuddy
    28 Lake Drive
    Darien,Connecticut 006820
    Dear Mr. and Mrs. Chuddy:
    Because you have made a commitment in Palm Coast by establishing your home here, we believe you should be aware of an agreement that we recently reached with the Federal Trade Commission.
    ITT Community Development Corporation ( ICDC) has signed a Consent Agreement with the Federal Trade Commission (FTC) concerning the furture development of Palm Coast. Signing the agreement does not constitute an admission that any law has been violated, as the agreement itself states. We feel the agreement is important in order to attain our primary goal — the development of Palm Coast as a balanced, well-rounded community.
    An important part of the Consent Agreement calls for the execution of plans, within six years, which we believe, in the long run, will be good for Palm Coast. In brief, among other things , we have agreed to the following:
    1. A shopping center with at least 400,000 square feet of floor space will be provided.We are already in contact with prospective developers of individual stores, including a supermarket.
    2. With appropriate governmental agreement, a traffic interchange on Interstate Highway 95 will be constructed to serve Palm Coast according to plans we submitted to the Florida Department of Transportation in August 1972. ICDC will pay for the interchange as originally designed.
    3. An office and research park area will be developed with appropriate roads and utilities to serve it and landscaping to make it an attractive part of Palm Coast. Planning for this already is under way.
    4. A multi-purpose office building, with at least 5,000 square feet of floor space, will be constructed for tenants in the office and reserch park. This structure, also, is under planning.
    5. We will move the headquarters of ICDC to Palm Coast. We plan to be substantial employer contributing much to the economy of Palm Coast and Flagler County.
    The agreement also provides for us to restrict our developoment efforts to 42,000 acres for a period of 15 years ( with possible extension for another five years). This will allow appropriate construction in areas set aside for commercial establishments, light industry, recreation, preservation and conservation and other residential uses. Moreover, during this 15- or 20-year period, sales will be limited to 48,000 registered lots of which over 36,000 already have been sold.
    The aforementioned are some of the most important points contained in the Consent Agreement as it affect you and the balanced development of Palm Coast. You will also be interested in knonwing of additional projects that we believe further enhance the community.. Here are some examples:
    We have donated two acres of land, adjoining the furture Emergency Services Building site, to the Palm Coast branch of the YMCA to be used as the location fo a Community Activities Center. We will bear the cost of constructing this facility for all community residents and for sharing in operational expenses during its first three years — a gift totalling more than $400,000.
    We have provided as a gift a site of 57 acres to the Flagler County School Board for a junior-senior high school. The first class of proud seniors was graduated from Flagler-Palm Coast High School last spring.
    We have designated a number of sites for recreation parks, preservation and conservation, and other public areas. One site, in Section 1-A, now is being developed and a paved bicycle path has been constructed. Another bike path, starting near the Yacht Club, is in use. We are working with the Palm Coast Civic Association so that Palm Coast residents can form a legal entity to which we can donate oa one-acre site and an Emergency Services Building to house fire and security forces, an ambulance, and facilities for community activities. A preliminary blueprint fo the structure has been approved by a committeee from the Community.
    As you know, we donated a $36,000 pumper fire truck to the Palm Coast Volunteer Fire Department , which will be stationed in the Emergency Services Building..
    Palm Coast’s first church building, St. Mark by the Sea Lutheran Church, ws dedicated on the morning of July 4. Catholic and Baptist church organizations have purchased sites for their proposed churches. And Temple Beth Shalom is considering building a Synagogue. We at ICDC are very pleased, as we know citizens of Palm Coast are, to witness this growth and progress in the vitally important religioius life of our community.
    Palm Coast’s first financial institution, a branch of the Security First Federal Savings and Loan Association, recently opened for business. We believe others will follow with the growth of the community.
    These and many other facilitites will be needed to serve Palm Coast’s growing population. And it is growing. During the last nine months, construction of over 200 homes began. We now have over 1,000 people living and enjoying the good life at Palm Coast.
    In closing, let me assure you that the ITT Community Development Corporation believes very strongly in the furture of Palm Coast and that we are determined that it will grow and progress in a balanced and healthy manner.
    Sincerely yours,
    Alan Smolen
    President.

    ( Tho’ many Amenities were promised by the Master Developer of ‘ The Palm Coast Project ‘ – the Special Investigative Units wanted to be sure me / us were given what we paid for and what was promised by Levitt & I.T.T. – the Master Developer of the gargantuan 93,000 acres comprising ‘ The Palm Coast Project ‘ – the largest planned community in the Nation…’ and ‘…the largest New Town in the World…’.)

    August 1976
    Mr. and Mrs. George E. Chuddy
    28 Lake Drive
    Darien,Connecticut 006820
    Dear Mr. and Mrs. Chuddy:
    Because you have made a commitment in Palm Coast by establishing your home here, we believe you should be aware of an agreement that we recently reached with the Federal Trade Commission.
    ITT Community Development Corporation ( ICDC) has signed a Consent Agreement with the Federal Trade Commission (FTC) concerning the furture development of Palm Coast. Signing the agreement does not constitute an admission that any law has been violated, as the agreement itself states. We feel the agreement is important in order to attain our primary goal — the development of Palm Coast as a balanced, well-rounded community.
    An important part of the Consent Agreement calls for the execution of plans, within six years, which we believe, in the long run, will be good for Palm Coast. In brief, among other things , we have agreed to the following:
    1. A shopping center with at least 400,000 square feet of floor space will be provided.We are already in contact with prospective developers of individual stores, including a supermarket.
    2. With appropriate governmental agreement, a traffic interchange on Interstate Highway 95 will be constructed to serve Palm Coast according to plans we submitted to the Florida Department of Transportation in August 1972. ICDC will pay for the interchange as originally designed.
    3. An office and research park area will be developed with appropriate roads and utilities to serve it and landscaping to make it an attractive part of Palm Coast. Planning for this already is under way.
    4. A multi-purpose office building, with at least 5,000 square feet of floor space, will be constructed for tenants in the office and reserch park. This structure, also, is under planning.
    5. We will move the headquarters of ICDC to Palm Coast. We plan to be substantial employer contributing much to the economy of Palm Coast and Flagler County.
    The agreement also provides for us to restrict our developoment efforts to 42,000 acres for a period of 15 years ( with possible extension for another five years). This will allow appropriate construction in areas set aside for commercial establishments, light industry, recreation, preservation and conservation and other residential uses. Moreover, during this 15- or 20-year period, sales will be limited to 48,000 registered lots of which over 36,000 already have been sold.
    The aforementioned are some of the most important points contained in the Consent Agreement as it affect you and the balanced development of Palm Coast. You will also be interested in knonwing of additional projects that we believe further enhance the community.. Here are some examples:
    We have donated two acres of land, adjoining the furture Emergency Services Building site, to the Palm Coast branch of the YMCA to be used as the location fo a Community Activities Center. We will bear the cost of constructing this facility for all community residents and for sharing in operational expenses during its first three years — a gift totalling more than $400,000.
    We have provided as a gift a site of 57 acres to the Flagler County School Board for a junior-senior high school. The first class of proud seniors was graduated from Flagler-Palm Coast High School last spring.
    We have designated a number of sites for recreation parks, preservation and conservation, and other public areas. One site, in Section 1-A, now is being developed and a paved bicycle path has been constructed. Another bike path, starting near the Yacht Club, is in use. We are working with the Palm Coast Civic Association so that Palm Coast residents can form a legal entity to which we can donate oa one-acre site and an Emergency Services Building to house fire and security forces, an ambulance, and facilities for community activities. A preliminary blueprint fo the structure has been approved by a committeee from the Community.
    As you know, we donated a $36,000 pumper fire truck to the Palm Coast Volunteer Fire Department , which will be stationed in the Emergency Services Building..
    Palm Coast’s first church building, St. Mark by the Sea Lutheran Church, ws dedicated on the morning of July 4. Catholic and Baptist church organizations have purchased sites for their proposed churches. And Temple Beth Shalom is considering building a Synagogue. We at ICDC are very pleased, as we know citizens of Palm Coast are, to witness this growth and progress in the vitally important religioius life of our community.
    Palm Coast’s first financial institution, a branch of the Security First Federal Savings and Loan Association, recently opened for business. We believe others will follow with the growth of the community.
    These and many other facilitites will be needed to serve Palm Coast’s growing population. And it is growing. During the last nine months, construction of over 200 homes began. We now have over 1,000 people living and enjoying the good life at Palm Coast.
    In closing, let me assure you that the ITT Community Development Corporation believes very strongly in the furture of Palm Coast and that we are determined that it will grow and progress in a balanced and healthy manner.
    Sincerely yours,
    Alan Smolen
    President.

  6. George Edward Chuddy
    George Edward Chuddy says:

    Palm Coast second Palm Beach

    There is also the Federally Ordered ‘ Compliance Report ‘. The Special Investigative Units of the United States Dept. of Justice Federally ORDERED ‘ Compliance ‘ because I / we were wronged.
    It was the largest ‘Consumer REDRESS ‘ ever ordered at that time by the Federal Trade Commission. There are many ‘ Exhibits ‘ therin – listing and documenting that the Amenites we were promised and paid for were provided me/us.
    Therein , within the ‘ Exhibits ‘ were everything pledged such as the ‘Four Sisters’ Golf Clubs promised ( Cypress Knoll Golf Club, Matanzas Woods Golf Club, Pine Lakes Golf Club, and the ‘Palm Coast Golf Club ‘ later known as ‘ The Palm Harbor Golf Club ‘, The Marina Complex/Palm Coast Resort, The Palm Harbor Shopping Center, Community Wide Landscaping, and so much more.

    United States of America
    Federal Trade Commission
    Washington, D.C.
    Date: September 20, 1991/October 4, 1991
    FROM Joseph J. Koman, Jr. Attorney
    Ronald D. Levis, Investigator
    Division of Enforcement/BCP
    Sugject: Show Cause Order
    International Telephone and Telegraph, ITT, ITT Community Development Corporation ICDC and Palm Coast, Inc., Docket No C-2854
    To : Commission
    Recommendation:
    That the Commission issue a show cause order as to why the existing fifteen year moratorium on sale of registered residential lots at Palm Coast should not be extended for an additional five years. Note: The extension must be ordered not late than the expiration of the fifteen year period, which expires on December 27, 1991

    Nature of Case
    International Telephone and Telegraph Corporation ( ITT) , its land sales subsidiary, ITT Community Development Corporation ( ICDC), and ICDC subsidiary Palm Coast, Inc., 1 . were charges with misrepresenting ITT’s obligations and responsibilities of ICDC and Palm Coast, unfairly and deceptively selling land by misrepresenting the investment values of Palm Coast lots, misrepresenting the types of amenities and facilities available at Palm Coast and failing to provide cancellation and refund rights and failing to disclose other pertinent information.
    __________________

    1 ITT is one of the major industrial corporations in the United States. The 1991 Standard & Poors Register lists ITT’s revenue as $ 20.05 billion with 119,000 employees. ICDC is a land sales and development firm engaged in selling and developing Palm Coast, a land development in northeast Florida, and also some surrounding areas. Palm Coast is located in Flagler County, between Daytona Beach and St. Augustine, Florida. Attached is a map which shows the various communities that comprise Palm Coast. On the reverse side is an aerial photograph of Palm Coast that clearly shows where growth and development have occurred during the past fifteen years.

    Background

    A consent order was issued in this matter on December 10, 1976. The initial compliance report of February 28, 1977, a spot check investigation report of December 28, 1978, a compliance investigation report of April 1, 1981, and the final complance investigation report of October 6, 1983, were accepted by the Commission. The Atlanta Regional Office (ARO) was responsible for this matter until December 1989, whereupon the Enforcement Division took responsibility for future compliance activity.

    Scope of the order

    The Major purpose of the order is to prevent misrepresentations and to require disclosures concerning: (1) the extent of Palm Coast’s developoment, (2) ITT’s financial responsibilities for the development, (3) the investment potential of Palm Coast lots, (4) total lot costs, (5) the current extent of lot use and the timetable for development, (6) the proximity of Palm Coast to major roads, cities and necessary facilities and amenities, (7) number and size of facilities, amenities, and residents, and (8) notices of cancellation.

    a second purpose of the order was to make Palm Coast a self-sufficient community with the necessary amenities for year-round living. To assist in this goal, order paragraphs required certain improvements to be developmed and constructed in Palm Coast. These included: (1) shopping center, (2) office building , (3) commercial, manufacturing, and research park, (4) corporate headquarters, (5) I-95 interchange, (6) St. Joe Road improvement. All of these improvements were developed and constructed within the time limitations imposed by the order.

    The order also requires written and oral disclosures in Palm Coast’s promotional material, contracts, property reports, easements and covenants and sales presentations. Furthermore, respondents are required to conduct in-house surveillance of their sales personnel as to compliance with the disclosure and representation requirements of the order.

    By terms of the order, respondents are also limited in the size of their development for at least 15 years to 42,000 acres and a maximum of 48,000 registered residential lots. 2. The 15 year restriction on expansion was explained to the Commission in
    _________________
    2…for a period of fifteen (15) years after the service upon respondents of this order,….respondents shall limit and restrict the development presently known as Palm Coast and consisting of approximately 93,0000 acres, to a maximum of approximately 48,000 registered lots in a maximum of 42,000 acres,….and, accordingly, respondents shall neither register any lots nor sell any registered lots in the balance of such approximately 93,000 acres.

    earlier ARO staff pre-order memoranda as probably the most significant order accomplishment. By reducing the acreeage 55%, the Palm Coast community takes on a manageable size, and ICDC must concentrate its development efforts on a smaller parcel of land. With a limited number of lots to sell, the provision alters the business of ICDC from a mere subdivider to a community builder. This provision, as well as the one providing for the building of a basic infrastructure, were designed to stimulate the development and population growth of Palm Coast and to produce a fully-planned and self-contained thriving community. The order also required respondents to submit a report 13 years after date of service. If housing units built or under construction do not equal 50% of the deeded lots, the Commission may extend the limit on the size of developoment for an additional five years.

    December 1, 1989 Compliance Report

    As required by the order, ICDC filed its December 1, 1989, compliance report in a timely fashion. The order provided that the written report be filed 720 days prior to the expiration of the fifteen (15) year moratorium period. The filed report described the extent of the development at Palm Coast, including the number of dwelling units, recreational facilities and public and commercial services (Compliance Report Materials File I, December 1, 1989, Report).

    The December 1, 1989, reeport disclosed that at that time there were 7,552 dwelling units (6,784 single family and 768 multifamily) at Palm Coast and a population of approximately 15,000 ( 60% of Flagler County’s total population). Richard Braunstein, Assistant General Counsel for ICDC, orally reported that at the time of the December 1, 1989 report, there were approximately 34,513 deeded lots. Thus, the report indicated that the number of dwelling units located or under construction at Palm Coast after the expiration of the fifteen year period was not expected to be equal to at least 50% of the number of lots at Palm Coast then authorized for residential use as to which deeds are at that time held by purchasers or their assigne. The order provision provides that if the 50% figure is not achieved, the Commission’s Rules to extend the fifteen year period for an additional period not to exceen five years. Any such extension must be ordered not later than the expiration of the fifteen year period ( December 27, 1991)

    August 27, 1991 Compliance Report

    On August 7, 1991, staff requested ICDC to provide updated data on both the number of deeded registered lots and dwelling units at Palm Coast. ICDC’s August 127, 1991, compliance report shows the following analysis of ICDC’s deeded registered lots and dwelling units as of November 30, 1989, and July 31, 1991:

    Registered lots deeded November 30, 1989 33,700
    Number of dwelling units on registered lots
    single family 6,600
    multi-family 800
    Total: 7,400

    Registered lots deeded Julyu 31, 1991 35,800
    Number of dwelling units on registered lots
    single family 7,700
    multi-family 800
    Total 8,500

    The current data reveals that as of July 31, 1991, less than 24% (23.7%) of the deeded lots have dwelling units thereon. This percentate is only slightly higher than the 22% comparison (of dewlling units to registered lots) which the November 30, 1989 data indicates. It falls far short of the 50% mandate. According to the report, the Palm Coast population now numbers about 18,000.

    Staff’s August 1991 on-site inspection of Palm Coast

    After the December 1, 1989 compliance report was submitted by ICDC, the Enforcement staff received a number of letters from Flagler County Officials, various lot owners, and civic associations at Palm Coast and a number of individual lot purchasers regarding possible Commission action about the extension of the moratorium for an additional five years. Most wanted to make some personal input into the decision-making process and express their likes and/or dislikes of ICDC and the Palm Coast community. Staff explained there would be a comment period where interested parties could submit written statements and views to the Commission; however, a number of the parties requested Commission personnel be made available for oral comments. As a result, the staff made itself available to meet with and discuss the applicable order provisions and community development during the week of August 19 through 22, 1991. All of the parties spoken to were in favor of extending the moratorium for another five years. It will undoubtedly take more than the additional five year period to achieve the order’s 50% dwelling units objective; 3 . however, the additional time period will provide all interested parties the opportunity to insure orderly groth and development of Palm Coast will continue.
    ________________
    3 At a rate of approximately a 2 % increase in dwelling units to registered lots over a 1 year , 8 month period of time ( i.e., from November 30, 1989 to July 31, 1991, the percentage went from about 22% to 24%) it would take another 21 1/3 years to reach the 50% build out. However, since the time frame November 30, 1989 to July 31, 1991, reflects a period of housing recession, it would be unwise to conclude that it will take that length of time to reach the 50% build out.

    The Flagler County Officials are of the opinion that an extension of the moratorium would be in the best interest of the county and its residents. According to Mr. Noah McKinnon, the attorney for the county commissioners, if ICDC wanted to develop and sell new lots in the county, their plans would have to be interfaced with the Comprehensive Land Use Plan (CLUP) adopted by the STate and ICDC in 1974, and amended in 1977, when a more limited 42,000 acre subdivision was adopted. Using CLUP, Flagler County plans five (5) years in advance for lands that will be needed over the next five (5) years for schools, parks, administrative buldings, etc. Such planning helps to keep county taxes lower and encourages adopting strong regulatory or zoning rules to scrutinize incoming industry and hlep protec the environment. Therefore, if ICDC were sudenly to announce a plan to plat, register and marker new residential lots, the county would view the proposals under a magnifying glass ( one of the county commissionser, Al Jones, specifically used the term “under a magnifying glass’) to ensure that corporate plans would not upset the delicate growth and develpment balance in the county.

    Furthermore, since the state now has requirements ( Concurrence Acts) for all utility, etc., infrastructure to be in place prior to selling homesiet property, the infrastructure would not only be prohibitively expensive for ICDC, but it would mean the county would face additional concerns involving water, drainage, solid waste, etc.

    By extending the moratorium, Flagler county authorities will be assured that ICDC will continue to develop existing Palm Coast acreage in the county for at least 5 more years, and be intimately involved in the same issues that the county must face, i.e., water and utility management and use of public lands. In essense, the moratorium provides an extension of the continuity of the cooperative business relationship currently existing between the county and ICDC. Perhaps Mr. Guy Sapp, the county’s deputy tax appraiser summed up the situation best: If it “aint’t broke, don’t fix it.”

    The staff spoke with ICDC officials on Augsut 27 and 28, 1991. Mr. Braunstein advised that ICDC will not oppose the Commission in extending the moratorium another five years. ICDC still has an inventory of unsold registered lots at Palm Coast and in recent years it has decided to upscale the area east of the Intercoastal Waterway. ICDC is centering most of its development acitivites and financial resources east, from the existing core area at Palm Coast towards the Atlantic Ocean. It will take anywhere from ten to twenty years to develop this area. ICDC is not interested at this time in developing lands outside those contained in the CLUP Agreement. ICDC is pouring millions of dollars into making this area a ‘Second Palm Beach” in which only the wealthy can afford to live. For example, it has spent more than $11 million on a Mediterranean-styled Equity Country Club, to be used exclusively by residents in the communities.

    Recommendation

    Respondents have not met the order’s proscribed target goal of 50% build out of deeded Palm Coast residential lots ( only 24% of deeded residential lots have dwelling units constructed thereon since service of the order); and staff’s inquiry does not disclose the existence of any valid reason as to why the moratorium should not be extended for an additional five (5) years. An extension will encourage continued construction of dwelling units within the sections comprising Palm Coast. Moreover, respondents do not oppose the extension of the moratorium for an additional five years.

    Therefore, it is respectfully recommended that the Commission, pursuant to Section 3,72 of the Commissions’s Rules of Practice issue the accompanying order to show cause as to why the existing fifteen year limitation on the sale of registered lots ( maximum of approximately 48,000 registered lots in a maximum of 42,000 acres) should not be extended for an additional five year period. A draft Federal Register Notice is attached to the file.
    Attachments’
    1. Aerial Map of Palm Coast
    2, Order to Show Cause
    3, Draft Federal Register Notice
    Approved:
    Justin Dingfelder
    Assistant Director
    Division of Enforcement/BCP
    william S. Sanger
    Associate Director for Enforcement/BCP



    Compliance Investigation
    At the time staff of the Atlanta Regional Office concluded the last compliance investigation, they reported that the Admiral Corporation, a wholly owned subsidiary of ITT, was developing property east of the Intracoastal Waterway ( Hammock Dunes, a private community of 2,250 acres:, and therefore, they were attempting to verify whether this acreage was part of the 42,000 acres within which ICDD was permitted to register and sell lots in accordance with the Commission’s order. To assist them in making this determination, ARO requested that respondents forward a copy of the application for development approval ADA for a development of regional impact DRI which Florida statures required developers to file with State and local authorities. However, previous to ever receiving the ADA/DRI application, the Commission closed the compliance inquiry with the caveat that ARO monitor the situation as it developed. The Secretary’s letter advised respondents of the Commission’s continued interest in the Admiral Corporations’ development activities.
    After this matter was assigned to the Division of Enforcement, staff reviewed existing files and upon discussing the matter with respondents counsel discovered that the previously requested ADA/DRI application had never been forwarded to the ARO. Therefore, we again made the request. Staff will review the ADA/DRI application, as well as the Comprehensive Land Use Plan CLUP, and existing maps of the area at or prior to the time the order was issued, and conduct discussions with knowledgeable persons to determine whether Hammock Dunes, as well as the five or six other developments east of the Intracoastal Waterway, fall within the restricted 42,000 acres. The company maintains that all of these development are within the permitted acreage. They also maintain that by deplating lots within the original Palm Coast subdivision, they have been able to register lots in Hammock Dunes, etc. and still stay within the order’s proscribed cap of 48,000 registered residential lots. As of this time, the staff has been unable to locate the two maps relied upon to show the areas comprising the 42,000 acres. 5
    With regard to the cap of 48,000 lots, the staff has also discovered that the respondents in recent years have engaged in a substantial buy back program. ( approximately 8,000 lots bought back from previous ICDC purchasers to replenish its lot inventory for additional lot sales, lot and home packages and sales or exchange programs such as the Harbor Club time sharing program in which equity can be applied to a lot and house package. The manner in which this buy back program affects the cap of 48,000 lots has yet to be determined. It is clear, however, that the purpose of this order provision limiting the number of lot sales was to change the busineess attitude of ICDC from a seller of lots to a community developer and builder. At the time of the order 38,000 of the 48,0000 lots had been sold. by 1983, there were only 2,000 lots left in inventory October 6, 1983 report by ARO which was in line with the decrease in lots the Commission envisioned. The Buy back program, however, has put a new twist on the meaning of the previously arrived at numbers….


    Staff has also been advised by a number of Palm Coast residents that respondents have shown an increasing disinterest in furthering the growth of Palm Coast and are attemptiong, by frivolous means, to extricate themselves from the financial burdens of canal maintenance, road improvements or providing utility hook ups to existing plant facitilties. For example, there are certain sections of Palm Caost in which alternative methods to sewer hook ups are used. These areas have holding tanks in which the effluent flows and pumping of raw sewage is done on a….


    Page 7
    (total 93,000 acres, 42,000 buildable acres, 51,000 acres moratorium)

    5 Pomeranz Exhibit A was the map used before the order was accepted by the Commission. Lister Physical Exhibit C
    was the map used in the intial compliance report.

    Federal Trade Commission October 4, 1991

  7. George Edward Chuddy
    George Edward Chuddy says:

    Official State of Florida Historic MARKERS

    Flagler County is very History rich – whether it be the Mastadons & Wolly Mammoths Sites, or the Sawmill providing wood to St. Augustine, or Brigadeer General Jose Martin Hernandezs’ ‘ St. Joseph Plantation’ and outbuidings site ( Florida Park Drive / Palm Harbor Shopping Center ), and the more recent huge Heritage and History of the LEVITT & I.T.T. development of ‘ The Palm Coast Project ‘.
    Hopefully the City will pursue Historic MARKERS so we all can have a ‘ sense of place ‘. Only by knowing our past can we best approach our Future. It would also be nice if a couple of these MARKERS would give recognition to our Police Officers / Firefighters / E.M.S. – our ‘ Community Protectors’. ( The Document above that I am Steward of clearly notes the origin of our cherish and beloved Firestation – that document alone most probably would ensure the required documents for a MARKER for them for starters).
    Additionally, this ‘ sense of place ‘ would also help with Touri$$m for us and applying for Grant$$$.
    Thank you very much.

  8. George Edward Chuddy
    George Edward Chuddy says:

    Official State of Florida Historic MARKERS

    Flagler County is very History rich – whether it be the Mastadons & Wolly Mammoths Sites, or the Sawmill providing wood to St. Augustine, or Brigadeer General Jose Martin Hernandezs’ ‘ St. Joseph Plantation’ and outbuidings site ( Florida Park Drive / Palm Harbor Shopping Center ), and the more recent huge Heritage and History of the LEVITT & I.T.T. development of ‘ The Palm Coast Project ‘.
    Hopefully the City will pursue Historic MARKERS so we all can have a ‘ sense of place ‘. Only by knowing our past can we best approach our Future. It would also be nice if a couple of these MARKERS would give recognition to our Police Officers / Firefighters / E.M.S. – our ‘ Community Protectors’. ( The Document above that I am Steward of clearly notes the origin of our cherish and beloved Firestation – that document alone most probably would ensure the required documents for a MARKER for them for starters).
    Additionally, this ‘ sense of place ‘ would also help with Touri$$m for us and applying for Grant$$$. Telescopically, at the Princess Place upcoming ‘ Cottages ‘ that would help compliance for those staying there to see Flagler County / Palm Coasts’ Heritage and History.
    Thank you very much.

  9. Angela Banner
    Angela Banner says:

    Foreclosure fraud

    I was a victim. 60 years old without a home will i be compensated for my home and or for 3 years i paid joe starr 500.00 a month only to loose

  10. Angela Banner
    Angela Banner says:

    Foreclosure fraud

    I was a victim. 60 years old without a home will i be compensated for my home and or for 3 years i paid joe starr 500.00 a month only to loose

  11. Angela Banner
    Angela Banner says:

    Foreclosure fraud

    I was a victim. 60 years old without a home will i be compensated for my home and or for 3 years i paid joe starr 500.00 a month only to loose

  12. Angela Banner
    Angela Banner says:

    Foreclosure fraud

    I was a victim. 60 years old without a home will i be compensated for my home and or for 3 years i paid joe starr 500.00 a month only to loose

  13. Angela Banner
    Angela Banner says:

    Foreclosure fraud

    I was a victim. 60 years old without a home will i be compensated for my home and or for 3 years i paid joe starr 500.00 a month only to loose

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