You are currently browsing the monthly archive for August 2009.
Naples— David Lucas wants to set the record straight.
After months of silence, the chairman of Bonita Bay Group is speaking out in hopes of dispelling allegations of fraud involving the deposits his company collected from members of its golf and other recreational clubs in five communities — Bonita Bay, Verandah, TwinEagles, Shadow Wood at the Brooks and Mediterra.
He’s talking to the media and he’s sent a letter to club members and residents to give them “the facts” behind a decision last year to stop refunding deposits to members who resign.
On Nov. 7 last year, the developer decided to no longer honor its 30-day refund policy. Fuming members have alleged a Ponzi-style scheme and taken their complaints all the way to the Florida Attorney General’s Office, which is now investigating.
Bonita Bay Group has done nothing unethical or illegal _ and there is no Ponzi scheme, Lucas said in an interview Tuesday at the company’s headquarters off Coconut Road in Estero.
“We invested over $200 million more in the clubs than we collected in deposits,” he said.
His financial report shows the company put $447.7 million into the seven clubs, which it is now trying to sell to members in a fight to avoid bankruptcy.
Meanwhile, the company collected $243.2 million in membership deposits for the clubs, excluding refunds, Lucas said. The company spent more than $340 million to build the clubs and has covered $106 million in operating losses since 1985, he said.
“There is $342 million dollars worth of stuff in the ground,” Lucas said.
“To call this a Ponzi scheme is really an irresponsible thing to do. It’s not true.”
A Ponzi scheme is an investment scam that pays investors back with their own money or the money of new investors. Usually, no real profits are generated.
Lucas said he hasn’t had any discussions with investigators at the State Attorney’s Office yet. They’ve only requested information from the company.
“We look forward to talking to them and getting this resolved as soon as possible,” Lucas said.
He explained how the refund policy came about. A few years after opening the first club at Bonita Bay in 1985, Lucas said he was asked about developing a plan for refunding deposits. He decided members should get their money back immediately if they resigned, rather than having to wait for one or two new members to join, as is the case at many other clubs.
“I just sort of did it,” he said. “I was naive. I didn’t want a member to be in the club if they didn’t want to be in the club. That worked for 23 years.”
Bonita Bay Group was forced to stop the policy because it couldn’t afford it anymore, Lucas said. A bad economy brought a surge of resignations and created a “run on the bank” by members seeking refunds, he said.
Golf members who resigned between Jan. 1, 2005, and Nov. 7, 2008, received about $77 million in refunds, Lucas said.
In 2008 alone, the developer gave back $21 million in deposits, he said.
There are three sources of money to pay for refunds: land sales, new memberships and new investments or bank financing. All of them have dried up in a bad economy, Lucas said.
In 2006, the developer had more than $90 million in land sales. This year, it expects to have $2.2 million, a 97 percent decrease.
If it did not change its policy, the company would have had to pay out at least another $18.9 million in refunds based on a current list of resignations, Lucas said.
“Frankly, if we had honored all those requests we would not have been able to remain in business,” he said.
Some members have questioned how much the Lucas and Ukleja families, who own Bonita Bay Group, have profited from the company.
“We’ve put more money in than we’ve taken out,” Lucas said.
Over the last three years alone, the families have invested $115 million into the business to keep it going, he said. They have decided not to give anymore.
“At some point you have to say, ‘It’s as far as I can go,’” Lucas said.
He pointed out that members have never had to pay a special assessment to cover operating deficits at the clubs. He said membership documents do not require the developer to put the deposit money in escrow accounts and it can be spent elsewhere.
“Money comes in and money goes out,” he said.
In fact, he said, the contract with members makes it clear that they will have to put up additional money to purchase their clubs. The developer is seeking cash payments as high as $20 million for its clubs, in addition to wanting members to waive the liability of their deposits.
The developer is looking to sell off all of its clubs as quickly as possible. It owes $74 million to its lenders, led by Key Bank, that it can’t repay, Lucas said.
“The losses incurred by Bonita Bay Group over the last three years have wiped out the cumulative profit of the company since inception,” he said.
Attacks on his family and the company have been hard to take. The company has been known for its high ethical standards and its desire to “do the right thing” for the community and the environment.
The developer is also facing a handful of lawsuits brought by members who want their deposits back. Claims include fraud, violation of the Florida Deceptive and Unfair Trade Practices Act and breach of contract.
“I’ve tried to do the best I can,” Lucas said. “I think we’re a victim of the economic situation.”(source: naples news 8-25-09)
NAPLES REAL ESTATE — With an economy that is moving the right direction, there are going to be some celebratory brunches.
Naples Area Board of Realtors released its numbers Friday, and the statistics have many smiling: overall home sales increased by 67 percent in July, compared with the same period one year ago.
Comparing July 2009 to the previous year, there’s also been a 12 percent decrease in inventory, a positive sign that the “buy now” message is getting out, say leaders in the real estate industry.
“Every geographic area experienced an increase in both pending and closed sales, which is encouraging when looking at the bigger picture in Southwest Florida,” said Premier Properties President Tom Bringardner.
Especially heartening: the number of people asking to look at property and pending sales.
Desire for properties costing less than $300,000 increased by 165 percent compared with this period last year. In hard numbers, that was 682 pending sales last month as compared with the 257 pending sales NABOR reported in July 2008.
Friday, Bill Coffey, of Coldwell Banker, said there are really good signs of economic recovery looming.
“This inventory is the best sign we’ve seen,” Coffey said.
Realtors attempt to gauge the market by determining how much inventory – in terms of months – is out there on the market.
In July 2008, there was a 30.6-month supply of housing available for purchase, Coffey said.
Last month, that figure had dropped to an 18.7-month supply, Coffey said. The difference is 11.9 percent.
“That’s almost a year’s less of property out there hanging,” Coffey said. Of course, he and fellow real estate agents would prefer to see that 11.9 percent drop to about 6 or 7 percent, but they’ll take the gifts they’re given.
That certainly applies to longtime real estate maven Jo Carter.
This time of the year is traditionally slow in even the best of times, she said.
“It’s a little hot here,” she said dryly.
Many real estate professionals tend to take the summer off.
Seeing the number of sales, pending sales and showings on the increase, Carter said she isn’t going anywhere.
“It’s usually quiet this time of the year. I’ve been busier. A lot of Realtors try to get away. I don’t want to get away at all with showings up,” Carter said.
While the pickup is mostly due to single family home sales, real estate pros are seeing an increase in all markets.
Coffey said it’s kind of difficult to define the buying market right now, but he’s guessing that at least 25 percent are investors, and the balance are people who will live in their homes.
“The houses are selling a little faster because of financing,” Coffey said. The condo market is moving slowly, because banks are still calling for 30 percent down.
That was a situation that was caused by real estate speculators during the boom market between 2003 and 2006, he said.
But, Carter takes heart in the fact that even condo sales are increasing.
“Condos have been a really tough market. That’s a really good sign,” she said.
Condo sales increased by 61 percent with 283 in July 2009, compared to 176 in July 2008.(source: naples new 8-14-2009)
