Wednesday, October 24, 2007


Orlando-based Mirabilis Ventures Inc. has filed three new lawsuits against companies it did business with, invested in or lent money to since 2005, including one firm owned by one of the richest men in America.

The suits -- two in Orange Circuit Court in Orlando and another in Tampa's federal court -- are the second wave of litigation filed this month by Mirabilis. They seek to recover millions from former top company executives, firms that owe money to Mirabilis or others it accuses of making fraudulent deals with the company.

Mirabilis, a holding company that announced earlier this month it lost at least $220 million, has shut down nearly all of its operations and is trying to generate cash to pay a large tax bill anticipated from an ongoing Internal Revenue Service probe.

"Basically, Mirabilis doesn't want to get stuck with someone else's tax bill," said Bob O'Malley, an Orlando public relations consultant hired by Mirabilis. "We're seeking to collect what could be the total amount of taxes."

Magnate named in suit

Among those named in the tax-related suit are Kenneth Hendricks, a Wisconsin construction supply magnate ranked 91st on the 2007 Forbes 400 list of wealthiest Americans. Another suit seeks to recover about $8 million in loans made to a dozen ex-Mirabilis security companies whose officers include Kevin Billings, a retired Secret Service agent from Orlando.

Billings was one of three security contractors detained and jailed in Africa's Democratic Republic of the Congo in May 2006 while working for a consulting company owned by Mirabilis' chief strategist, Frank L. Amodeo. The successful release of the three thrust Amodeo and Mirabilis into the public eye.

The lawsuits by Mirabilis, which once held interests in 70 human resource, construction, restaurant and security companies, follows scores of workers being laid off in Orlando earlier this year. The IRS and a federal grand jury are probing its operations.

One of the most recent suits, filed in Tampa, names Hendricks, his wife and their company, Amfinity Capital LLC. It seeks $230 million in damages stemming from Mirabilis' purchase of Amfinity's interests in two payroll outsourcing firms, Presidion Corp. and Presidion Solutions Inc.

The Presidion firms and others taken over by Mirabilis in the 2006 deal owe an estimated $173 million for federal payroll and Social Security taxes collected from workers' paychecks, O'Malley said. The suit said the Hendrickses did not disclose the tax problems and should be liable for them.

Morris Brooks Jr., attorney for the Hendrickses, sued Mirabilis earlier this year, saying it had defaulted on the $2.85 million purchase of Amfinity's interest in Presidion. Brooks said the couple did not run the companies and had nothing to do with the unpaid employment taxes.

Lawyer blames Mirabilis

"Mirabilis took our assets, didn't pay us our money and it's just that simple," Brooks said.

A second suit, filed in Orlando, seeks return of nearly $8 million in payroll advances made to Orlando-based security consulting firm Stratis Authority and 11 subsidiaries from 2005 to 2007 before they broke from Mirabilis in January.

The suit also accuses Stratis of failing to "properly maintain corporate compliance" with state and federal laws, an apparent reference to uncollected employment taxes.

Though no individuals are named in the suit, Orlando companies listed among those owing money to Mirabilis include A Very Private Eye, Gibraltar Integrity Corp. and RF Scientific Inc. Officers in those firms include Billings, the former Congo detainee; ex-Assistant Statewide Prosecutor Kellie Tomeo; and ex-Orlando police Officers Bill Eplin and Charles Rahn.

Billings could not be reached for comment.

Reached Tuesday, Rahn said he was "flabbergasted" by the suit and never signed any loan agreements with Amodeo or Mirabilis. Amodeo sold the private-investigation company back to him in March for $10, Rahn said.

Lawsuit called 'audacious'

Jim Abbott, the former majority owner of RF Scientific, called the suit "audacious." Money Mirabilis is seeking from RF includes the $350,000 it paid to buy the Orlando satellite communications company in March 2006, he said.

"They came and bought our company and now they're saying it was a loan?" Abbott asked.

The last of the most-recent suits accuses several investment companies and their principals of fraud and misrepresentation in multiple deals with Mirabilis from 2005 to 2007. Named are Forge Capital Partners LLC of Boca Raton; Argent Capital Advisors of Tampa, formerly known as Atlantic American Capital Advisors LLC; and principals Joseph Bryant of Jacksonville, Robert Moreyra of Tampa and Peter Collins of Boca Raton.

They could not be reached for comment.

Mirabilis spokesman O'Malley said the company invested $16 million through the various parties, including $2 million that was supposed to go into the Trump Towers project in Tampa but was diverted.

All the deals turned out to be plagued with problems, misleading finances and tax liabilities, the suit said.

Jim Leusner can be reached at [email][/email] or 407-420-5411.


Monday, October 15, 2007

The Central Florida Real Estate Bust

Nearly twice as many people face losing their homes in Central Florida this year compared with 2006, many of them borrowers struggling to repay adjustable-rate loans or investors unable to sell in a glutted market.

Through the first eight months of 2007, more than 11,000 homeowners in a seven-county area in and around Orlando have entered the foreclosure process by defaulting on their mortgage payments -- 85 percent more than all of last year.

An Orlando Sentinel analysis of public records gathered by RealtyTrac Inc., which sells foreclosure data online to prospective home buyers, found the problem cuts across differences in income, race, ethnicity and geography:

Osceola County has been hit hardest in the region, with more than triple the number of defaults so far this year compared with all of 2006. But Volusia, Brevard and Polk counties already have more than twice as many defaults as all of last year. And Orange, Lake and Seminole counties have registered increases ranging from 42 percent to 57 percent.

Communities with widely divergent income are affected. The ZIP codes with either a high volume or a high concentration of defaults range from east Pine Hills and north Poinciana -- areas with median household incomes in the bottom quarter for Central Florida -- to Waterford Lakes and Celebration, communities whose median incomes fall within the top 5 percent for the region.

The complexions of the communities also vary. The most-affected ZIP codes range from Taft and south Poinciana, which are nearly two-thirds Hispanic and black, to Windermere and Davenport, which are more than three-quarters white.

Single-family homes dominate the foreclosure rolls, constituting about nine of every 10 defaults and public auctions. Condominiums come in a distant second, with about one in every 20 defaults and auctions.

The situation is likely to get even worse, because the data indicate that the number of loan-default notices has jumped sharply in recent months.

Experts say the evidence points to both homeowners living beyond their means and investors grasping for quick riches as prime sources of the problem, with foreclosure notices stretching from the new resort-home subdivisions near Walt Disney World in Osceola to the established starter-home neighborhoods of Deltona in Volusia County.

"There is blame for everybody: builders who overbuilt, Realtors who oversold, lenders who weakened loan criteria and borrowers who stretched too far knowing nothing goes up forever," said Doug Duncan, chief economist for the Mortgage Bankers Association.

Florida is one of four states driving the nationwide rise in foreclosures, Duncan said. The others are California, Arizona and Nevada.

He attributed the increase in Florida at least partly to investors, noting that home construction far outpaced population growth in the Sunshine State during the five-year housing boom. Now, with home prices dropping, many first-time owners have no equity with which to refinance their mortgages, and investors who had hoped for a quick and profitable resale cannot sell for what they owe, Duncan said.

Statewide this year, home lenders started foreclosures on more than 60,000 properties through August -- three-quarters more than during all of 2006, according to the Sentinel analysis of RealtyTrac data. During those same eight months, more than 16,000 Florida properties were put up for sale at public auctions, an increase of about two-thirds from all of last year.

How foreclosure happens

Lenders initiate the foreclosure process in Florida once a homeowner has defaulted on a loan by missing three payments. At that point, the bank asks the court to set a sale date for the property. Once a judge sets the auction date, servers notify the homeowner. The public can bid on the property at auction. If there are no bidders, the lender repossesses the property.

Don Casselman of St. Cloud started missing mortgage payments on his home earlier this year, after work injuries and a failed attempt to start a duct-cleaning business. His century-old house weathered Hurricane Charley three years ago with only a chimney brick missing, but when Casselman, saddled with two mortgages, tried to sell it recently, he got no takers.

Last month, Minneapolis-based U.S. Bank forced his family to leave.

"They take people who are not in the best of credit, and they treat us like we're millionaires -- then they try to rip every dollar that you can make from your pocket, and they try to draw blood," said Casselman, who couldn't persuade lenders to refinance his adjustable-rate loans when the $974 monthly payment was about to double. "They try to keep a poor man poor."

Osceola hard-hit

Fast-growing Osceola County, with its production-line subdivisions and service-job wages, is the local epicenter of the mortgage meltdown.

The one-time cattle county on Disney World's doorstep has recorded one foreclosure for every 184 residents so far this year -- compared with one for every 339 people in Orange County and one for about every 450 residents in Seminole and Lake counties.

Linda Goodwin, a real-estate agent in Kissimmee, says foreclosures were inevitable in Poinciana, a 47,000-acre working-class community that straddles the Osceola-Polk county line. Prices for basic, three-bedroom homes there had doubled since 2000, as they had most everywhere else, Goodwin said.

"We knew this had to stop, because salaries had not gone up that much," she said. "That's why we're seeing so few buyers."

South Poinciana is home to the worst-hit ZIP code in Central Florida -- 34759 -- where nearly 300 homeowners have defaulted on their mortgages so far this year.

The community is one of the youngest in the region, with a median age of 33. It also has one of the highest concentrations of Hispanic residents in Central Florida, though other heavily Hispanic communities, such as Pierson in Volusia County and Mascotte in Lake County, have not encountered the same default rates.

In all of Osceola County, defaults through August totaled 1,328, compared with 416 for all of last year.

"A lot of houses in this area were owned by the British, [and] a lot have gone through foreclosure," said Clara Arango, who lives with her four school-age sons in a neighborhood south of Disney World filled with investor-owned vacation homes.

Her street of pastel stucco houses has more "For Sale" signs in the yards than cars in the driveways. She used to live in a larger home nearby, but the family lost it to foreclosure last year after she and her husband divorced.

Jump in loan defaults

The biggest indication that the region's and the state's mortgage woes are far from over is the recent spike in the number of property owners defaulting on their home loans.

In the seven counties surrounding Orlando, the number of monthly loan defaults recorded in court has jumped from 611 in January to 3,181 in August. Statewide, monthly loan defaults increased from 2,919 in January to 18,676 in August.

In Florida, one in every 33 homeowners with an adjustable-rate loan was in foreclosure as of June, according to Mortgage Bankers Association data, compared with fewer than one in every 100 homeowners with a fixed-rate loan.

Loan defaults are spiraling into auctions more often these days than in past years, experts say, because property owners' options are limited when they can neither sell the house nor refinance the loan. And Florida buyers who used "subprime" loans to finance their purchase have been 10 times more likely to lose their property than homeowners with conventional-rate loans, according to MBA data.

Even some homeowners who built up some equity are losing their dwellings because they took out second mortgages to pay such things as credit-card debt, said Richard Schram, special-projects manager at Consumer Credit Counseling Service of Central Florida and the Florida Gulf Coast.

"They lose their job, they're in trouble," he said.

Whatever the reason for falling behind, a homeowner who misses three monthly payments faces added bills that include lender's fees, court costs and other expenses.

"The [monthly] payment is $1,200 when they buy," Schram said. "When they fall [three months] behind, it goes to an attorney, and that adds $2,500 to $3,000. Suddenly they're $6,000 behind, and the lenders may want another inspection or appraisal," which further drives up the debt.

To make matters worse, homeowners in financial trouble usually don't seek help restructuring their debts until it's too late, Schram said. In July, for example, his nonprofit credit-counseling service offered an Orlando workshop for homeowners titled "The ABCs of Mortgage Foreclosure." Two people showed up.

"We still have people who call and say, 'I need to go through counseling today, because my property is going to be sold tomorrow,' " he said.

Flooding the auction block

More defaults inevitably lead to more homes on the auction block.

In Central Florida, more than 3,000 properties were put up for sale at public auction from January through August, about two-thirds more than for all of 2006. They ranged from a $3.3 million mansion in Isleworth, with five bedrooms and 6.5 bathrooms, to a $131,000 half-century-old house in Deltona with two bedrooms and a single bath.

Brevard County has recorded the biggest jump in auctions so far this year of any county in the state: nearly a sixfold increase to 677 compared with all of last year. Osceola County was fifth in Florida through August by the same measure, with 333 auctions, or four times as many as all of last year.

Palm Bay, whose town motto is "A Perfect Place to Grow," has had nearly 100 properties sent to auction through the first eight months of the year.

Anticipating an eviction from their Palm Bay home, Lori Groos and her family recently moved into a rental and are working with their lenders on a "short sale," in which the house is to be sold for less than the amount the family owes.

Groos said the family's debt grew when she and her husband took out a second mortgage to repair damage from the 2004 hurricanes. Then their income shrank when Groos opted to stay home from her Internet Web-design job to watch the couple's children.

"Banks are willing to work with the short sales, just to keep the house from coming back to them," said Groos, who hopes the house sells soon because interest continues to accumulate on the couple's loans until a buyer is found.

North Palm Bay, where the Grooses live, is generally representative of Central Florida as a whole, with a median age of 38 and a median household income of $45,980 a year. The reason for the flood of foreclosure auctions, however, may be the concentration of investor-owned properties in town.

Sharon Maynard, a Palm Bay real-estate agent, says she knew the area was headed for trouble back in 2005, during the height of the housing boom, when home prices jumped 10 percent in a single month. Out-of-state buyers, attempting to seize what they saw then as an opportunity, were snapping up relatively affordable new homes in hopes of reselling them soon after for huge profits.

"It's people who were trying to flip houses: buy them from the builder" and sell them to someone else, Maynard said. "But the market went down, and they weren't able to sell them."

Sean Snaith, an economist and professor at the University of Central Florida, also blames investors for the pockets of mortgage misery in places such as Palm Bay and Kissimmee.

Whether the Federal Reserve's recent half-point cut in interest rates will be enough to thaw the credit markets and slow the region's rising foreclosure rate is not yet certain, Snaith said. But at least the local economy appears to remain strong enough to weather the real-estate slowdown.

"That's kept this from getting worse than it could be," he said.

Saturday, October 13, 2007


Embattled Mirabilis Ventures Inc., under siege by creditors, the Internal Revenue Service and a federal grand jury for failed business dealings and an employment tax scandal, announced Friday it has suffered at least $285 million in losses.

The public disclosure -- the first made by the Orlando company about its losses -- came as Mirabilis announced it had launched the first wave of lawsuits against former company officials, creditors and partners with whom they loaned or invested money.

"The company has been working on gathering information," said Bob O'Malley, a public relations consultant hired by Mirabilis. "And now is the time to file the collection actions."

"Mirabilis is shutting down and we are in collection mode so we can recover assets owed to the company and pay off its obligations."

He said any money collected would be assigned to the Internal Revenue Service to cover any back taxes owed for entities related to Mirabilis, including Presidion Solutions, a defunct payroll and human resource firm. Former company officials say Presidion and related entities owe the government more than $100 million in back taxes.

Several angry former employees have complained that Mirabilis has failed to honor health insurance claims from earlier this year when it laid off scores of employees and shut down virtually all of its subsidiaries and insurance processing units. O'Malley said the company would cover those debts if they present proper documentation.

Five Justice Department lawsuits filed against Presidion and related payroll outsourcing firms tied to Amodeo, Mirabilis or prior owners were filed this summer seeking up to $223 million in back taxes dating to 2001. But they quietly were dropped by prosecutors, apparently filed prematurely.

Assistant U.S. Attorney Randy Gold, who is running the Mirabilis probe, said Friday he could not comment on Mirabilis disclosures because of an ongoing investigation. A spokesman for the U.S. Attorney's Office regional headquarters in Tampa confirmed the Mirabilis probe to the Sentinel in March after the newspaper obtained a grand jury subpoena for records in the case and interviewed several witnesses questioned by IRS and FBI investigators.

Mirabilis, an obscure investment fund which owned or held investments in 70 companies ranging from construction, restaurant and human resource payroll firms, claimed revenues of nearly $1 billion last year. It was the brainchild of Frank L. Amodeo, 47, of Orlando. Disbarred as a Georgia bankruptcy lawyer in 1994 who later served two years in federal prison for fraud, he took over Mirabilis in 2005 as a shell company and became its chief strategist and investor.



Standing in front of his top executives two years ago, Frank L. Amodeo bragged about growth prospects of his investment brainchild, Mirabilis Ventures Inc. He pledged to succeed where competitors, other Fortune 500 companies and even the Pentagon had failed.

On Friday, the Orlando-based holding company disclosed it had lost at least $220 million and had closed down virtually all of its operations.

"Mirabilis is shutting down, and we are in collection mode so we can recover assets owed to the company and pay off its obligations," said Bob O'Malley, a public-relations consultant hired by the company.

Mirabilis, which is under investigation by a federal grand jury in Orlando, also announced it is suing former top company executives and creditors, claiming they defrauded or owe money to the firm.

Money recovered from the lawsuits will be turned over to the Internal Revenue Service, which O'Malley said is trying to determine the company's tax liabilities and whether it is responsible for millions of dollars in payroll taxes collected by a human-resources firm linked to Mirabilis that were never paid to the government.

Mirabilis was an obscure company until three security contractors working for Amodeo were detained in the Democratic Republic of Congo in May 2006. At the time, Mirabilis owned or held investments in 70 companies, including construction, restaurant, insurance, defense consulting and human-resource-payroll firms.

Company officials claimed revenues of nearly $1 billion last year before it laid off scores of workers starting in December.

Alleged wrongdoing

Litigation filed recently in Orange Circuit Court allege wrongdoing by a number of Mirabilis business associates:

A fraud lawsuit accuses the former owners of RKT Constructors of Titusville, Robi A. Roberts, a trust she controlled, and F. Del Kelley of inflating the assets of the company. Mirabilis paid $3.2 million for RKT in December 2005. Roberts said Friday the allegations were untrue.

A suit against Palaxar Group LLC, ex-Mirabilis President Frank Hailstones and ex-secretary-treasurer Edith Curry alleges the executives breached contracts with Mirabilis and misappropriated trade secrets and patents developed by the company before they left. The suit said the former executives are marketing an anti-fraud product that would deprive Mirabilis of revenue. Neither could be reached for comment.

A breach of contract suit against ex-Mirabilis Vice President Robert Konicki and Premier Servicing LLC concerns the $1.1 million sale of three Mirabilis insurance subsidiaries -- Cadent Underwriters, Bencomp National Corp. and Community Health Solutions of America LLC -- to Premier earlier this year. It says Premier defaulted on its September and October payments and that Konicki structured the deal thinking Mirabilis would collapse before all payments were collected. He still is an officer with the three insurance firms, the suit said.

Konicki's lawyer, William Sheaffer, called the lawsuit "baseless" and an "attempt to deflect attention on issues being investigated by the federal government."

The IRS, FBI and a federal grand jury are looking at the business dealings of Mirabilis, its subsidiaries and Amodeo-related companies. Assistant U.S. Attorney Randy Gold, who is running the probe, declined comment Friday because it was ongoing.

The investigation has focused on company acquisitions and more than $100 million in unpaid employment taxes collected by payroll-outsourcing companies tied to Mirabilis or Amodeo, including Presidion Solutions Inc., witnesses said.

Justice suits dropped

Earlier this summer, the Justice Department filed five lawsuits seeking up to $223 million in back taxes dating to 2001. But the suits quietly were dropped by prosecutors, apparently because they were filed prematurely.

O'Malley said Mirabilis has settled 16 of 24 business lawsuits filed against it across the country this year. In the remaining suits, the company has filed counterclaims seeking $14 million. More suits will be filed in the coming weeks, he said.

Numerous other disputes have been resolved without litigation, he said, including one involving nearly 500 workers who complained that about 2,000 health-insurance claims had not been paid.

Mirabilis, which once employed 400 workers in three downtown Orlando office towers, is now down to a handful of personnel. The company is reviewing 20,000 hours of internal office surveillance tapes -- which also have been turned over to prosecutors -- to find which former employees are culpable in unscrupulous dealings, O'Malley said.

Amodeo, 47, has served as Mirabilis' chief strategist and primary investor since 2005. O'Malley said the company would stay in business indefinitely while it collects its debts.

"The bottom line is he [Amodeo] is still around," he said. "He is very much trying to do the right thing and has had some good people who have stuck with him."

Some are skeptical

In July 2006, the Orlando Sentinel disclosed that Amodeo was disbarred as a Georgia bankruptcy lawyer in 1994 and served two years in federal prison for fraud.

Robert Sacco, owner of PaySource Inc. of Dayton, Ohio, remains skeptical of Amodeo and Mirabilis. He sued both in April, alleging they defaulted on the $22 million purchase of his human-resources firm. Sacco claims he lost $4 million taking back the company and fixing its operations.

"The guy acquired over 100 companies and didn't [fully] pay for them," Sacco said. "His actions and the consequences of his actions have caused collateral damage to thousands of people."

Orlando company says it will try to recover assets