LIT COMMENTARY
This is a convoluted case history but the facts LIT address are very specific, they address the responsibility of ‘black robe’ judges to report fraud by attorneys before them.
The attorneys for Messrs Kaplan (and in effect former Congressman Bennett) were co-conspirators to fraud. The issue which concerns LIT the most is the 3-panel effectively “laughed it off” with a warning at the oral argument and after newly appointed Judge Luck (who moved from the Florida Supreme Court no less) roasted counsel with the undeniable evidence.
The evidence presented by the lower court judge concluded that the law firm knowingly conspired with the Kaplans’ to ‘overcharge and overbill’ its legal fee. This, the lower court concluded, was both intentional and fraudulent.
This conversation between Judge Luck and Kaplan’s counsel starts at appx. 2.57 minutes into oral argument.
However, after the conversation between Luck and Kaplan’s counsel, the 3-panel refocuses on the parties, namely the involvement and knowledge of Kaplan and his wife in the fraudulent scheme.
What this shows is the fact that the court knew Kaplan’s counsel were co-conspirators to a fraud and yet did nothing after oral arguments where Luck had essentially grilled counsel and warned them about the fact he knew their arguments were not only frivilous they were fraudulent.
Judges are also registered State Bar lawyers and as such have a duty to report attorney misconduct. Despite having an attorney who’s law firm created fake and fabricated forged invoices in front of the 3-panel, no further misconduct or referral to the prosecutor was forthcoming. This despite the direct questioning by Luck who stated that the law firm was found to be crafting fraudulent invoices.
This is unacceptable.
This court found that an attorney who allegedly was the “mastermind” of his client’s fraudulent transfer of settlement funds through the attorney’s trust account could be held liable as an “initial transferee” upon a showing of the attorney’s lack of good faith. In re Harwell, 628 F.3d 1312 (11th Cir. 2010). Yet nothing was reported in this case involving a politician, real estate investor, lawyers and a law firm who conspired to finch hundreds of thousands of dollars from Regions Bank.
No. 18-14010
03-19-2020
REGIONS BANK, an Alabama Banking Corporation, Plaintiff-Appellee, v. KATHRYN KAPLAN; R1A PALMS, LLC, et al., Defendants-Appellants.
[DO NOT PUBLISH] D.C. Docket No. 8:16-cv-02867-SDM-AAS Appeal from the United States District Court for the Middle District of Florida Before WILLIAM PRYOR, JILL PRYOR, and LUCK, Circuit Judges. PER CURIAM:
We sua sponte vacate our original opinion and substitute the following opinion in its place.
Kathryn Kaplan and several companies that she and her husband, Marvin Kaplan, own appeal the district court’s judgment against them in favor of Regions Bank. The district court ruled that three of the Kaplans’ companies had fraudulently conveyed $742,543 to Kathryn to avoid paying Regions for preexisting debt. It also ruled that MIK Advanta LLC, another one of the Kaplans’ companies, was a legal successor of yet another Kaplan-owned company, MK Investing, that owed Regions $1,505,145.93. We affirm.
In 2012, Regions sued Marvin and four of his companies for liability stemming from debts that his companies owed. Regions prevailed and secured over $7 million in judgments against the Kaplans’ various companies. While the 2012 lawsuit was pending, Regions discovered that the Kaplans had completed two sets of transactions to jettison money from their companies: first, three of the Kaplans’ companies in the 2012 lawsuit—Triple Net Exchange, BNK Smith, and R1A Palms—wrote a series of checks to Kathryn that totaled $742,543, which she deposited into her personal account; and second, the fourth company in the lawsuit, MK Investing, transferred its assets to MIK Advanta LLC, a new company that Marvin had created.
Regions filed a second complaint against the Kaplans and their companies to recover this transferred money. As relevant to this appeal, it sought to hold Kathryn liable for the value of the transfers to her under Florida’s fraudulent transfer act, Fla. Stat. Ann. § 726.101 et seq., and Advanta liable for its judgment against MK Investing as a successor in liability. A bench trial ensued. The Kaplans contended that the transfers to Kathryn comprised a loan that she repaid with interest and, alternatively, that even if the transactions were fraudulent, her act of returning the money precluded Regions from recovering against her. They also disputed that Advanta was a successor to MK Investing and sought to frame the transfers to Advanta as either loans or non-fraudulent transfers.
The district court ruled in favor of Regions on both of its claims. The court determined that the evidence overwhelmingly established that the transfers to Kathryn were fraudulent conveyances, not bona fide loans. It found that the Kaplans had originally reported the transfers as “distributions” on the tax returns for Triple Net, BNK, and R1A. It was only during the 2012 lawsuit that Marvin amended the returns to re-characterize the transfers as loans. The Kaplans also could not identify any documents contemporaneous with the transfers that evidenced a loan. Finally, the district court found that Marvin’s testimony was not credible. According to the district court, Marvin initially could not decide whether the transfers were loans. And after he later asserted that the transfers were loans, he “didn’t know the interest rate for the loans, didn’t know the maturity date for the loans, and didn’t know if Kathryn repaid the loans.”
The district court also rejected Kathryn’s contention that she returned the property by transferring $794,153.22 through various sources to a trust account that paid the companies’ legal fees. It first found that the Kaplans’ companies owed at most $504,352.11 in legal fees, far less than the amount Kathryn purportedly repaid. Moreover, the district court explained, Marvin admitted that the excess amount of the “repayment” found its way to a different trust that “held the money for Kathryn.” According to the district court, nobody offered a cogent explanation for why Kathryn paid excess money in the first place. Instead, the district court found that these “confusing and circuitous conveyances emit the unmistakable odor of fraud.”
Finally, the district court ruled that Advanta was a legal successor to MK Investing. It found that Marvin owned and “managed the two companies, which both operate from Marvin’s personal office and transact the same business.” The district court also found that MK Investing transferred its assets to Advanta. According to the district court, “[t]he shared assets, office, management, and ownership confirm Regions’ claim that [Advanta] amounts to a ‘mere continuation’ of [MK Investing] under a different name.” Because Advanta was a successor to MK Investing, the court also entered a judgment against it for $1,505,145.93, the amount MK Investing owed to Regions.
Kathryn and Advanta appeal these rulings. “After a bench trial, we review the district court’s conclusions of law de novo and the district court’s factual findings for clear error.” Crystal Entm’t & Filmworks, Inc. v. Jurado, 643 F.3d 1313, 1319 (11th Cir. 2011) (internal quotation marks omitted). We also “review de novo the application of law to those facts.” Harris v. Schonbrun, 773 F.3d 1180, 1182 (11th Cir. 2014). “A factual finding is clearly erroneous only if we are left with the definite and firm conviction that a mistake has been committed.” Id. (internal quotation marks omitted).
Kathryn challenges the district court’s judgment against her for the amount she received from Triple Net, BNK, and R1A. When a debtor transfers property “[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor,” creditors can hold the transferee liable. Fla. Stat. Ann. §§ 726.105(1)(a), 726.108(1)(b). Kathryn does not dispute the evidence at trial that supported the district court’s finding that she and Marvin made the transfers to avoid an impending judgment against their companies. She instead contends that this evidence is “wholly irrelevant” because she “repaid” the money. We disagree.
Even if returning a fraudulent conveyance could relieve a transferee of liability—and nothing in Florida’s fraudulent transfer act suggests that it could—Kathryn has not established that the district court clearly erred when it found that she did not actually repay anything. To start, Marvin testified that some of Kathryn’s “repayment” went to a trust that acted in her benefit, not the benefit of their companies. More importantly, the transfer does not even appear to have been entirely Kathryn’s money. For example, eight days before Kathryn “repaid” more than $700,000 of the alleged loan, she received two deposits that totaled $718,455 in her account. The Kaplans never conclusively identified the source of this deposit. Kathryn first testified that the funds came from Triple Net, BNK, and R1A—that is, the very companies she purportedly repaid. She later said that the money came from a property sale but could not identify the property or the purchaser. Marvin suggested it might have come from selling an ice rink, but he could not identify the buyer. Because Kathryn has not established that she owned the money she “returned,” she has not established that the district court clearly erred when it found that no repayment occurred.
The district court also did not err when it concluded that Advanta was a legal successor to MK Investing. If a corporation is a “mere continuation” of another company, the successor company is liable for the debts of the former company. Amjad Munim, M.D., P.A. v. Azar, 648 So. 2d 145, 151 (Fla. Ct. App. 1994) (internal quotation marks omitted). Mere continuation occurs when the “purchasing corporation is merely a ‘new hat’ for the seller, with the same or similar entity or ownership.” Id. at 154 (internal quotation marks omitted). “The key element of a continuation is a common identity of the officers, directors and stockholders in the selling and purchasing corporation. The change is in form, but not in substance.” Id. (citation omitted). Advanta does not contest the district court’s finding that it and MK Investing shared the same office, management, ownership, and business purpose. And although Advanta purports to challenge the district court’s finding that MK Investing transferred its assets to it, it admits that it received most of MK Investing’s assets.
For all but two of the relevant transfers, Advanta protests only that the transfers were not fraudulent conveyances, which is irrelevant to continuation liability. See id. at 153 (“Proof of fraudulent intent is not an integral element of [successor liability].”). Advanta also does not dispute that one of the two remaining transfers—a transfer of $214,263.16 in 2012—occurred. It asserts only that MK Investing did not directly transfer those assets to it and instead used a series of IRA redemptions. But the presence of a middleman is also not relevant to continuation liability. Advanta also argues that the other remaining transfer between the companies—a transfer of $73,973.21 in 2015—was a loan that it repaid. But it offers no evidence for this assertion other than Marvin’s testimony, which the district court discredited. So it has not shown clear error. See United States v. Ramirez-Chilel, 289 F.3d 744, 749 (11th Cir. 2002) (“[A] trial judge’s choice of whom to believe is conclusive on the appellate court unless the judge credits exceedingly improbable testimony.” (alteration omitted) (internal quotation marks omitted)). Because the district court did not clearly err when it found that Advanta took all of MK Investing’s assets and that the two companies shared the same office, management, ownership, and business purpose, it did not err when it ruled that Advanta was a continuation of MK Investing. See, e.g., Serchay v. NTS Fort Lauderdale Office Joint Venture, 707 So. 2d 958, 960 (Fla. Ct. App. 1998) (finding a “clear continuation” where the successor company had “the same assets, management, personnel, stockholders, location, equipment, and clients” as its predecessor company).
We AFFIRM the judgment in favor of Regions.
No. 18-14010
02-19-2020
REGIONS BANK, an Alabama Banking Corporation, Plaintiff-Appellee, v. KATHRYN KAPLAN, R1A PALMS, LLC, et al., Defendants-Appellants.
[DO NOT PUBLISH] D.C. Docket No. 8:16-cv-02867-SDM-AAS Appeal from the United States District Court for the Middle District of Florida Before WILLIAM PRYOR, JILL PRYOR, and LUCK, Circuit Judges. PER CURIAM:
Kathryn Kaplan and several companies that she and her husband, Marvin Kaplan, own appeal the district court’s judgment against them in favor of Regions Bank.
The district court ruled that three of the Kaplans’ companies had fraudulently conveyed $742,543 to Kathryn to avoid paying Regions for preexisting debt.
It also ruled that MIK Advanta LLC, another one of the Kaplans’ companies, was a legal successor of yet another Kaplan-owned company, MK Investing, that owed Regions $1,505,145.93.
We affirm.
In 2012, Regions sued Marvin and four of his companies for liability stemming from debts that his companies owed. Regions prevailed and secured over $7 million in judgments against the Kaplans’ various companies.
While the 2012 lawsuit was pending, Regions discovered that the Kaplans had completed two sets of transactions to jettison money from their companies: first, three of the Kaplans’ companies in the 2012 lawsuit—Triple Net Exchange, BNK Smith, and R1A Palms—wrote a series of checks to Kathryn that totaled $742,543, which she deposited into her personal account; and second, the fourth company in the lawsuit, MK Investing, transferred its assets to MIK Advanta LLC, a new company that Marvin had created.
Regions filed a second complaint against the Kaplans and their companies to recover this transferred money. As relevant to this appeal, it sought to hold Kathryn liable for the value of the transfers to her under Florida’s fraudulent transfer act, Fla. Stat. Ann. § 726.101 et seq., and Advanta liable for its judgment against MK Investing as a successor in liability.
A bench trial ensued. The Kaplans contended that the transfers to Kathryn comprised a loan that she repaid with interest and, alternatively, that even if the transactions were fraudulent, her act of returning the money precluded Regions from recovering against her.
They also disputed that Advanta was a successor to MK Investing and sought to frame the transfers to Advanta as either loans or non-fraudulent transfers.
The district court ruled in favor of Regions on both of its claims. The court determined that the evidence overwhelmingly established that the transfers to Kathryn were fraudulent conveyances, not bona fide loans.
It found that the Kaplans had originally reported the transfers as “distributions” on the tax returns for Triple Net, BNK, and R1A. It was only during the 2012 lawsuit that Marvin amended the returns to re-characterize the transfers as loans.
The Kaplans also could not identify any documents contemporaneous with the transfers that evidenced a loan. Finally, the district court found that Marvin’s testimony was not credible. According to the district court, Marvin initially could not decide whether the transfers were loans.
And after he later asserted that the transfers were loans, he “didn’t know the interest rate for the loans, didn’t know the maturity date for the loans, and didn’t know if Kathryn repaid the loans.”
The district court also rejected Kathryn’s contention that she returned the property by transferring $794,153.22 through various sources to a trust account that paid the companies’ legal fees. It first found that the Kaplans’ companies owed at most $504,352.11 in legal fees, far less than the amount Kathryn purportedly repaid.
Moreover, the district court explained, Marvin admitted that the excess amount of the “repayment” found its way to a different trust that “held the money for Kathryn.” According to the district court, nobody offered a cogent explanation for why Kathryn paid excess money in the first place.
Instead, the district court found that these “confusing and circuitous conveyances emit the unmistakable odor of fraud.”
Finally, the district court ruled that Advanta was a legal successor to MK Investing. It found that Marvin owned and “managed the two companies, which both operate from Marvin’s personal office and transact the same business.”
The district court also found that MK Investing transferred its assets to Advanta. According to the district court, “[t]he shared assets, office, management, and ownership confirm Regions’ claim that [Advanta] amounts to a ‘mere continuation’ of [MK Investing] under a different name.” Because Advanta was a successor to MK Investing, the court also entered a judgment against it for $1,505,145.93, the amount MK Investing owed to Regions.
Kathryn and Advanta appeal these rulings. “After a bench trial, we review the district court’s conclusions of law de novo and the district court’s factual findings for clear error.” Crystal Entm’t & Filmworks, Inc. v. Jurado, 643 F.3d 1313, 1319 (11th Cir. 2011) (internal quotation marks omitted). We also “review de novo the application of law to those facts.” Harris v. Schonbrun, 773 F.3d 1180, 1182 (11th Cir. 2014). “A factual finding is clearly erroneous only if we are left with the definite and firm conviction that a mistake has been committed.” Id. (internal quotation marks omitted).
Kathryn challenges the district court’s judgment against her for the amount she received from Triple Net, BNK, and R1A. When a debtor transfers property “[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor,” creditors can hold the transferee liable. Fla. Stat. Ann. §§ 726.105(1)(a), 726.108(1)(b).
Kathryn does not dispute the evidence at trial that supported the district court’s finding that she and Marvin made the transfers to avoid an impending judgment against their companies. She instead contends that this evidence is “wholly irrelevant” because she “repaid” the money. We disagree.
Even if returning a fraudulent conveyance could relieve a transferee of liability—and nothing in Florida’s fraudulent transfer act suggests that it could—Kathryn has not established that the district court clearly erred when it found that she did not actually repay anything.
To start, Marvin testified that some of Kathryn’s “repayment” went to a trust that acted in her benefit, not the benefit of their companies. More importantly, the transfer does not even appear to have been Kathryn’s money.
Of the $796,212.67 “repayment,” $76,212.67 came from Advanta. And eight days before Kathryn transferred the remaining $720,000, she received a $718,455 deposit in her account. The Kaplans never conclusively identified the source of this deposit.
Kathryn first testified that the funds came from Triple Net, BNK, and R1A—that is, the very companies she purportedly repaid. She later said that the money came from a property sale but could not identify the property or the purchaser.
Marvin suggested it might have come from selling an ice rink, but he could not identify the buyer.
Because Kathryn has not established that she owned the money she “returned,” she has not established that the district court clearly erred when it found that no repayment occurred.
The district court also did not err when it concluded that Advanta was a legal successor to MK Investing. If a corporation is a “mere continuation” of another company, the successor company is liable for the debts of the former company. Amjad Munim, M.D., P.A. v. Azar, 648 So. 2d 145, 151 (Fla. Ct. App. 1994) (internal quotation marks omitted). Mere continuation occurs when the “purchasing corporation is merely a ‘new hat’ for the seller, with the same or similar entity or ownership.” Id. at 154 (internal quotation marks omitted).
“The key element of a continuation is a common identity of the officers, directors and stockholders in the selling and purchasing corporation. The change is in form, but not in substance.” Id. (citation omitted).
Advanta does not contest the district court’s finding that it and MK Investing shared the same office, management, ownership, and business purpose. And although Advanta purports to challenge the district court’s finding that MK Investing transferred its assets to it, it admits that it received most of MK Investing’s assets.
For all but two of the relevant transfers, Advanta protests only that the transfers were not fraudulent conveyances, which is irrelevant to continuation liability. See id. at 153 (“Proof of fraudulent intent is not an integral element of [successor liability].”).
Advanta also does not dispute that one of the two remaining transfers—a transfer of $214,263.16 in 2012—occurred.
It asserts only that MK Investing did not directly transfer those assets to it and instead used a series of IRA redemptions. But the presence of a middleman is also not relevant to continuation liability.
Advanta also argues that the other remaining transfer between the companies—a transfer of $73,973.21 in 2015—was a loan that it repaid.
But it offers no evidence for this assertion other than Marvin’s testimony, which the district court discredited.
So it has not shown clear error. See United States v. Ramirez-Chilel, 289 F.3d 744, 749 (11th Cir. 2002) (“[A] trial judge’s choice of whom to believe is conclusive on the appellate court unless the judge credits exceedingly improbable testimony.” (alteration omitted) (internal quotation marks omitted)).
Because the district court did not clearly err when it found that Advanta took all of MK Investing’s assets and that the two companies shared the same office, management, ownership, and business purpose, it did not err when it ruled that Advanta was a continuation of MK Investing.
See, e.g., Serchay v. NTS Fort Lauderdale Office Joint Venture, 707 So. 2d 958, 960 (Fla. Ct. App. 1998) (finding a “clear continuation” where the successor company had “the same assets, management, personnel, stockholders, location, equipment, and clients” as its predecessor company).
We AFFIRM the judgment in favor of Regions.
James D. Whittemore, presiding
Julie S. Sneed, referral
Date filed: 10/01/2014
Date terminated: 12/11/2015
Date of last filing: 12/11/2015
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Answer to Complaint |
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Case Management Report |
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Answer to Complaint |
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Motion to Quash |
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Order referring motion to Magistrate Judge for disposition |
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Order on Motion to Quash |
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Motion to Quash |
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Response in Opposition to Motion |
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Order on Motion to Quash |
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Stipulation |
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Motion to Quash |
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Motion to Compel |
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Response in Opposition to Motion |
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Notice of hearing on motion |
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Notice of appearance |
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Witness List |
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Response in Opposition to Motion |
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Order on Motion to Appear Telephonically |
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Notice of hearing on motion |
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Motion Hearing |
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Order on Motion to Compel |
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Motion for Extension of Time to Complete Discovery |
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Notice of mediation conference/hearing |
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Order on Motion for Extension of Time to Complete Discovery |
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Appearance of non-resident counsel |
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Motion to Appear Pro Hac Vice |
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Order on Motion to Appear Pro Hac Vice |
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Mediation report |
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Motion to Extend Time |
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Order on Motion to Extend Time |
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Motion for Extension of Time to Complete Discovery |
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Order on Motion for Extension of Time to Complete Discovery |
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Compliance notice |
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Stipulation of Dismissal |
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Order dismissing case |
Kaplan v Regions Bank (ongoing 2020)
Ellenton Ice and Sports Complex sells for $7 million
Originally Published: May 10, 2016
ELLENTON — As of Friday, Manatee County Supervisor of Elections Mike Bennett and his business partner Marvin Kaplan put their pucks and skates away.
Under the name of their company MJ Squared LLC, the owners sold the Ellenton Ice and Sports Complex to Space Coast Iceplex owner Matt Smith for “just at $7 million,” Bennett said.
Three different parties were interested in the complex, Bennett said, and the MJ Squared partners chose Space Coast because of its track record.
The Space Coast Iceplex is in Rockledge, about half an hour from the Kennedy Space Center on the east coast. The Space Coast facility, according to its website, has an Olympic-size ice surface, a pro shop, a space academy, a fitness center and a dance studio, a snack bar, a sports bar, multi-use party rooms and skate sharpening services.
Smith’s experience running an ice rink made him the ideal candidate.
“These people are experienced operators,” Bennett said.
Although the former state senator said in the past that the complex was his most profitable Florida business and he wasn’t interested in selling it, he told the Bradenton Herald in 2013 that the right amount of money could change his mind. The $7 million offer plus Smith’s background turned the corner.
“We felt someone else could probably take it to the next level,” Bennett said of the decision to sell.
The partners took over the Ellenton ice rink in October 2005 after they purchased a $5 million mortgage from originator Regions Bank.
The 115,000 square-foot Ellenton Ice Complex, next to Ellenton Premium Outlets off Interstate 75, houses two National Hockey League-size ice rinks, a 13,500-square-foot indoor turf field, a fitness center, a video game room, conference rooms, a concessions area, multi-use party rooms, a pro shop and a massage therapy studio.
MJ Squared LLC also owns two parcels totaling 9.41 acres just north of Ellenton Ice Complex. The property, along with three other parcels owned by Kaplan’s Mik Advanta LLC and totaling almost 5 acres, is listed on commercial real estate website LoopNet as a $6.5 million “great development opportunity for a hospitality.” Kaplan’s son Brett Kaplan is the listing broker listed on LoopNet.
Smith could not be reached for comment Tuesday.
MJ Squared LLC sold the Ellenton Ice and Sports Complex to Space Coast Iceplex owner Matt Smith for $7 million.
Kaplan alleges how he was scammed
Sarasota real estate investor Marvin Kaplan has lost about $22 million in what his attorney alleges to be a Ponzi scheme involving Sarasota entrepreneur Larry Starr.
Originally Published: May 30, 2012
After being criminally accused in late January by Regions Bank of orchestrating a $10 million check kiting scheme, prominent Sarasota real estate investor, developer and entrepreneur Marvin Kaplan is speaking out.
Kaplan says in a 46-page counterclaim filed Wednesday in the 12th Circuit Court in Sarasota he orchestrated nothing.
Kaplan alleges, with specific chronological details, that Larry Starr, a longtime Sarasota and Longboat Key tourism entrepreneur and one-time Business Review entrepreneur of the year, along with the owners of Fayettville, N.C.-based Smith Advertising & Associates conspired in a Ponzi scheme that duped Kaplan.
And that scheme unraveled in January, Kaplan’s counterclaim alleges, when Regions Bank mishandled Kaplan’s checks, ultimately costing Kaplan a loss of about $22 million in four days.
What’s more, Kaplan’s counterclaim says the Starr-Smith Advertising scheme is likely to have fleeced investors in multiple states out of as much as $400 million.
Kaplan’s counterclaim also takes aim at Regions Bank, accusing the bank of systematically defaming Kaplan, of invasion of privacy and negligent misrepresentation when the bank publicly accused Kaplan of check kiting. This was done, Kaplan alleges, to divert attention away from the bank’s faulty check-handling procedures, procedures that ultimately led Kaplan’s lawyer to uncovering the alleged Ponzi scheme.
The three counts leveled against Regions in Kaplan’s counterclaim were among 22 counts total he filed against Starr; Smith Advertising; its owners, Gary, Todd and Lucy Smith; Wells Fargo Bank; Bridgeview Bank in Illinois; the Florida Bankers Association; and Regions Bank security official Robert Nicholas Shaw. The counts ranged from fraud, racketeering, improper handling of checks, mail fraud and misappropriation of funds.
Editor’s Note
In the following text, the Business Review presents Kaplan’s counterclaim in its entirety. Kaplan’s attorney, Jon Parrish, a partner in the Naples law firm of Parrish, Lawhon and Yarnell, prepared the counterclaim after more than 80 hours of piecing together the chronology and events of Kaplan’s involvement with Starr, Smith Advertising and its owners.
The narrative that follows is Parrish’s version of what occurred, based on discussions with his client, Kaplan, and Parrish’s research of bank records and other information. Kaplan declined to speak to the Business Review on advice of his lawyer.
All accusations and statements in the narrative are those made by Kaplan and his attorney in Kaplan’s counterclaim.
Neither Gary, Todd nor Lucy B. Smith could be reached for comment.
Linda Carlson and Robert Nicholas Shaw of Regions Bank could not be reached for comment. Mel Campbell, a spokesman for Regions Bank, said the bank does not comment on pending litigation.
Kathy Harrison, a spokeswoman for Wells Fargo, said the bank would be unable to respond until after its attorneys review Kaplan’s claims.
Bridgeview Bank did not return the Business Review’s call for comment. The Florida Bankers Association did not respond before press time.
The Facts, as alleged in the counterclaim
The Pitch
In or around August, 2009, Kaplan relocated his business operations to an executive office suite in downtown Sarasota, owned and managed by longtime Sarasota entrepreneur and real estate investor Larry Starr.
Prior to that August, Kaplan did not otherwise know Starr and had only met him on one other occasion.
Shortly after Kaplan had moved into the office suites, Starr approached him and began to pitch an investment opportunity. As Starr explained, the opportunity involved the Smiths and their company, Smith Advertising & Associates.
Starr represented that he knew it was safe to invest with SAA and the Smiths because he was a long-term friend of the Smiths, had a 20-year history with them and was also a successful investor with them.
Starr explained that the Smiths and SAA wanted Kaplan or his companies to provide financing to them to allow them to take advantage of certain early payment discounts on private printing contracts.
According to Starr, the Smiths and SAA needed the financing because SAA was a successful and expanding company that needed capital to take advantage of discounts that it was offered on such contracts.
Starr explained that SAA’s business was to act as a kind of middleman or broker between printers and entities that sought printing services for their advertising needs. He explained that customers would order print material from SAA and that SAA would then, in turn, enter into contracts with printing vendors to produce the materials, with a profit to SAA on the transaction.
Once the materials were printed, SAA would obtain them from the printer, deliver them to the customer and, in 30 days, receive payment, which it would use to pay the vendors, keeping a percentage for itself.
Starr explained that because the print vendors preferred to receive payment for their services up front, they routinely offered SAA early payment discounts of about 10% of the total cost of the contract if SAA would pay for the printing work in advance.
Starr explained that, while the Smiths and SAA could not afford to fund all of these large pre-payments alone, they were able to do so in partnership with investors.
Starr explained that the Smiths and SAA were requesting that investors advance half of the required early payment amount for any given print contract and that the Smiths and/or SAA would advance the other half.
According to Starr, this money would be paid immediately to the vendor to obtain the 10% discount.
The investor would immediately receive his share of the 10% discount via a check from SAA. The investor would also receive a promissory note or notes guaranteed by G. Smith and T. Smith and one or more checks representing the return of the principal. These checks were to be cashed after the 30-day period had expired and SAA had received payment from the customer.
The investor would then wait the 30 days until SAA received the payment back from the customer and then the investor would deposit the checks (with the 10% return) into his accounts.
Starr said that this investment offered no real risk because the customers were all governmental or quasi-governmental agencies and always paid their bills.
He also represented that the Smiths and SAA had been in the publishing business for more that 30 years, had a distinguished list of clientele that included a large number of governmental tourist agencies and quasi-governmental agencies, that he had invested a large sum of money with the Smiths and SAA himself and had always received the promised returns.
Starr then offered to introduce Kaplan to the Smiths and SAA.
The unknown reality
Kaplan’s counterclaim further states:
Although Kaplan and his investment companies were not aware of it at the time, Kaplan’s counterclaim alleges that Starr, the Smiths and SAA, along with the conscious and knowing support of Bridgeview — all referred to in the counterclaim as “the conspirators” — orchestrated and developed a Ponzi-type scheme designed to defraud Kaplan, his investment companies and others.
The investment that was pitched was a fiction. It did not really exist and was designed to fraudulently induce Kaplan, the investment companies and many others to give money to the conspirators.
The conspirators would then take some or all of the money or compensation for themselves, constantly cycling and floating what remained among many victims to maintain the illusion that the fictional investments were paying off and to induce still more investment into the scheme.
Bridgeview, an Illinois bank, was directly complicit in this scheme, allowing the other conspirators to utilize it as a repository and accounting system for the fraud for what is believed to be many years in exchange for compensation.
Bridgeview and its employees were direct and knowing participants in the scheme with knowledge of the activities and directly participating in the fraud by actively transferring money between accounts, floating checks to facilitate the fraud and by inducing investors to wire funds by manipulating and false statements.
Says Kaplan’s counterclaim: All of Starr’s, the Smiths’ and SAA’s statements to Kaplan and the investment companies were false, and they knew them to be false, as all were direct participants in the fraud and received undisclosed compensation and kickbacks for bringing money into the scheme.
Unbeknown to Kaplan and the investment companies, the counterclaim says, Starr was an experienced con artist who had previously been convicted in Vermont for engaging in a mail fraud scheme with his father.
That conviction was overturned, but Kaplan’s counterclaim says the factual findings of the court at the time demonstrate that Starr attempted to and succeeded in defrauding the U.S. Post Office of hundreds of thousands of dollars.
Later, Starr moved to Florida and obtained a position on the Sarasota Tourism Convention and Visitors Bureau (STCVB). While there, he had contact with the Smiths and SAA and served on the board of STCVB at a time when it dismissed and terminated further business dealings with the Smiths and SAA.
Contrary to Starr’s misrepresentations to Kaplan and the investment companies, Starr, in collusion with the Smiths and SAA, would target individuals like him and his companies and offer them the bogus investment outlined above in to steal money.
Starr knew that the printing contracts and the customers that the conspirators said that they had did not actually exist. It is believed, the counterclaim says, that Starr either participated in developing or developed the fraudulent scheme himself, using his knowledge of the industry as a base and then creating exaggerated contracts to take in money for the scheme.
SAA may have had some much smaller real business, however the conspirators used this small base to fabricate contracts with customers and vendors that looked real but were actually forgeries and which often were many times larger than any real contract could or would be.
The conspirators lured Kaplan, the investment companies and many others to invest money under the scheme and then to increase their investments more and more, using the aforementioned mis-representations, all the while siphoning off large amounts for their own use and benefit.
As each subsequent bogus contract would come due to be paid, the conspirators would present new contracts to their “marks” to replace the old ones, keeping investors like Kaplan and the investment companies in play and keeping the principal in their own hands, by causing the marks to believe that their money was constantly growing.
At the same time, the conspirators would also pitch new contracts, constantly inducing investors like Kaplan and the investment companies to invest more “new” money as the paper profits on the old money seemed to grow.
Investors who would leave or briefly stop would be paid, using the money supplied by the constant influx of new money and new marks. This increased the credibility of the scheme and induced more re-investment.
The conspirators continuously stole a large portion of the invested money, leaving only enough to fund fluctuations in investment and cloak the fraud.
The object of the scheme was to increase the amount of new money invested as that increased the amount the conspirators could steal or siphon off without revealing the scheme.
It is believed that this scheme was widespread, operating over many states and with many investors like Kaplan and the investment companies. It was a massive Ponzi scheme involving perhaps $400 million or more.
Kaplan’s Initial ‘Investment’
The counterclaim goes on to say:
Unaware of the fact that he would be caught in a Ponzi scheme, Kaplan agreed to and did discuss investing with the Smiths and SAA.
In those discussions, the Smiths and SAA reiterated all that Starr had told Kaplan and confirmed the arrangement was as Starr had explained it.
In reliance upon all of these false and fraudulent representations by the conspirators, Kaplan agreed to invest personally an initial sum of $50,000 in or about August 2009.
Of course, this initial investment appeared to go as planned and as promised by the conspirators, who sought to get more money from Kaplan.
As a result of the apparent success, Kaplan caused his investment companies to begin investing with the Smiths and SAA.
Over a period of several months, the investment companies participated in more and more contracts with the Smiths and SAA, all the time believing they were receiving the promised returns and that things were going as the conspirators had promised.
Over this time, the Smiths and SAA continued to offer more and more investments and to renew the old ones, urging Kaplan through the investment companies to take new contracts upon the expiration of each prior contract, leaving the principal sum to “ride” from contract to contract.
Because of this, instead of depositing the checks when they were due at the end of the 30 days, the investment companies would hold them (if they had not expired) or discard them, and Smith and SAA would issue new ones (if they had expired) on new contracts.
Over time, as the investment companies began to realize more and more paper returns, the Smiths and SAA would consistently urge Kaplan to reinvest both the returns that the investment companies had made as well as new money into the deals.
By November 2011, the investment companies had more than $7 million collectively invested and/or re-invested with the Smiths and SAA.
Upping the Ante
Kaplan’s counterclaim goes on to state:
For several months leading to November, the investment companies had not added any “new” money to their deals, preferring to let the “investments” grow without putting in new capital.
Because the Ponzi scheme relied upon the influx of new money and growth to survive, T. Smith contacted Kaplan and presented a “new” idea to try to get Kaplan and the investment companies to make additional infusions.
T. Smith explained to Kaplan and the investment companies that he had developed a new and better method to earn even larger returns, stating that he had found a way to bunch printers together in multiple contract deals and to time the payments that were to be received from customers in such a way that he could obtain discounts in shorter time frames, some in as little as 24 hours, thus substantially increasing the rate of return.
However, T. Smith and SAA added that, because they were multiple contract deals, the investment would have to be larger. To participate in these larger contracts, the investment companies would therefore have to invest more new money.
This new scheme was also complete fiction. However, unaware of this fact and based upon all the perceived prior successes, Kaplan and the investment companies agreed to the new arrangement and infused substantial additional capital into the Ponzi scheme.
The new or “Second” scheme differed somewhat from the first.
Under it, the investment companies would agree to a smaller number of larger, consolidated deals for the same type of pre-payment discounts.
However, according to T. Smith and SAA, SAA would obtain the same 10% discounts from the vendors immediately before it expected the customer to pay and only needed “bridge” funds for a short time.
As a result, the investment companies were to wire funds from their bank accounts to SAA’s account at Bridgeview.
The Smiths and SAA would Fedex down the contracts and checks for these new transactions, to be received by the investment companies on the day they sent the wire(s) to the Bridgeview account. The contracts would provide for the deposit of the checks shortly thereafter, supposedly after SAA had received the customer payment.
Because these new transactions were so large, involving wires of more than $250,000, the investment companies were forced to establish a new banking relationship with Regions Bank because the previous lender would not do wires greater than that.
As a result, each of the investment companies opened an account with Regions Bank in November 2011.
As of that time, the investment companies had no prior banking or credit relationship with Regions, and Kaplan only had a small personal checking account at the bank with his wife.
Under the second arrangement, the contracts with SAA and the Smiths were grouped into two to three main groupings, and the investment companies would make new investments every few days.
The timing of the deals was such that the investment companies would wire up funds for each successive deal as Regions would advise Kaplan’s investment companies that the checks from the prior deal had cleared, and the money was in the bank to wire.
From November 2011 through Jan. 20, the investment companies continued to invest and re-invest in these contracts and, through the infusion of new capital and the returns, their total investment grew to approximately $22 million.
The Final Days
The First Deal
Kaplan’s counterclaim further states:
On Jan. 19, the investment companies agreed to invest funds in one of these bridge deals with T. Smith and SAA, with each of the four investment companies investing separate funds in separate contracts.
On the morning of Jan. 20, four of Kaplan’s investment companies wired $9.7 million from accounts at Regions to SAA’s account at Bridgeview.
In particular:
• R1A invested $6.6 million in 13 contracts.
• TNE invested $1,6 millioin in three contracts .
• MKI invested $1.1 million in three contracts.
• BNK invested $400,000 in one contract.
According to the contracts, the money was to be repaid later that day, and the investment companies received checks for repayment by Federal Express that morning, as well as checks for the payment of interest and certain incentive checks.
In particular:
• R1A received $7,395,125.
• TNE received $1,760,000.
• MKI received $1,124,000.
• BNK received $443,375.
The investment companies deposited the checks on Jan. 20.
The Second Deal
According to the counterclaim:
After the checks from the first deal were deposited in Kaplan’s companies’ accounts, T. Smith and SAA immediately requested that the investment companies invest in another “bridge” deal to occur on Jan. 23, and the investment companies agreed to do so. Again, each of the four investment companies agreed to invest separate funds in separate contracts, providing that the funds from the previous deal had cleared.
On the morning of Jan. 23, Kaplan, on behalf of the investment companies, reviewed the accounts with Regions and found that Regions had cleared all of the previously deposited checks.
Believing that the investment companies had been repaid for the prior transaction because Regions had so represented, the investment companies wired $10.45 million to SAA’s account at Bridgeview.
In particular:
• R1A invested $7 million in 14 contracts.
• TNE invested $1.8 million in three contracts.
• MKI invested $1.25 million in three contracts.
• BNK invested $500,000 in one contract.
According to the contracts, the money was to be repaid later that day, and the investment companies received checks for repayment by Federal Express that morning, as well as checks for the payment of interest and certain incentive checks.
In particular:
• R1A received $8,044,660.
• TNE received $2,009,700.
• MKI received $1,395,000.
• BNK received $556,675.
The Third Deal
According to the counterclaim:
On Jan 23, T. Smith and SAA again requested that the investment companies invest in a third bridge deal to occur on Jan. 24, and the investment companies agreed to do so.
The investment companies deposited the checks from the second deal into their Regions accounts. However, Regions placed a hold on the checks and declined to credit them that day.
As a result, the investment companies advised T. Smith and SAA that they did not have sufficient funds to invest in the third deal.
At this point, T. Smith and SAA suggested that because the third deal was so time sensitive, rather than wait for the second set of checks to clear, they could simply stop payment on those checks relating to the return of principal from the second deal and use those funds, supposedly still in the Bridgeview account, to do the third deal.
Because the total investment amount for the third deal was $500,000 less than the total amount of the principal returned with the second set of checks, R1A’s contribution was $500,000 less. T. Smith and SAA agreed to wire back $500,000 to the R1A account at Regions to account for the difference.
Because the investment companies still believed that they had funds in their own accounts, they agreed to this procedure, and T. Smith wired $500,000 to R1A and, presumably, stopped payment on the principal checks from the second deal on Jan. 24.
On Jan. 24, the investment companies invested in the third deal in the afore-mentioned manner, the total sum of $9.95 million left at Bridgeview to invest.
In particular:
• R1A invested $6.5 million in 12 contracts.
• TNE invested $2 million in four contracts.
• MKI invested $1.45 million in four contracts.
According to the contracts, the money was to be repaid later that day, and the investment companies received checks for repayment, as well as checks for the payment of interest and certain incentive checks. However, the checks for the third deal were not deposited Jan. 24 as planned because Kaplan was unable to get to the bank.
The Fourth Deal
Kaplan’s counterclaim further states:
On Jan. 24, still believing that the investment companies had been repaid for the first transaction because Regions had so represented, R1A wired an additional $2 million to SAA’s account at Bridgeview for a smaller fourth deal that had been discussed with T. Smith and SAA.
The parties agreed that under this smaller fourth deal, R1A would send $2 million for contracts valued at $2.25 million, and that the $225,000 plus a $25,000 incentive bonus would just be deducted from the money sent up rather than checks be sent down for that from SAA.
R1A invested the $2 million in five contracts.
According to the contracts for the smaller fourth deal, the money was to be repaid on Jan. 25.
A hole in the dike
According to the counterclaim:
Late in the day Jan. 24, T. Smith and SAA called Kaplan. T. Smith advised Kaplan that Bridgeview had frozen all of SAA’s accounts after T. Smith had issued the stop payment on the checks from the second deal.
He told Kaplan that neither he nor SAA could move any money in or out of the Bridgeview accounts.
He advised Kaplan to wait while he took action to correct the problem.
Kaplan agreed.
The next morning, Jan. 25, Kaplan and the investment companies received a call from Linda Carlson, manager of the Regions Bank branch where Kaplan had deposited the funds from the first deal.
Carlson advised Kaplan and the investment companies that the funds that had been deposited Jan. 20 had not cleared and that the checks were being returned.
Kaplan and the investment companies were shocked to learn this, because Regions previously had represented that the funds from these checks had cleared.
Kaplan and the investment companies immediately inquired of Carlson why the checks had been returned and were told that the checks were returned “Refer to Maker,” not “Insufficient Funds” or some reason that would indicate that there was a problem with funds availability.
Kaplan immediately contacted T. Smith and SAA, the maker, and was advised that the problem was the same as the one he had informed Kaplan of the night before — that Bridgeview had wrongfully placed a hold on all of the SAA accounts. He advised that he was working on the problem and asked Kaplan and the investment companies to be patient.
At this point, T. Smith began to express concern to Kaplan about his fears of what would happen if this problem became public knowledge to his customers or his vendors.
T. Smith advised that he could not tell whether he was getting payments from customers because he could not see his account and that, if they discovered he was having a problem, they would hold payments still longer, destroying his business and reputation. In addition, his vendors would cease production and cease to work with him.
He stressed that Kaplan should keep this quiet, or SAA would be unable to repay Kaplan, the investment companies or anyone else.
What Kaplan and the investment companies were unaware of was that the Smiths and SAA were buying time to try to correct what was, basically, a hole in the dike that could lead to the collapse of the entire criminal enterprise and the greater Ponzi scheme.
They were buying time in an effort to keep the greater Ponzi scheme alive by correcting whatever problem existed and perpetuating the scheme.
The Smiths and SAA thought that they could get sufficient money from other investors to pay the investment companies off and allow the Ponzi scheme to continue.
What they told Kaplan and the investment companies was they just needed to straighten out their customer payment situation and get Kaplan’s companies their money.
Moreover, Kaplan believing that funds were available to the Smiths and SAA and just on hold, took no action because the “Refer to Maker” designation led him to believe that funds were available and would be released at some point.
Regions jumps in
According to the counterclaim:
Later that day, Kaplan received a call from Robert Nicholas Shaw, who professed to be the head of security at Regions Bank. Shaw wanted to know what was happening.
Kaplan told him what he knew, and Shaw asked to speak with T. Smith and SAA.
Kaplan arranged a telephone conference with himself, Shaw and T. Smith.
Kaplan said Shaw became very belligerent with T. Smith and threatened him, telling him that he needed to straighten out the situation right away. Shaw claimed that he was an ex-FBI agent and that he would report the matter to the Secret Service if the money was not returned immediately.
T. Smith and SAA advised that they were not sure what was going on and were working on it.
After the call with Shaw, Smith and SAA contacted Kaplan and the investment companies, asking for time to straighten out the banking problems.
Still unaware of the Ponzi scheme, believing that Smith and SAA had real customers and vendors when they did not and believing that the checks had not been returned due to insufficient funds because they said “refer to maker,” Kaplan advised that he was willing to work with the Smiths and SAA and be patient but that the Regions Bank problem needed to be resolved.
New checks from a new bank
Kaplan’s counterclaim further states:
In response to the concern about Regions, T. Smith and SAA advised Kaplan and the investment companies that they would issue a new set of checks for the first and second deals drawn on a bank account at Wells Fargo and have those checks sent down by a special air flight that day.
T. Smith and SAA did, indeed, send a special courier flight with a replacement set of checks, which arrived late in the day on Jan. 25.
The replacement set of checks was only for the contracts entered into in the second deal and not the first deal.
Kaplan and the investment companies deposited the replacement checks that same evening on Jan. 25. Regions extended its operating hours to allow the checks to be deposited late.
The returned checks
According to the counterclaim:
On or about Jan. 26, the investment companies received formal written notice from Regions of the return of 28 checks that had been returned by Bridgeview with the designation “Refer to Maker” as Carlson had previously reported.
The next day, Friday, Jan. 27, the investment companies received written notice from Regions of the return of a second set of 32 checks from the second deal that had been returned by Bridgeview, also with the designation “Refer to Maker.”
Some of the checks in the second set were checks that Kaplan and the investment companies believed had been stopped by Smith to invest in the third deal.
However, none of the returned checks bore any indication that funds were not available to SAA.
Nor did they provide any basis to cause Kaplan and the investment companies to take any action or disregard what they were being told by T. Smith and SAA.
On Jan. 30, the following Monday, Kaplan received another call from Shaw at Regions.
Shaw advised Kaplan and the investment companies that the third set of checks, drawn on Wells Fargo, had not cleared.
Unbeknown to Kaplan and the investment companies at the time, on that same day, Regions had already filed a lawsuit against Kaplan and was seeking ex-parte relief that included Wells Fargo, the new bank, as a party.
Nor were Kaplan and the investment companies aware that Shaw and Regions had begun what the counterclaim alleges to be “a campaign of systematic defamation against them.”
On or about Jan. 31, the investment companies received written notice from Regions Bank of the return of 21 checks that had been returned by Wells Fargo and which Shaw had reported, all but one also with the designation “Refer to Maker.”
Only one check was returned with the designation “NSF” for insufficient funds.
Kaplan contacted T. Smith and SAA because the designation “Refer to Maker” directed him to do so and was advised that Wells Fargo had frozen SAA’s accounts there as a result of the interference by Regions and that was the reason the latest set of checks had bounced.
This interference was confirmed when Kaplan sought to use money he had transferred to Wells Fargo for an unrelated business transaction and was advised that all of the accounts of his or his businesses had been frozen, including the Lighthouse Point account from which the transaction was to occur.
Regions’ attacks on Kaplan
According to the counterclaim:
On or around Jan. 30, the same day the third set of checks was returned by Wells Fargo, Shaw and Regions began to engage in a campaign of defamation, lies and deceit against Kaplan, designed to discredit him, destroy his reputation and distract attention from Regions’ own failure to follow correct banking procedure, which caused the investment companies to lose millions of dollars.
Despite no evidence or backing, Shaw and other representatives of Regions Bank began to tell other third parties, including Wells Fargo, the Florida Bankers Association and the public that Kaplan and his wife had engaged in criminal conduct, illegal activities and were “check kiters.”
This accusation was blatantly false and was made with absolutely no knowledge or support by Shaw, acting in his capacity as an employee of Regions, according to the counterclaim.
Shaw falsely accused Kaplan and his wife of a criminal act in an alert bulletin sent to the Florida Banker’s Association, including in that alert Kaplan and his wife’s social security numbers, accusing them of fraud, check kiting and criminal conduct and falsely warranting the information to be true and correct when it was absolutely false, the counterclaim states.
Shaw, Regions and their attorneys also sued Kaplan individually without actually bringing a claim against him and repeated the false accusations of check kiting and fraud.
The Kaplan counterclaim states Shaw and Regions were perfectly well aware that there was no basis to suggest that Kaplan and SAA or T. Smith were coordinating a kite or that either Mr. or Mrs. Kaplan was engaged in any fraud.
Shaw and Regions sought only to discredit Kaplan in an effort to distract attention from the fact that, had they followed their own procedures or proper banking practice, the investment companies owned by Kaplan would not have lost millions of dollars to the conspirators because they would have known that the first checks had not cleared Bridgeview and would not have invested, and potentially lost, the additional funds, according to Kaplan’s counterclaim.
It also appears that Shaw and Regions reported Kaplan to the Secret Service and law enforcement for a crime that did not occur, says Kaplan’s counterclaim.
As a result of Shaw and Regions Bank’s conduct, all of Kaplan’s banking accounts, as well as those of any business he was associated with, were frozen at Wells Fargo and Regions, and he has been unable to maintain a banking relationship anywhere for himself or any of his companies.
The Dike Bursts
According to Kaplan’s counterclaim:
In the weeks following the filing of Regions’ lawsuit against Kaplan, Kaplan and the investment companies sought to obtain the return of their money from the conspirators, still not knowing of the Ponzi scheme.
The Smiths and SAA continually reassured Kaplan and the investment companies that they and Regions would be repaid as money came in from the customers.
The Smiths and SAA also continued to stress the need to keep silent to preserve the customer and vendor relationships that would allow the money to be returned. Kaplan and the investment companies tried to comply.
But as the story that had begun with Regions and Shaw’s claims against Kaplan started to reach the public through press accounts, the Smiths and SAA began to make inconsistent comments to the press, indicating that the entire matter was somehow Kaplan’s fault when it clearly was not.
As a result of this and that time was going by with no repayment and repayment dates were consistently missed, Kaplan began to investigate by contacting SAA’s claimed vendors to verify contracts.
Kaplan discovered that the contracts offered by the conspirators were completely fictional and that neither the vendor nor the customer contracts actually existed and that the entire investment was a scam.
It also became apparent to him that the conspirators were trying to cover up the Ponzi scheme by attempting to pay back the investment companies with money raised from other victims.
This was not acceptable to Kaplan, and he and the investment companies immediately asked to meet with the Secret Service and the Tampa district attorney to report all that they knew.
Editor’s Postscript
In an interview Tuesday with the Business Review, Kaplan’s attorney, Jon Parrish, said Kaplan has recovered only about $800,000 since the investment scheme collapsed in late January and early February.
Parrish, who has represented Kaplan on many of his prior real estate investments, said he had been aware of Kaplan’s involvement in the Starr-Smith Advertising scheme prior to Kaplan’s difficulties. But he said he started growing increasingly suspicious of its legitimacy in late January when instead of sending millions of dollars back to Kaplan’s companies, the Smiths sent only $800,000.
“(Todd) Smith began to never fulfill his promises on time,” Parrish says.
Then in late January, after the accusations of check kiting started and payments from the Smiths stopped, everything came to a head. Kaplan was in Parrish’ office.
“Marvin is a very loyal person,” Parrish said. “He was even going back and forth then” on whether he was being duped.
Parrish said he then picked up a copy of an invoice from one of the alleged vendors with which the Smiths were doing business.
“The graphics on the invoice looked kind of weird and hokey,” Parrish recalls. “So I looked up the firm online. The invoice logo was different from the company logo online. So I called the customer.
“He laughed at me when I told him the amount on the invoice,” Parrish said. “When I asked why he laughed, he said, ‘I would remember an invoice that big. It exceeds my whole revenues we have in a year.’”
Parrish said he called a second vendor. “The guy starts laughing,” Parrish said. “He gave me the same exact answer as the first one. I turned to Marvin and said they are all bogus.”
Asked how Kaplan, a sophisticated investor and businessman, did not have suspicions early on that the investment scheme was the proverbial “too good to be true,” Parrish, who has handled similar fraud litigation before, said: “That’s not how it works in the real world. People don’t (question that) when they are getting paid. You get blinded. And the people who do these crimes are some of the most likable people you meet in your life.
“Marvin is a very gentle, loyal kind of person,” Parrish said. “He’s not a suspicious person.” Parrish said that as the scheme began to unravel after two years, Kaplan “sat in front of me, shaking his head, saying, ‘I just can’t see it.’”
According to Marvin Kaplan’s counterclaim, longtime Sarasota businessman Larry Starr approached Kaplan in 2009 about participating in an investment opportunity that generated 10% returns each month.
Informed of the allegations and counts against him in Marvin Kaplan’s countersuit, Sarasota entrepreneur Larry Starr issued the following statement Wednesday afternoon prior to press time:
“I am reluctant to talk about a lawsuit I haven’t seen.
“Marvin dealt with the Smiths directly over a period of years, and whatever decisions he made to invest, he made on his own after talking with the Smiths.
“If the lawsuit is trying to say I’m responsible for his losses with the Smiths, that is simply not true.
“I am a victim of the Smiths just as Marvin is.
“In fact, Marvin just called me and told me the suit was coming. He told me he didn’t want to name me in it and was very uncomfortable having done so, as he didn’t think I had done anything wrong.
“He explained that he is involved in a complicated lawsuit, and only did so on the advice of his lawyers.”
Kaplan’s version
Asked to verify Starr’s comments, Kaplan said:
“I did not say that I didn’t think he was involved. I said I hope everything comes out OK for him, and I hope it’s not as it appears.
“I said, ‘Larry, I don’t know, and I’m taking the advice of counsel.
“I feel bad about suing him.”
THE PLAYERS
Marvin Kaplan — An entrepreneur involved in a wide range of businesses, Kaplan has owned car dealerships and invested in commercial real estate in Florida and New York. He previously owned nearly 20 Dunkin’ Donuts stores on the Gulf Coast. He is a close, longtime business associate of Florida Sen. Mike Bennett.
Larry Starr — Starr acquired a resort property rental firm, Longboat Accommodations, in the late 1980s. He later sold that business to ResortQuest International and headed up that company’s operations along the West Coast of Florida. Starr also has run several commercial real estate businesses, most recently becoming the franchise owner of the Sarasota-Manatee office of Sperry Van Ness.
Smith Advertising & Associates Inc. (SAA) — Founded in 1974 in Fayetteville, N.C., by three partners as Cain, Allen, Smith, it went on to become Smith Advertising & Associates. In 2002, the company opened its Raleigh office, and eventually did business in Hilton Head, S.C., and Sarasota. The agency closed its headquarters March 6, according to reports in the Fayetteville Observer, in the wake of widespread allegations of fraud in Florida, North Carolina and other states.
Gary T. Smith — In 1974, Gary Smith was one of the three founders of Cain, Allen, Smith, which would go on to become Smith Advertising & Associates. He was the CEO of the firm.
G. Todd Smith — Son of Gary Smith, Todd Smith was vice president and chief operating officer of Smith Advertising & Associates in Fayetteville, N.C.
Lucy B. Smith — Wife of Gary T. Smith and an officer in Smith Advertising & Associates Inc.
Linda Carlson — former manager of Sarasota Regions Bank branch where Kaplan made his deposits.
Robert Nicholas Shaw — Regions Bank vice president of security, according to his business card. He sent an alert to the Florida Bankers Association alleging Kaplan engaged in check kiting.
Bridgeview Bancorp — An Illinois bank holding company. It was the bank from which SAA sent checks back to Kaplan after the investment/printing deals were completed.
CHARGES ALLEGED IN KAPLAN LAWSUIT
Naples attorney Jon Parrish filed the following charges on behalf of Sarasota real estate investor Marvin Kaplan and four of his companies in a 46-page countersuit.
Whom Kaplan is suing:
Regions Bank
Robert Nicholas Shaw (of Regions Bank);
The Florida Bankers Association, Inc.
Bridgeview Bancorp, Inc., Bridgeview, Ill.
Wells Fargo, N.A.
Charles “Larry” Starr III
Smith Advertising & Associates, Inc. (SAA)
Gary T. Smith
G. Todd Smith
The charges:
Count I: Fraud — The Investment Companies v. Starr, T. Smith and SAA
Count II: Conspiracy to defraud — The Investment Companies v. Starr, T. Smith, G. Smith, L. Smith, Bridgeview and SAA
Count III: Negligent Misrepresentation — The Investment Companies v. Starr, T. Smith and SAA
Count IV: Racketeering (Violation of 18 U.S.C. 1962 and 1964) — The Investment Companies v. Starr, T. Smith, G. Smith, L. Smith, Bridgeview and SAA
Count V: Mail and wire fraud (Florida Statutes 772.103 and 772.104) —The Investment Companies v. Starr, T. Smith, G. Smith, L. Smith, Bridgeview and SAA
Count VI: Depriving the right to money and misappropriation of funds (Florida Statute 772.11) — The Investment Companies v. T. Smith, G. Smith, L. Smith and SAA
Count VII: Improper use of funds — The Investment Companies v. T. Smith, G. Smith, L. Smith, Bridgeview and SAA
Count VIII: Deceptive and unfair trade practices — The Investment Companies v. T. Smith, G. Smith, L. Smith, Bridgeview and SAA
Count IX: Action to collect payment (Florida Statute 68.065) — The Investment Companies v. SAA
Count X: Breach of Contract — The Investment Companies v. SAA, T. Smith and G. Smith
Count XI: Breach of U.C.C. 4-302(a) — The Investment Companies v. Bridgeview
Count XII: Breach of U.C.C. 4-302(a) —The Investment Companies v. Wells Fargo
Count XIII: Improper handling of checks; breach of 12 C.F.R. Part 229 —The Investment Companies v. Bridgeview
Count XIV: Improper handling of checks; breach of 12 C.F.R. Part 229 —The Investment Companies v. Wells Fargo
Count XV: Negligence — The Investment Companies v. Bridgeview
Count XVI: Negligence — The Investment Companies v. Wells Fargo
Count XVII: Fraud — The Investment Companies v. Bridgeview
Count XVIII: Negligent Misrepresentation — The Investment Companies v. Bridgeview
Count XIX: Defamation Per Se — Kaplan and the investment companies v. Regions, FBA and Shaw
Count XX: Invasion of Privacy — Kaplan and the Investment Companies v. Regions, FBA and Shaw
Count XXI: Negligence/Negligent Misrepresentation — The Investment Companies v. Regions
Creditors RIPPED OFF for MILLIONS…AGAIN!
By Jon Susce10/15/12
At a recent City of Sarasota Commission meeting (10/2/12) it is apparent that the politically connected Marvin Kaplan and Mike Bennett, who have ripped off their creditors for $millions and are the poster child’s of the most severe financial real estate meltdown since the Great Depression, are back in business.
For example, appearing before the City Commission were attorney Dan Bailey and land use consultant, Joel Freedman carrying water for Bennett and Kaplan’s latest real estate “venture.” Bailey and Freedman who (along with Bruce “The Bag Man” Franklin) were the most notorious rainmakers when City Hall was up for sale, were asking City Commissioners to sell some publicly owned property to their clients.
No doubt, Bennett and Kaplan observing how Randy Benderson’s water boy, Larry Feinberg ripped off the City for $millions$ on the publicly owned property on Beneva and Fruitville, they believed Bailey and Freedman could pull off more magic tricks with the City Commissioners. (More about that Benderson scam coming up in THE SARASOTA PHOENIX).
What Bennett and Kaplan want the City to do is to sell them some publicly owned property on Pineapple Avenue and a vacant alley behind the property they own. According to Bailey, Bennett and Kaplan want to open a “quaint little restaurant on Pineapple.”
This “quaint little restaurant ” on the Pineapple property these aspiring Julia Childs devotees desire to open is controlled by a Bennett and Kaplan entity called 127 Pineapple, LLC. In 2011 the property was purchased for $500,000 from an entity called J BenMarChad, LLC who had previously purchased the property for $1.1 million.
Guess who controlled J BenMarChad, LLC and sold the property to Bennett and Kaplan? None other than the aspiring restauranteur, Marvin Kaplan.
The actual principals in this flipping scam becomes even more questionable according to an article in the Sarasota Herald Tribune.
The SHT reports that the real owner of the property on Pineapple is a partner in many real estate deals with Kaplan, Larry Starr.
(More about the Kaplan/Starr business dealings next week).
Pineapple Avenue store sells for less than half its 2006 purchase price
By Michael Braga, Herald-TribuneJanuary 17, 2011
“BenMarChad, LLC, a Sarasota company managed by Marvin Kaplan, has sold a 2,234-square-foot retail store at 127 Pineapple Avenue in downtown Sarasota for less than half what it paid for the building in December 2006.
The buyer, 127 Pineapple, LLC, paid $500,000, or $525,000 less than BenMarChad paid five years ago.
127 Pineapple, LLC is headquartered on the 5th floor of 1626 Ringling Boulevard in downtown Sarasota and its registered agent is David Rosenberg – two clues that point to the possibility that this property was actually purchased by Sarasota businessperson Larry Starr.
“Starr has already purchased several other properties from Kaplan, who leases space on the same floor of the same building.” (more about that office suite on the 5th floor of the Regions Bank building at Ringling & Orange next week).
Whatever the tax break maneuvering or whoever the actual principals are involved in this endeavor by Bennett and Kaplan, to operate a “little quaint restaurant on Pineapple” is secondary to this:
Why in the world is the City of Sarasota even considering a financial deal with Bennett and Kaplan, who owe their creditors $millions$ of dollars and are approaching the City to purchase public property. Am I missing something here?
A question City Commissioners should be asking Bennett and Kaplan, which I asked Bailey and received no answer: Where are Bennett and Kaplan getting the money to pay Bailey, Freedman, purchase the property on Pineapple and to build their “quaint little restaurant”?
It is outrageous that these characters, who are prime examples of why Southwest Florida was the epicenter of the worst financial housing disaster since the Great Depression, even have the audacity to ask the City to allow them to do business in the City of Sarasota.
Before, Bailey and Freedman come before the City Commission seeking public favors for Bennett and Kaplan, I suggest our elected public officials read the below article:
Loan Linked Sen. Mike Bennett to Failed Florida Bank
By: Kenric WardPosted: September 28, 2010 4:05am
The demise of a Bradenton Bank carries the fingerprints of state Sen. Mike Bennett.
The veteran lawmaker, according to a Wall Street Journal report, obtained a $1.8 million loan from Flagship National Bank of Bradenton. The loan went “sour” and the community bank was eventually seized by federal regulators.
Steve Jonsson, Flagship National’s president and chief executive, said Bennett’s status as a member of the Senate Committee on Banking and Insurance gave the bank “comfort” at the time the loan was approved.
But when a planned development venture involving Bennett and a partner failed to materialize, loan repayments did, too.
“I don’t think I’d ever lend money to a politician again if my life depended on it,” Jonsson told the Journal.”.
An additional suggestion for our City Commissioners is that before Bailey and Freedman come before them seeking the City’s assistance of Bennett, and Kaplan with putting together their “quaint little restaurant,” they read the excellent article written by SHT writers Michael Braga and Anthony Cormier. The article details the financial dealings of Bennett and Kaplan. (READ IT HERE).
After reading those articles, take into consideration the following: How anyone can even consider doing business with these two individuals?
Listed below are the creditors whom Kaplan has left out to dry.
Kaplan’s Defaults:
Borrower | Default Date | Lender | Amount Owed
MM Rye Road, LLC | Nov. 4, 2008 | Flagship Bank | $1.97 million
Devonshire Park, LLC | Jan. 29. 2009 | First Priority | $7.6 million
Marvin Kaplan | July 10, 2009 | JPMorgan Chase | $465,600
Marvin Kaplan | Aug. 14, 2009 | Citibank | $675,000
Marvin Kaplan | Nov. 2, 2009 | Deutsche Bank | $2.36 million
Marvin Kaplan | Mar. 9, 2010 | Bank of America | $653,000
Marvin Kaplan | Apr. 1, 2010 | Bank of New York | $1.557 million
Marvin Kaplan | Apr. 1, 2010 | LandMark | $470,000
KMS II, LLC | June 30, 2010 | Wells Fargo | $1.85 million
Fit To Be Tied, LLC | Nov. 4, 2010 | First Bank | $1.53 million
2224 South Trail Corp. | Nov. 22, 2010 | Southern Commerce | $3.8 million
Jacyn Beacon Realty Inc. | Dec. 10, 2010 | Superior Bank | $1.3 million
KMS II, LLC | Dec. 20. 2010 | Bank of America | $645,000
KMS II, LLC | Dec. 23, 2010 | LandMark | $1.1 million
KMS II, LLC | Dec. 23, 2010 | LandMark | $1.086 million
KMS II, LLC | Dec. 23,2010 | M&I Bank | $1.1 million
Total $28.16 million
Kaplan’s outstanding loans with LandMark Bank:
Borrower | Amount Owed
SR 64, LLC | $3.65 million
Lighthouse Pointe, LLC | $1.8 million?
SIK Corp. | $440,000
FTU Inc. | $375,000?
Jacyn Beacon Realty Inc. | $287,500?
FTU Inc. | $260,916?
Total | $6.8 million
Kaplan’s loans with other lenders:
Borrower | Lender | Amount Owed
BC Properties Limited, LLC | Superior Bank | $3.277 million
Linger Lodge RV, LLC | SBKA, LLC | $2.76 million
Pearl Partners, LLC | M&I Bank | $2.68 million
4420 South Trail Corp. | Fifth Third Bank | $855,000
BenMarChad, LLC | Insignia | $820,000
MIK, LLC | FH Partners | $562,500
MIK, LLC | First America Bank | $345,000
MJ Squared, LLC | SBKA, LLC | $229,000
MJ Squared, LLC | Peninsula Bank | $500,000
Total | $12.03 million
As for Bennett financial situation, earlier this year, companies partly-owned by Bennett, got hit with two foreclosure suits totaling $4 million on a Clark Road shopping center and a Manatee county ranchette that Bennett bought with Kaplan. In addition, East 15th Street Inc., a Sarasota company managed by Bennett, has defaulted on a $912,595 loan from Cadence Bank.
Court records and ethics filings concerning Bennett’s finances show all but the Ellenton rink of his early $18 million real estate acquisitions are in foreclosure or deeply underwater.
By the way, Kaplan also has been the subject of allegations that he engaged in an illegal property transaction with flipping fraud mastermind Craig Adams in March 2007. He has not responded to the allegations made by Adams, a former Sarasota Realtor, during the federal flipping fraud trial in the spring.
In court testimony, Adams asserted that Kaplan’s attorney illegally manipulated closing documents so that Kaplan could buy a house on Bird Key.
Kaplan was supposed to bring $2.2 million to the closing but only brought $970,000, Adams said.
Kaplan is also involved in a federal court case, which now involves RICO — racketeering, influence and corrupt organization — allegations, court records show. Federal prosecutors have used RICO charges to stymie and dismember organized crime groups. In addition Kaplan is involved in a flipping property with Henry Rodriguez. (READ IT HERE)
Who is Marvin Kaplan of Sarasota, Florida?
Originally Published: July 23, 2017
Marvin Kaplan, a real estate mogul, based out of Sarasota, Florida and Larry Starr’s business associate, has been on a mini media tour. The attempt is to make sure everyone knows that a judge has cleared Kaplan of not knowing there was a scheme at hand when his checking accounts were closed by Regions Bank for kiting checks. As the old saying goes “guilty dog barks the loudest”. In the latest article in the Business Observer, Marvin Kaplan says his tarnished reputation has been restored. Well, maybe not so fast.
Here is why Kaplan’s claim that he did nothing wrong is so hard to believe. First, he was loaning a ridiculous amount of money to a small adverting agency in North Carolina.
Millions of dollars per day (based on court records) at 10% for “one” day loans.
Based on research, the interest being charged to the company (Smith Advertising and Associates) is illegal in the State of Florida.
Punishable up to 5 years in prison.
When Regions Bank realized Marvin Kaplan was up to no good, the bank attempted to freeze / close Kaplan’s other Regions Bank accounts to the tune of millions of dollars. Marvin Kaplan, the experienced businessman he is, beat Regions to the punch and wired millions out of Regions Bank. If Marvin Kaplan was on the up and up, why did he wire out millions of dollars. What was he hiding?
Marvin Kaplan claims he contacted the Secret Service as if he reported the potential fraud. We know this is not true because earlier public records show Regions Bank immediately contacted the Sarasota Police and Secret Service.
Marvin Kaplan was actually cashing checks from the advertising agency. Principle and interest checks (based on published public information).
Marvin Kaplan says he should have known it was too good to be true. This might be true from a blue collar, unsophisticated investor but not Marvin Kaplan and his associates. Kaplan and his associates like Larry Starr are extremely savvy and notorious money guys.
The Sarasota Herald Tribune has extensively documented Marvin Kaplan and Larry Starr for over 15 years as he has walked away from tens of millions of dollars in bank loans.
Kaplan has sent area banks into tail spins with his bad loans.
Kaplan seems to forget, as he takes his victory lap, that he still has a tarnished reputation in the state of Florida.
Marvin Kaplan appears to have dodged another bullet for check kiting. But is it over? Will the FDIC intervene? Will Regions Bank make another run at Kaplan for fraud or breach? Will Regions Bank reach out to Todd Smith’s attorney for help now that he has pled guilty?
It is likely that most people do not feel sorry for Kaplan as he describes himself being a recluse after Regions Bank leveled the alleged charges of check kiting against him. Marvin Kaplan has been a shark in the waters of Sarasota Florida for the past 15 years. All well published and documented.
As the public looks closer at the published details of this matter involving Smith Advertising, Marvin Kaplan, Larry Starr and many more common sense prevails. It simply does not pass the smell test. It is very difficult to believe Marvin Kaplan and associates are victims. The contradictions in the court records show an incestuous relationship between Marvin Kaplan, Larry Starr and their entities.
Marvin Kaplan, of Sarasota Florida, makes a victory lap, but believable?
Originally Published: July 27, 2017
Marvin Kaplan, a real estate mogul, based out of Sarasota, Florida and Larry Starr’s business associate, has been on a mini media tour. The attempt is to make sure everyone knows that a judge has cleared Kaplan of not knowing there was a scheme at hand when his checking accounts were closed by Regions Bank for kiting checks. As the old saying goes “guilty dog barks the loudest”. In the latest article in the Business Observer, Marvin Kaplan says his tarnished reputation has been restored. Well, maybe not so fast.
Here is why Kaplan’s claim that he did nothing wrong is so hard to believe. First, he was loaning a ridiculous amount of money to a small adverting agency in North Carolina. Millions of dollars per day (based on court records) at 10% for “one” day loans. Based on research, the interest being charged to the company (Smith Advertising and Associates) is illegal in the State of Florida. Punishable up to 5 years in prison.
When Regions Bank realized Marvin Kaplan was up to no good, the bank attempted to freeze / close Kaplan’s other Regions Bank accounts to the tune of millions of dollars.
Marvin Kaplan, the experienced businessman he is, beat Regions to the punch and wired millions out of Regions Bank.
If Marvin Kaplan was on the up and up, why did he wire out millions of dollars. What was he hiding?
Marvin Kaplan claims he contacted the Secret Service as if he reported the potential fraud. We know this is not true because earlier public records show Regions Bank immediately contacted the Sarasota Police and Secret Service.
Marvin Kaplan was actually cashing checks from the advertising agency. Principle and interest checks (based on published public information). Marvin Kaplan says he should have known it was too good to be true. This might be true from a blue collar, unsophisticated investor but not Marvin Kaplan and his associates. Kaplan and his associates like Larry Starr are extremely savvy and notorious money guys. The Sarasota Herald Tribune has extensively documented Marvin Kaplan and Larry Starr for over 15 years as he has walked away from tens of millions of dollars in bank loans. Kaplan has sent area banks into tail spins with his bad loans.
Kaplan seems to forget, as he takes his victory lap, that he still has a tarnished reputation in the state of Florida . Marvin Kaplan appears to have dodged another bullet for check kiting. But is it over? Will the FDIC intervene?
Will Regions Bank make another run at Kaplan for fraud or breach? Will Regions Bank reach out to Todd Smith’s attorney for help now that he has pled guilty?
It is likely that most people do not feel sorry for Kaplan as he describes himself being a recluse after Regions Bank leveled the alleged charges of check kiting against him.
Marvin Kaplan has been a shark in the waters of Sarasota Florida for the past 15 years. All well published and documented.
As the public looks closer at the published details of this matter involving Smith Advertising, Marvin Kaplan, Larry Starr and many more common sense prevails. It simply does not pass the smell test. It is very difficult to believe Marvin Kaplan and associates are victims. The contradictions in the court records show an incestuous relationship between Marvin Kaplan, Larry Starr and their entities.
Judge rules for Kaplan in Ponzi case
Originally Published: June 28, 2017
SARASOTA — Five years ago, Sarasota entrepreneur Marvin Kaplan was accused by his bank of participating in a massive Ponzi scheme orchestrated by a now-defunct advertising agency.
But this week, a federal judge ruled against those claims by Regions Bank that Kaplan aided and concealed the scheme, agreeing that he knew nothing about it.
Kaplan lost $24 million, according to court records, in a scam that bilked investors in Sarasota and elsewhere out of at least $55 million.
“He didn’t know anything,” his attorney, Jon Parrish, said Wednesday. “He was a victim from the beginning. He lost all his money. If he was part of a Ponzi, wouldn’t he have made some money?”
Kaplan, a developer and real estate investor, was blackballed by other financial institutions after the allegations hit the Internet in 2012, Parrish said.
“He tried 23 different banks to get accounts after that, but no bank would touch him,” Parrish said.
The case involved short-term loans made by investors to Smith Advertising, a Fayetteville, North Carolina, agency which for years operated a Sarasota branch that represented local tourism agencies such as Visit Sarasota County.
One of the agency’s principals, Gary Todd Smith, pleaded guilty to fraud charges this month and faces up to 30 years in prison. Criminal charges have been filed against his father, agency head Gary Truman Smith. Kaplan was never charged with any crime.
In the scheme, the Smiths borrowed money from more than 150 investors and then repaid the earlier loans with money from the later loans. The U.S. Attorney’s Office in Tampa said the Smiths lied to the investors about the purpose of the loans and they and other employees at the agency created fake documents to mask the scheme.
In 2008, Kaplan, who once owned a number of Dunkin’ Donuts franchises, began making short-term loans to Smith Advertising for high-yield returns.
The concept was that Smith could make extra profits on its arrangements on behalf of advertising clients by buying advertising space with web and print publishers up front on a discounted basis. It would bill clients at a higher rate after results could be shown.
The alleged check kiting occurred when Kaplan and his companies wired money from their Regions’ accounts to Smith’s account based on Smith checks from Bridgeview Bank of Illinois, which bounced. Kaplan maintains that Regions had granted him special withdrawal privileges and that he never kited funds.
After the checks started bouncing, Kaplan reported the problem to the U.S. Secret Service, which began investigating, Parrish said.
Regions Bank, based in Birmingham, Alabama, did not respond Wednesday to a request for comment on the court ruling.
U.S. District Judge Elizabeth A. Kovachevich presided over a bench trial in May 2016. She ruled against Region’s claims this week, after Todd Smith’s recent guilty plea.
“The court has found that Marvin I. Kaplan did not have actual knowledge of the Ponzi scheme carried out by Todd Smith, Smith Advertising and others,” Kovachevich wrote in her opinion.
“The court has also found that Marvin Kaplan and the Kaplan entities did not have actual knowledge that the wire transfers out of Regions accounts were not supported by sufficient funds in the Smith Advertising account at Bridgeview Bank to pay the checks deposited in the Regions accounts.”
Kaplan has won a default judgment against the Smiths for nearly $70 million, which included tripled damages, interest and attorneys fees, but he is unlikely to collect on it, Parrish said.
Kaplan is considering a malicious prosecution case against Regions, he added.
Marvin Kaplan and Larry Starr: The Big Lie
Originally Published; Nov 12, 2017
On November 9, 2017, Marvin Kaplan, based out of Sarasota Florida, filed yet another lawsuit. This time against Regions Bank. Kaplan claims that Regions Bank destroyed his reputation when they made claims he was check kiting. Based on the lawsuits, there is no other reasonable assumption.
The reality is that Marvin Kaplan destroyed his own reputation by his own actions. Marvin Kaplan sent many banks in Southwest Florida into deep trouble as he walked away from over $20 million in financial institution loans. All of this is public domain and well documented by the Sarasota Herald Tribune and several other media outlets.
Kaplan was loaning Smith Advertising money at rates that were illegal in the state of Florida and unimaginable. The interest rates based on documentation from previous lawsuits were 10% a day on loans of $500,000 plus. As others have cited this would be considered usurious in the State of Florida which is a felony.
Marvin Kaplan and Larry Starr, his business associate, claim they were duped by Smith Advertising. Common sense says this is very difficult for anyone to believe. Both Marvin Kaplan and Larry Starr were in trouble in the real estate business as their projects collapsed and the banks wanted their money. Both were hunting for new revenue to survive. Larry Starr is also well documented for defaulting in millions in loans to the banks. Both men are sophisticated and smart businessmen. It is highly unlikely that a small advertising agency based out of Fayetteville, NC were so good that they hood winked Starr and Kaplan.
What is most interesting is that Smith Advertising had many public accounts. After a quick online search, an ex-client of Smith Advertising like Charlotte Harbor has their annual marketing budget posted for public view. Anyone at anytime could have run due diligence on Smith Advertising. It obviously never happened. Why not? Smith Advertising clearly never had the revenue to support millions of dollars in loans to Larry Starr and Marvin Kaplan at 10% daily interest. Starr and Kaplan would have had to fall off the back of the turnip truck to think otherwise.
Larry Starr was convicted for fraud in Federal Court, with his father, that was ultimately overturned in an appeal. Starr narrowly escaped prison time and then relocated to Sarasota, Florida. What is interesting, Starr was convicted on a similar scheme that Smith Advertising is alleged to have cooked up. Did Larry Starr strike again? This time out of Sarasota, Florida along with Marvin Kaplan. Larry Starr was once the Chairman for the Sarasota Convention and Visitor’s Bureau for over a 10 years, overseeing the annual tax dollar marketing budget. Larry Starr knows advertising, he knows advertising budgets, he knows what companies and public entities like Convention and Visitor Bureaus spend on marketing and advertising. Likewise, Marvin Kaplan is a smart man with the same type of finance and financial background.
All facts produced in the lawsuits point to Larry Starr and Marvin Kaplan running a predatory lending operation with the interest rates they and others were charging Smith Advertising. This is illegal. There are very few people that believe the spin and lie that these two men were victims. The facts from all of the lawsuits filed throughout the past six years tell a much different story. A story of predatory lending, usurious interest rates, greed and persuasive power.
Smith Advertising was a 40 year old family company with clients all over the Southeast.
Ex-clients have nothing but accolades for Smith Advertising, Gary Smith, Todd Smith and their staff. Clients were with Smith Advertising for 15, 20, 25 and even 30 years. The company was in obvious financial trouble and based on the records turned to private lenders.
What they obviously did not know is that they were walking into a web of well documented, unscrupulous businessmen.
The interest rates charged by lenders like Marvin Kaplan and Larry Starr are incogitable and beyond belief. People lie, but numbers do not lie.
Who hood winked who? Regions Bank is likely to fire back hard. Kaplan has filed a frivolous lawsuit. The FDIC is likely watching Marvin Kaplan and Larry Starr like a hawk and rightfully so.
As lawsuits continue to be filed, we continue to learn more on who the true victims in this case are and it certainly does not bode well for Marvin Kaplan and Larr Starr.
Smith Advertising’s Son gets 40 years in prison for Ponzi-type scheme
Originally Published: Dec 6, 2018
Advertising agency owner Gary Todd Smith had pleaded guilty to fraud
A former advertising executive who prosecutors say ran a Ponzi-like scheme that swindled investors in Sarasota and elsewhere has been sentenced to 40 years in federal prison.
Gary Todd Smith, who pleaded guilty last year in Tampa federal court to several fraud counts, also was ordered to pay $63.4 million in restitution to victims, although they are unlikely to recover much if any of that money.
Smith, 49, known as Todd, was a principal with his father in Smith Advertising, a Fayetteville, North Carolina, agency that for years operated a Sarasota branch that represented local tourism agencies.
Running what federal prosecutors called “a massive and complex loan fraud scheme,” the Smiths borrowed money from more than 150 investors and then repaid the earlier loans with money from the later loans.
The U.S. Attorney’s Office said Todd Smith lied to the investors about the purpose of the loans and he and other employees at the agency created fake documents to mask the scheme.
When the agency collapsed in 2012, its net worth was a negative $169.8 million, prosecutors said.
U.S. District Judge Elizabeth A. Kovachevich on Wednesday sentenced Smith to 30 years on one count of conspiracy to commit mail and wire fraud, and 10 years on one count of wire fraud affecting a financial institution, to be served consecutively. She also gave him three years of supervised release.
He was taken into custody and as of Thursday afternoon was in the Pinellas County Jail awaiting assignment to a federal prison. He had been free on personal recognizance and living in Fayetteville since being charged in 2014.
His father, Gary Truman Smith, is scheduled to be sentenced Dec. 19. He pleaded guilty in February to a single fraud charge and faces up to five years in prison and a $250,000 fine. He also has been free on bond and living in Fayetteville.
Robert M. Tager, Todd Smith’s attorney, said he would quickly file a notice of appeal.
“We were very surprised and disappointed in the sentence,” Tager said. “Forty years is a life sentence.”
He argued during the sentencing hearing that prosecutors were overstating the amount of money that investors lost, claiming it was less than $20 million.
But prosecutors lobbied for a harsher sentence for several reasons, including the size, sophistication and complexity of the crime and the fact that more than two dozen victims incurred “substantial financial hardship,” including in some cases losing their entire life savings.
Sarasota real estate investor Marvin Kaplan has said he lost $24 million in the scheme.
Other victims said they lost much of their money and had to postpone retirement for years. More than 50 victims from Southwest Florida and around the country entered statements, either in person or by video, during the sentencing hearing that ran over parts of five days.
One Sarasota victim, who asked not to be identified, credited the work of the prosecutors and investigators.
Prosecutors said the victims suffered bankruptcies, loss of their homes and losses of retirement funds and their children’s education funds.
“This was a crime motivated by greed and a desire to fund an extravagant lifestyle,” U.S. Attorney Maria Chapa Lopez said in a statement.
The judge recommended Smith serve time at Federal Correctional Institution Butner in North Carolina — the same low- to medium-security complex where Ponzi kingpin Bernard Madoff is serving 150 years and where Sarasota Ponzi schemer Arthur Nadel died in 2012.
Although Kovachevich ordered Smith to repay victims $63.49 million, its doubtful that will happen. Smith and his wife filed for bankruptcy in August in North Carolina, claiming $327,688 in assets and $35.1 million in debts.
The case was investigated by the U.S. Secret Service and the FBI. It was prosecuted by Assistant U.S. Attorney Thomas N. Palermo.
Smith Advertising founder sentenced to maximum 5 years
Originally Published: Jan 11, 2019
TAMPA — The founder of an advertising agency that defrauded investors in Sarasota and elsewhere out of $63 million was sentenced Friday to five years in prison.
Gary Truman Smith received the maximum sentence in U.S. District Court in Tampa, the second family member to be imprisoned for his role in what federal prosecutors have called a “massive” Ponzi-like fraud conspiracy.
Smith, 74, pleaded guilty last February to one count of conspiracy to commit wire and mail fraud. He has been living in Fayetteville, North Carolina, and working as an Uber driver.
His son, Todd Smith, was sentenced last month to 40 years in federal prison as the ringleader of the scam.
Gary Smith remained free on bond after the sentencing hearing. He will report to the federal Bureau of Prisons later, according to the U.S. Attorney’s Office in Tampa.
Prosecutors said he received $1 million from the fraud.
The Smiths’ Fayetteville-based ad agency, which operated a Sarasota branch for years, borrowed money from investors and repaid earlier loans with money from later loans. Prosecutors say they lied to the investors about the purpose of the loans, which were supposedly backed by money that clients owed to the agency. They and other agency employees created fake invoices and other documents to mask the scheme and to make the agency appear financially sound.
In what federal prosecutors called “a massive and complex loan-fraud scheme,” the Smiths borrowed money from more than 150 investors.
At Todd Smith’s sentencing, prosecutors had noted that more than two dozen victims incurred “substantial financial hardship,” including in some cases losing their entire life savings. Sarasota real estate investor Marvin Kaplan has said he lost $24 million in the scheme.
When the agency collapsed in 2012, its net worth was a negative $169.8 million, prosecutors said.
Gary Smith’s attorney argued for less than the maximum sentence, saying Smith had handed over the 40-year-old agency to Todd and only returned after learning his son had gotten into financial trouble and was creating fraudulent invoices to keep it going. He has since lost his home, investments and other assets, attorney William F. Sansone stated in court documents.
“As the fraud and losses continued, Mr. Smith realized that he could not bring in enough legitimate business to turn the company around, and he convinced his son that all of this needed to stop, and they needed to turn themselves in,” Sansone said.
Several Fayetteville community and business leaders, including former Mayor John W. “Bill” Hurley, wrote letters supporting Smith to U.S. District Judge Virginia Hernandez Covington. One noted that Smith was named Fayetteville’s “Business Person of the Year” in 2006 by Methodist University, which is in Fayetteville.
Naples lawyer disbarred after allegedly pleasuring himself on girlfriend he allowed ex-partner to attack
Originally published; Oct 1, 2019 | Republished Feb 23, 2020
TALLAHASSEE (Florida Record) — Suspended Naples attorney Jon Douglas Parrish has been voluntarily disbarred following an Aug. 29 Florida Supreme Court order and his 2017 arrest after he allegedly pleasured himself on his girlfriend, whom he had allowed his ex-girlfriend to brutally attack.
“Parrish was adjudicated guilty of a misdemeanor charge of harassing a victim, in this case of a domestic violence attack,” The Florida Bar said in its Sept. 26 announcement of the discipline and the court’s order.
In its two-page order, state Supreme Court approved Parrish’s uncontested petition for disciplinary revocation, tantamount to disbarment, with leave to seek readmission after five years. Parish, 56, already was suspended, which meant his disbarment was effective immediately. The court also ordered Parish to pay $1,280 in costs.
Florida court orders are not final until time to file a rehearing motion expires. Filing such a motion does not alter the effective date of Parrish’s disbarment.
Parrish was admitted to the bar in Florida on Oct. 1, 1993, according to his profile at the state bar website.
Parrish was arrested in early January 2017 after his girlfriend, unidentified because she was a victim domestic assault victim, escaped from Parrish when she said she wanted a coffee, according to a Collier County Sheriff’s criminal affidavit and news reports at the time.
Parrish was charged with false imprisonment, domestic violence battery, and tampering with a witness, victim, or informant. Parish was later released on $12,500 bond.
The attack reportedly occurred in November 2016 when Parrish’s ex-girlfriend and business partner Natalie V. Peysina entered the home that Parish shared with his then-girlfriend and assaulted her for about an hour. Peysina allegedly told the woman she would kill her and choked her enough that “she lost consciousness more than once,” the affidavit said.
Parrish “watched and did nothing to help the victim,” the affidavit said.
Later, as Parrish held her in what she mistakenly believed was to “comfort her because she was shivering and scared from what just happened,” Parrish tried to have sex and, when she told him “he was out of his mind,” pleasured himself on her instead, according to the affidavit.
Parrish later told a local news outlet that he “didn’t do anything wrong” and that he was “embarrassed and humiliated” by the allegations.
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