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Thursday April 17th 2014

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Hoodwinked?

FRAUD OR PUFFERY?

The IN asked City Attorney Rusty Wells about any legal issues that a vendor might have if they misstate their qualifications in a RFQ proposal.

“If a party deliberately defrauded the City, any agreement would be null and void from the beginning,” Wells said. “However, it would have to be a strong level of fraud to do that.”

Some level of exaggeration and overstatement is permissible under the law, according to Wells. “The law allows what is called ‘puffery’,” said Wells. Puffery is a legal term that refers to promotional statements and claims that express subjective rather than objective views.

“The question is did the misstatements induce one party to enter into the contract,” said Wells. “If so, then you could have fraud in the inducement, which would void the contract.”

Did the misstatement by Land Capital about development partners and its financial resources help them get past the initial review by the CMPA board? Wells said that only the board members themselves can answer that question.

In May 2007, when they voted on which developers would be allowed to compete for the work, the CMPA board members scored Land Capital two points higher than Hammes, 52-50. Carter Real Estate and Trinity Capital Advisors, led by locals Joe Endry and Emmitt Smith, placed third and fourth, respectively. Board members John Merting, Juanita Scott, Eddie Todd, Katie White and Mayor John Fogg had placed Land Capital at the top of their lists.

WHO REALLY IS THE DEVELOPER?

The actual Request for Proposal (RFP) didn’t happen until a year later. Only Trinity Capital Advisors and Land Capital responded to the RFP that was released Feb. 1, 2008.

Land Capital had made considerable changes in its development team since the RFQ proposal. Gone were Halcyon LTD, Communications Arts Design, HKS Architects, JP Morgan Asset Management, Economic Research Associates, AC Advertising Agency, Cline Design Associates, Gulf Coast African-American Chamber, Caldwell Associates Architects, Darden & Associates and Harold DeBlanc of Silver Cloud Partners. Of the 20 development team members listed in the RFQ, 10 had changed over the seven months since the last presentation.

The biggest additions were Brass Real Estate Fund and Magi Real Estate, based in San Antonio, Tex. and owned by Rick Rodriguez; Bruce Cutright as the project manager; The Target Group, a Chicago economic development consulting firm, to handle the minority inclusion; and CapMark Financial Services to handle debt financing.

Rodriguez and his companies were to be full partners with Land Capital, forming a new entity, Maritime Park Partners, LLC, according to a letter Davison sent with his RFP proposal. While Land Capital was still the lead proposer, Brass Real Estate Fund and Magi Real Estate would act as “our co-developer and will have an entity interest in the project.” CapMark Financial Services would also have an equity interest, if it deemed the project “economically viable.”

However, there is no Maritime Park Partners, LLC, licensed in the state of Florida. There never has been.

According to the RFP, the general manager of the project would be MP-LC Development Partner, LLC, which would be controlled by Land Capital Group. According to filings with the Florida Secretary of State, Mark White, then-VP of Land Capital, is the manager of that limited liability corporation.

Here is where it gets tricky. There is a Maritime Park Development Partners, LLC that is licensed in Florida, and that is the company that has the development agreement with CMPA. Land Capital Group, Brass Real Estate Fund, Magi Real Estate and CapMark Financial Services aren’t partners in MPDP. CapMark isn’t involved with the project at all.

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