Two dozen properties in Coconut Grove are ensnarled in a legal dispute involving lenders, investors, a developer and dozens of people who put deposits down on the home of their dreams – only to find out last week that those properties may be instead sold or auctioned off to the highest bidder.
“We don’t see an end to this road, at least not one that is positive for the buyers,” said Alexandra Cardoso, who’s been waiting more than five years to take ownership of the Coconut Avenue townhome she contracted to buy for $1.55 million. “We’ve been waiting patiently and doing everything on our end the right way, so for us it’s like the good guy is getting screwed.”
In 2021, Diane Stobo put $840,000 down for a $2.8 million home the developer, Send Enterprises, was going to build on a lot after he razed existing homes there. Those homes remain standing.
“Not only am I out my huge deposit, but also out legal fees and there may or may not be a little bit of money that will come back to us,” Stobo said. “And we just spend more and more in hopes there’s at least a return on our deposit, not even thinking of getting a home out of it. That ship has sailed.”
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They are just two of the depositors who court records show paid Send Enterprises a total of more than $22 million to secure their houses or lots, only to now accuse the developer and its principals – Douglas Cox and attorney Nicole Pearl -- in civil lawsuits of fraud.
NBC6 first exposed complaints about the multimillion-dollar dealings last year.
Miami-Dade Circuit Judge Jennifer Bailey has appointed a receiver to take over their companies, dig into the books and piece together this saga of broken promises, vacant properties and empty bank accounts.
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The receiver who took over Send Enterprises reported finding two bank accounts – total balance: $269.29.
“Which kind of leads me to the question that everybody wants an answer to,” he told Bailey during a case management conference last week, “Where did the money go?”
Earlier this month, that receiver, recently retired Judge Alan Fine, informed the court in his latest monthly report that Send Enterprises has more than $85.5 million in claims against it:
- $22 million owed to depositors;
- $47.5 million in claims from lenders to the developer, including one charging Send Enterprises what Fine called “exorbitant” interest of 24.5% per year;
- $9 million owed to two companies that invested in Send Enterprises; and
- $7 million claimed by the company that deeded the land to Send Enterprises in 2019.
Fine estimates the fair market value of the 12 undeveloped lots and 12 townhouses he now controls may reach $65 million.
That would appear to leave a $20.5 million deficit in the receivership, not including the fees and costs Fine, his attorneys and experts are incurring ($588,000 through June).
But Fine said he will soon seek authority to sue others who have received assets from Send Enterprises.
He alleges in his report he has uncovered potentially illegal transactions, using Send Enterprise assets to pay off debts not owed by the company.
Any money recovered from those actions would be added to the pool used to pay back the depositors and other creditors, reducing that current apparent $20.5 million deficit.
For example, he is preparing to seek the unwinding of one property on Shipping Avenue that he said appears to be worth more than $3.5 million – but it was “sold” (quotes added by the receiver) for only $1.5 million. Fine said in his report to the judge his team “will be discussing unwinding the transaction with the current title holder in the very near future.”
Whatever money is recovered, Fine will have to deal with the creditors who claim to be first in line for repayment.
Fine reported he has not yet determined if the largest mortgage is valid as the first lien against the properties and companies, or whether that lender’s claims are proper. There is $33.2 million in outstanding principal on that mortgage, to Altamar Financial Group, plus nearly $12.5 million in interest as of mid-July, the result of the 24.5% rate that adds $22,251 a day to the debt, according to a foreclosure action filed in May by Altamar against Send Enterprises, Cox, Pearl and other entities, including depositors. A request to Altamar’s lawyer for comment on the receiver’s report has not been responded to.
The receiver also reported Send Enterprises has not provided all the financial information the judge has ordered he receive, including accounting information that would reveal how the depositors’ money was used. He reported he is trying to clear up “myriad transactions for which the details are currently murky,” including transactions with apparent lenders and investors who have not yet been named in the lawsuits.
He said some of Send’s assets and property have been transferred to others without clear evidence of what Send Enterprises received in return.
“I am also investigating various short-term, high interest financing transactions … which may not have been lawful or which may be void or voidable under Florida law,” he wrote, adding one example of that would be if Send Enterprises assets were used to “pay the liabilities of others for which insufficient or no value to Send was provided in exchange.”
As for Cox, Pearl and their companies, the fraud allegations against them are civil – not criminal. But some depositors say they have complained to law enforcement seeking a criminal investigation.
Cox and Pearl’s lawyer, Michael Schlesinger, said in a statement to NBC6: “Our clients deny any wrongdoing and they are looking forward to their day in court in order to refute the unsubstantiated and inflammatory allegations being made against them.” They are also appealing Judge Bailey’s order setting up the receivership.
That receiver said he has found one purported contract to purchase a unit where the deposit was paid not to Send Enterprises or its escrow agent, but instead to a third-party to satisfy a debt not connected to Send Enterprises.
As he told Judge Bailey in a hearing earlier this month, “We're still kind of dumbfounded at the explanations we've received about why so much has been paid and it doesn't make any business sense at all, your honor.”
Nor does it make sense to those who’ve been waiting years to move into the townhomes they thought they were buying.
“We’re all really angry. We feel we’re getting the short stick here,” said Kevin Ware, who claims in a lawsuit he signed his contract for a Coconut Avenue townhome. It was “a place we could afford, a beautiful big townhouse in Coconut Grove. I was told it’d be done in 30 to 45 days. Nothing has happened on them in two years.”
He or the others claim in lawsuits Cox and Pearl and their companies strung them along for years, intentionally leaving the properties unfinished as they collect multiple deposits for the same parcel.
The lawyer for one of Cox’s partners in the development summed up for Judge Bailey in May how, he alleged, Send Enterprises was “a Ponzi scheme to take deposits from purchasers and funds invested by investors and partners like my client … and use these properties to perpetuate the fraud.”
Fine confirmed Send Enterprises has been paid deposits more than once on some of the parcels, and that an undetermined number of the prior depositors never got their money back.
One of the townhomes on Coconut Avenue was used to collect more than $3.3 million in deposits from four different purported buyers, for prices that grew from $1.82 million in 2021 to $2.475 million in 2022, and then $2.3 million and $2.375 million this year, according to Fine’s court filings. He has not revealed whether any of those four depositors got their down payments refunded.
But he is working to get the 24 properties ready to sell, with the 12 undeveloped lots going first through competitive bids or auctions, once he seeks and the court approves bid procedures.
The townhouses need to receive certificates of occupancy from the City of Miami before they can be put on the market, and Fine said some of them are 90% complete.
Four of the units on Coconut Avenue need a total of $288,000 in finishing touches and could then be ready to sell in 30 to 60 days, Fine told the court.
Fine has surveyed depositors about whether they are willing to pay fair market value for the properties they have under contract, but said about three-fourths of them rejected that, largely because prices and interest rates have increased so much in the ensuing years, they would now be priced out of the market.
Michael Coyne, who put $487,500 down on a $1.625 million dollar Coconut Avenue townhome in March 2021, received a letter from Fine last month suggesting the current market value was more than $3.2 million.
His response: “Take care of the buyers. At a bare minimum give us a seat at the table and let’s honor our legally binding contracts.”
Stobo, the buyer hoping to recover her $840,000 deposit, said, “I have my family here as well, established myself here in Coconut Grove and I can’t afford to live here anymore. I have to move out of the Grove because what I paid for; I cannot buy now.”
The buyers also blame the City of Miami for letting Send Enterprises drag their feet for years in getting occupancy permits that would allow them to close on their purchases. At one point, a stop work order was placed on some of the properties, but the buyers say work continued.
That violation could have led to the city taking legal action against the developer, but that never happened.
The city says it’s up to the developer to get the property in shape so it can pass inspections.
