Condo seller pleads guilty to fraud

Article Courtesy of The Tampa Bay Business Journal

By Margie Manning

Published August 24, 2014

 

Here’s some fallout from a condo conversion project at the height of the real estate bubble.

Brendan Bolger, the owner of a company involved in the sale of The Arbors, pled guilty Wednesday to conspiracy to commit wire, mail and bank fraud. Bolger faces up to 30 years in federal prison, a statement from the U.S. Attorney for the Middle District of Florida said. He also agreed to forfeit $18.4 million.

According to the plea agreement and a filing in the case earlier this month, entities controlled by co-conspirators signed a contract to buy The Arbors, a 390-unit apartment complex at 3939 Ehrlich Road in Tampa, with a plan to convert it from rental apartments into a condominium complex.

The developers financed their purchase with a loan from Corus Bank, a Chicago-based bank that failed in September 2009. It was one of the largest financiers of the condo boom, as the South Florida Business Journal reported.

The Arbors’ loan agreement imposed strict conditions on the timing of the conversion process, and also specified that Corus was to receive 100 percent of the net proceeds of the sale of the first 80 units. The loan agreement included financial penalties for the developers if they failed to meet the conditions. Bolger owned or managed several companies that worked with the developers, including Capital Management Guarantee LLC.

Beginning in April 2007 and continuing through May 2008, Bolger and others offered cash payments to buyers, described as “buyers’ incentives," and containing material facts about the financing of the sale of the condo units that were concealed from Corus Bank and from the purchasers’ mortgage lenders.

Of the funds he agreed to forfeit, $4.3 million was associated with the fraud perpetrated on Corus Bank and $14.1 million was associated with the fraud perpetrated on the mortgage lenders, the statement said.

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