South Daytona condo investor stunned by bribery scandal

Article Courtesy of News-Journal

By Pat Rice

Published June 15, 2011

Significant questions remain in the case against two former South Daytona officials federal investigators have charged with taking bribes in exchange for reducing liens against a condo complex.

Perhaps no one would like those questions answered more than Ramara Garrett.

Garrett and other investors make up a partnership called 3131 South Ridgewood LLC. The partnership in turn owns the vast majority of the units at River Club Condominiums, located at 3131 South Ridgewood Ave. in South Daytona. Garrett is also owner of The Waverly Property Group, the real estate company that is selling the units at River Club.

Former Mayor Ron Clifton and former Special Magistrate Jerry Mitchell are accused of taking $5,000 each as part of a scheme to reduce liens against River Club Condominiums. According to federal court records, both have agreed to plead guilty. Clifton also is charged with accepting a $2,500 bribe for his help in reducing Volusia County fines against the condo complex, as well as lying to federal investigators.

In an interview last week, Garrett said neither she nor anyone connected to the condo complex had anything to do with the scheme involving Clifton and Mitchell. Nor did the condo owners benefit in any way from the actions of Clifton and Mitchell, she said.

She supplied documents that showed 3131 South Ridgewood LLC had made significant improvements to the condo complex, and also had hired area attorney Jim Morris, who already was helping them come to an agreement with the city of South Daytona to significantly reduce liens against the property.

The situation has cast an unfair shadow on the River Club condo's owners, who haven't done anything improper, Garrett said.

"We're a victim here, too, because of whatever scam they (Clifton and Mitchell) were pulling," Garrett said. "It's so frustrating."

Clifton and Mitchell have not responded to repeated requests for comment from The News-Journal.

At the center of the federal government's case against Clifton and Mitchell is an unnamed "purported representative of investors interested in buying the River Club Condominiums," according to a news release the U.S. Attorney's Office in Orlando sent out June 3, the day the charges against the officials were made public. A spokesperson for the U.S. Attorney's Office has declined to name the purported representative, or to provide any other additional details related to the case.

But Garrett believes that unnamed person is Stuart Buchanan.

Reached at his office last week by a News-Journal reporter, Buchanan, 40, declined comment and hung up the phone. He is currently a planner for Brevard County. Between 2000 and 2006, he worked for the cities of Deltona, Daytona Beach, South Daytona and Holly Hill. In South Daytona, he was the city's planner from 2003 to 2005.

In 1989, Buchanan was found guilty and sentenced to eight years incarceration by a court-martial of the U.S. Army for receiving, transporting and selling stolen property, as well as conspiracy and selling firearms without a license, according to city records and U.S. Army officials. In 2004, then-Gov. Jeb Bush granted Buchanan clemency, which restored his civil rights except for one restriction: He could not possess a firearm.

Garrett said Buchanan first made contact with her with an email on Feb. 15, 2010. She had no idea who he was, although he implied they'd already met.

"HI!" Buchanan's email began. "I believe we've met in the past." He stated that he had handled "entitlement work" for various developers in Volusia County, and he attached a lengthy biography to the email.

He also wrote, "Recently I was assisting in getting issues with the River Club condos in South Daytona resolved with the city of South Daytona. I also brought in the general contractor that wrote up the building for needed repairs. I was mainly involved because I have a buyer interested in making a bulk unit purchase. My client has purchased a number of properties in Volusia County previously.

"I would like to meet you for drinks and see if any of the units are still available from the new owner for purchase," Buchanan's email ended.

Garrett said she declined to meet with Buchanan at that time.

"He was always very determined to meet," Garrett said. "It was very creepy to me."

Garrett and the other investors in 3131 South Ridgewood LLC had purchased 39 of the 47 units at River Club condos in 2009. In making the purchase, 3131 South Ridgewood LLC became responsible for $241,000 in South Daytona code enforcement liens and $500,000 in Volusia County tax liens that had been racked up by the condo complex's previous owner, Avinash Gupta, city records show.

Garrett said the condos needed significant work, and ownership began making necessary fixes to the property. She said they also hired attorney Morris in late February or early March 2010 to help them negotiate a reduction in the South Daytona code enforcement liens.

"Everything was done properly with the city," Garrett said.

A couple months later, Garrett said, Buchanan approached her again. Buchanan told her South Daytona's new acting mayor, Ron Clifton, was impressed with the improvements 3131 South Ridgewood LLC had made to River Club condos. Clifton became acting mayor in March 2010 after the sudden death of then-Mayor Blaine O'Neal. Buchanan invited Garrett and the other owners of condos to have dinner with Clifton. Garrett accepted.

"The mayor wants to have dinner, I was honored," Garrett explained. "That's the only time I ever spoke to him (the mayor)."

The dinner took place May 21, 2010, at the Daytona Club. Garrett said she was there with the other owners of 3131 South Ridgewood LLC. They met with Buchanan and Clifton. Garrett said Clifton led the majority of the conversation, which centered around the city's history with the River Club condos.

"Basically, it was just the history," Garrett said. "As I recall, it was him (Clifton) complaining about the problems with (the previous owner) and how the property was looking a lot better. I think it was general, 'the place is doing better, and keep doing what you're doing.' "

At no point was there any discussion of any relationship of any sort between 3131 South Ridgewood LLC and either Buchanan or Clifton, Garrett said.

In the weeks after the dinner, Garrett said 3131 South Ridgewood LLC, through attorney Morris, continued to work with the city to come to an agreement to reduce liens against the property as improvements were completed.

Garrett shared a June 7, 2010, letter from South Daytona Assistant Community Development Director Helen C. Wert that chronicled the significant improvements on the property. Of a city "punch list" of 19 items needing attention given to the complex in March, all but two items had been repaired.

"Excellent progress has been made," Wert wrote to Morris. "Upon a final and approved inspection for both items, an affidavit of compliance letter will be issued by city staff. Then, a request for 'reduction of fine' hearing can be requested by you and/or your client. We appreciate your efforts in helping to resolve this code enforcement case."

Both Garrett and South Daytona City Attorney Scott Simpson point out that significant reductions in such liens or fines are common when new property owners make significant improvements to property. Simpson, in a recent interview, said the reductions help to spur development.

Meanwhile, according to the U.S. Attorney's news release, on May 26, 2010, "Clifton met with the purported investors' representative and discussed how to get the city of South Daytona code enforcement liens reduced on the River Club condominiums. At the conclusion of the meeting, Clifton suggested that the city of South Daytona special magistrate for code enforcement (Jerry) Mitchell would reduce the city liens to a minor amount, in exchange for a cash bribe."

On June 1, 2010, "the investors' representative met Clifton and Mitchell at a restaurant in Port Orange," according to the U.S. Attorney. The representative gave Clifton and Mitchell envelopes containing $5,000 in cash each. "At this and other meetings, the parties discussed the potential of further payments in relation to the River Club condominiums, as well as additional payments to Clifton, in exchange for his help in reducing the Volusia County tax liens," the U.S. Attorney's news release states.

On June 28, Buchanan sent South Daytona Director of Community Development John Dillard a letter "requesting to be placed on the upcoming July agenda for the Special Magistrate for the property located at 3131 South Ridgewood Avenue requesting a partial reduction of fines and liens."

In a July 2 letter, Dillard responded to Buchanan that before the city could consider a reduction of fines, "all items related to the fine must be corrected and inspected by the city. To my knowledge, there is still an outstanding issue with the plumbing at this property."

Both the letters note that they were copied to The Waverly Property Group, the company Garrett owns that is selling the River Club condos on behalf of 3131 South Ridgewood LLC. Garrett, though, said she does not recall receiving either letter. If she had, she said they would have been passed on to attorney Morris, who was handling their efforts to reduce liens from the city.

On July 8, although he wasn't on the agenda, minutes indicate Buchanan showed up at a magistrate's hearing Mitchell was conducting. Buchanan said he was there representing The Waverly Property Group regarding the condo complex. Over the objections of city officials, Mitchell reduced the liens against the condos from $241,000 to $12,000.

Garrett said she found out about what Buchanan and Mitchell had done about "an hour" after it occurred from Morris, who was contacted by City Attorney Simpson. Garrett said she immediately told Morris she had no knowledge of Buchanan's actions. An email Morris sent to Simpson on July 9 -- the day after the fines were reduced --supports that. "Waverly says they never knew," Morris wrote.

Garrett said the actions of Buchanan and Mitchell floored her.

"Oh my God, I'm dragged in the middle of this, and we did everything right," Garrett said. "We go through all the proper channels and are represented well, and this idiot comes along and involves us in this."

A "stipulation" was reached and signed within a day or two by both the city and condo owners in which they agreed that "3131 Ridgewood LLC did not authorize Stuart Buchanan to make a request on its behalf to request a reduction in the code fines." Mitchell's fine reduction was nullified. Shortly thereafter, when repairs were completed at the condo complex, the city reduced the liens on River Club condos to $32,000.

About a month after Buchanan showed up at the hearing before Mitchell, he sent 3131 South Ridgewood LLC a "letter of intent" to purchase any units for sale at River Club condos. The nonbinding letter was dated Aug. 6, 2010.

Garrett, who supplied The News-Journal a copy of the letter of intent, said it was filed away and never pursued by 3131 Souoth Ridgewood LLC because Buchanan's offer price for the condos was too low. Garrett said she hadn't looked at the letter of intent for months, and only reviewed it last week, after Clifton and Mitchell were publicly charged with bribery and the U.S. Attorney named River Club condos in its news release.

When she looked at it, Garrett said she got another shock.

On the letter of intent, Buchanan stated that the buyer interested in purchasing the condos is "Marat Balegula." Out of curiosity, Garrett typed that unusual name into Google. What popped up were numerous references to a "Marat Balagula."

Balagula is a reputed member of the so-called Russian crime syndicate. He served time in federal prison from 1992 to 2004 for a credit card scam and for a gasoline bootlegging operation. Various news accounts have tied him to organized crime in New York. He was released from a federal prison in Bastrop, Texas, in 2004. The News-Journal could not ascertain his whereabouts, whether he is even still alive or actually has any connection to this case.

"This was a jaw-dropper for me," Garrett said.

Meanwhile, Garrett said, the River Club condos have been selling steadily. Of the 39 condos 3131 South Ridgewood LLC purchased, 24 of them have already sold. The other 15 are selling for $99,000 to $150,000. The condo complex on the Halifax River includes a boat dock as well as a fishing pier. Garrett showed photos of improvements made to the property, and noted that as each unit has been sold, a portion of the liens still owed to South Daytona has been paid as part of the sale. Garrett said she's disappointed the U.S. Attorney hasn't more fully explained who was behind the bribery. She said she has not been contacted or interviewed by the FBI, which conducted the investigation, and to the best of her knowledge, neither have any other investors in 3131 South Ridgewood LLC. She added that the publicity related to the case has unfairly impacted other owners of the condos. But she said it hasn't affected their ownership of the property.

Mitchell is set to plead in federal court in Orlando on June 29. A plea date for Clifton hasn't been set.

Garrett feels like she is viewing a puzzle with missing pieces. Above all, she said no one connected to the condos has done anything wrong.

"I don't understand it," Garrett said in reference to Clifton and Mitchell. "I don't know what their goal was. Unfortunately, I inadvertently became the victim of it.

"It's just very sad."