The lawsuits relate to Ginn’s $4.9 Billion Grand Bahama project, Ginn Sur Mer. If mediation fails, Ginn and Lubert Adler will have to defend against two Rico claims for two fraudulent schemes.
Palm Coast, FL – September 23, 2014 – On Friday, U.S. District Judge Timothy Corrigan ruled on Motions to Dismiss six consolidated cases against Bobby Ginn and Lubert Adler. In his plit ruling, Corrigan granted Defendant’s Motion and dismissed, with prejudice, charges of bank fraud. Charges of breach of fiduciary duty and fraudulent inducement were dismissed with leave to amend. Remaining RICO charges will go to mediation. Discovery is stayed pending the results of mediation.
If the parties are unable to resolve the cases at mediation, Ginn and Lubert Adler will have to defend against two RICO claims for two fraudulent schemes; Cash Out Scheme and Appraisal Scheme. They would be facing the possibility that they are liable for treble damages and payment of plaintiff’s attorney fees.
The six complaints, the first of which was filed in mid 2009, were filed by Dana Ballinger on behalf of several plaintiffs who had purchased building lots in Ginn Sur Mer, a $4.9 billion resort developed by Bobby Ginn on Grand Bahama.
GSM, and three other Ginn developments (Tesoro and Quail West in South Florida and Laurelmor near Blowing Rock, N.C.), were left insolvent after Ginn defaulted on a cross-collateralized $675 million Credit Suisse loan. Half of the loan proceeds were paid to the defendants as “profit distributions.” The complaint asserts that GSM received no benefit from the loan.
Tesoro and Quail West were forced into bankruptcy and were liquidated. Laurelmor was sold for pennies on the dollar. Ownership of GSM, on Grand Bahama, is now split, part owned by Credit Suisse investors, the rest by Lubert-Adler (Ginn's financial partner).
Ballinger and at least one of her plaintiffs first became aware of Ginn-LA’s financial difficulties when they read about the $675 million Credit Suisse default on GoToby.com.
Shortly after Ginn-LA’s bankruptcy of Tesoro and Quail West, a series of lawsuits were brought against them. The first was filed by 99 Michigan residents. Like the dozens of similar suits filed in the next few years, the Michigan suit failed. The consolidated Ballinger cases are the first civil suits against Ginn-LA to have advanced this far.
In the transcript of one case (Demsheck), Ginn attorney, Bob Alpert, boasted, “I’ve been responsible now for defending Ginn for several years in connection with these cases… And I can tell you, Judge, we have had resounding success in connection with having these claims dismissed….The plaintiffs in these cases have been unable to state a claim….”
In regards to Lubert Adler, Alpert says, "And the fact of the matter is there has been no success in these cases against Ginn or Lubert-Adler. Lubert-Adler has been in a handful of cases in which we’ve been involved. And they’ve been dismissed in every occasion that I can recall…”
A federal bankruptcy case was recently settled days before the deposition of Bobby Ginn and Ginn V.P., Robert Masters were scheduled to begin. As a result, Ginn and Lubert Adler paid bankruptcy trustee, Drew Dillworth $25 million on behalf of unsecured creditors.
In that case, lot owners were not compensated for their investment loss, though many received compensation for club membership deposits that were supposed to have been placed into an escrow account until amenities were completed. The trustee had been unable to find any evidence that such an escrow account had ever existed.