Sunny Isles Beach project faces former developer's debt claims
South Florida Business Journal - July 13, 2007
by Susan Stabley
Attorneys representing a Sunny Isles Beach hotel and condominium project may file a countersuit to clear up an allegation of fraud lingering from a previous failed development.
The development company leading construction of the proposed Solís Resort, Spa & Residences has been entangled in legal filings from a foreclosure action against the site's prior owner.
"We're the innocent party," said Jeffrey Perlow, one of the corporate attorneys representing Mansiana Ocean Residence LLC, which is led by New York-based developer Alex Forkosh.
"If this isn't resolved soon, we're going to sue for slander of title."
Perlow and Gary Kornik, of Aventura-based Fromberg, Perlow & Kornik, P.A., are working to obtain about $130 million in financing plus insurance for the Solís project, which would have a 140-room hotel and 132 residential condos.
Solís is expected to become one of the first under a hotel management concept crafted by former Ritz-Carlton COO Horst Schulze, founder of Atlanta-based West Paces Hotel Group. The condo owners would have access to the hotel's amenities, but their units would not be part of the hotel room pool, like condo-hotel units are.
The attorneys said they want to be sure that the ongoing legal battle among a previous developer's lenders and a law firm don't drag the project into any delays. Groundbreaking was held in February for a summer 2009 opening.
"It's the first time in 32 years I've ever seen anything like this," Kornicki said. "It's like a catfight - and we've caught a little collateral damage."
He is referring to filings that claim fraud in Mansiana's acquisition of the Solís site at 15701 Collins Ave., between Haulover Park and a string of Trump-branded developments.
The suits involve a original foreclosure case brought by Atlantic Lending LLC against Fantasy of the Ocean LLC (FOTO) and a subsequent suit filed against Atlantic Lending's former counsel, Miami law firm Meland, Russin, Hellinger & Budwick, P.A., and two of its shareholders, Peter B. Russin and Andrew B. Hellinger, explained Atlantic's attorney Bob Miller of Tabas, Freedman, Soloff & Miller, P.A. in Miami.
The new purchaser of the property, Forkosh's shell company Mansiana, was named as a defendant. Also named - but dismissed from part of the suit in 2006 - was Coconut Grove-based mortgage servicing company Berman Mortgage Corp. Company executive Dana Berman could not be reached for comment.
Miami-based Atlantic Lending filed a month after Forkosh's $26 million acquisition of the site in June 2005. The suit asks for reinstatement of mortgage, breach of contract and fraud, among other issues.
At issue is a 2002 loan by Berman Mortgage to previous developer FOTO for a $6.2 million principal sum secured by the mortgage, assignment of rents and a security agreement.
Atlantic Lending had acquired 50 percent interest in the FOTO notes and mortgage. In 2004, FOTO defaulted.
A year later, when Forkosh's limited liability corporation bought the property, it received a satisfaction of mortgages from Berman Mortgage, but failed to get the same from Atlantic Lending, the suit states.
The suit charges that Berman Mortgage had no authority to satisfy Atlantic Lending's recorded interest and asks for a judgment that reinstates the mortgages.
Meland, Russin, Hellinger & Budwick, P.A. had represented the foreclosure action on behalf of the lenders, and shareholder Hellinger had negotiated the settlement.
"We're very confident we did nothing wrong. Berman did nothing wrong. The settlement was an excellent result," said Russin, who disagrees with the suit's charges. He counters that Atlantic Lending agreed to the settlement and received more than 19 percent interest on its money.
Hellinger has since taken a position as president of Leviev Boymelgreen Developers of Florida. He could not be reached for comment.
A settlement was agreed without Atlantic's authorization, the suit states, and claims that a secret deal was hatched to use the proceeds from the Sunny Isles Beach land sale to settle a second - and separate - debt owed by a different shell company, PSD Properties LLC, also controlled by FOTO's principal.
Atlantic Lending had no ties to the second debt and said in court filings that it was unaware that its attorneys were simultaneously negotiating to recoup a debt separate from Atlantic Lending's claim. One estimate of damages desired by Atlantic Lending, according to filings, was $345,488.15.
According to Miller, Atlantic Lending also intents to seek punitive damages from the lawyer defendants and Berman Mortgage, but not Forkosh's company.
Solís' attorneys said they thought the claim seemed small in light of the legal efforts.
"This is really unique to us," said Kornicki, who added that he thought there were some other, non-monetary factors in play among the other parties. "There's some bitterness here."
Solís construction started
Asked whether the suits could affect financing for Solís, Kornicki said the decrease in dollars offered by lenders for projects in South Florida is a greater worry.
Daniel Tantleff, the former Bal Harbour mayor who is Forkosh Development Group portfolio director for Florida, said: "I can tell you that the suit has 100 percent nothing to do with our lending or our construction project."
In February, Solís' development team held a groundbreaking for the proposed resort. Shortly after the ceremony, Tantleff told the Business Journal that an in-house general contractor should begin construction within a few.
A visit to the site in June showed little visible work above ground, but Tantleff said the time has been spent working on test pilings for the structure's foundation.
In March, Tantleff said units were for sale for about $1,000 a square foot, but he declined to give exact figures and would not divulge how many units were under contract by buyers.
Condos were expected to start at more than $1 million, with Rodrigo Niño's Prodigy International Development in Miami handling sales.
One of Solís' sales agents said June 29 that 70 percent of the project's units were sold and the remaining units are priced at $1.2 million or more.
When asked, Prodigy broker Lina Fidler said the project was being built. After being told that there were no work crews in view on a recent day, she said: "We broke ground, so we are considered under construction."
Solís Timeline
1995: Site of the former Olympia Motel, at 15701 Collins Ave., in Sunny Isles Beach, sells for $1.75 million.
2000: Land sells again for $7.75 million, according to the Miami Sun-Post.
2002: Berman Mortgage Corp. loans a principal sum of $6.2 million to Fantasy of the Ocean (FOTO) developer Enrique Soltanik. Berman is also involved in selling a separate note to a group of investors on a debt held by another Soltanik shell company, PSD Properties LLC.
2003: Marketing for Fantasy of the Ocean promises a Hilton-managed 21-story condo-hotel.
2003: After a series of agreements, 50 percent interest in the notes and mortgage was transferred to Miami-based Atlantic Lending LLC.
2004: FOTO defaults on loan.
June 2005: Developer Alex Forkosh buys the site under the shell company Mansiana Ocean Residence LLC for $26 million.
July 2005: Atlantic sues, claiming the mortgage was satisfied without its approval and funds were used to resolve losses from the PSD loan.
November 2005: Forkosh's first proposal for the site, Aja, gets approvals. The project is later revamped under the Solís brand.
February 2007: Official groundbreaking for Solís.
July 2007: A Forkosh representative said foundation work is under way, but gave no details on financing for construction.
sjstabley@bizjournals.com (954) 949-7522
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Mott Marvin Kornicki, Broker • Waterway Realty, LLC • 305.935.3533 • Realtors®
Sunny Isles Beach, Florida
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