Aquatera

Would love to hear your thoughts on this if I am missing something

Horace,

You make a lot of good points, and if that is as far as the story goes, and what you state are indeed facts, then there's no fraud.

But...being the skeptic that I am, there could possibly be more to this story that will come to light as the real estate frenzy continues to unwind. For instance, could it be possible that in other development dealings the stated value of this property was used to secure loans from elsewhere?

In researching the rise and fall of the RE frenzy, the tactic of engineering a quick bump up in the value of property assets (in order to secure loans for personal or business use from other sources) appears to have been a common occurrence. I'm not saying this was the case with Aquatera (nor do I have any proof that it was)...but let's just say if they discover it is, I wouldn't be in the least surprised.

So if another entity loaned money to a developer based on the fact that he held an asset he claimed was worth, say, $79 million, and later found that the value was arrived at by the use of smoke and mirrors, the claimant could say he 1. "reasonably relied " 2. "on a misrepresentation" 3. "to their detriment"....no?

Another good Shelly post. Here is my thought for the day: "fraud" is tossed around very easily when markets downturn- see the lawsuits by investors against stockbrokers. Fraud requires proving 5 key elements, three of which are you have to have a claimant who 1. "reasonably relied " 2. "on a misrepresentation" 3. "to their detriment". "Bank fraud" requires a "bank" to be the victim. A "bank" is generally an institution whose deposits are insured by the US Government. While "fraud" is a bad bad bad thing, no bank = no bank fraud. I am not defending any developer- but anyone who thinks they are going to be anything other than aggressive and all about the money is naive.

Let's see what we can tell from this thread about Aquatera:

1. no bank involved. Word is that is what stalled the Feds on this deal- no jurisdiction

2. victim? The lender is a well known "hard money lender" who made a high interest rate loan with 12% in up front points ($4 million loan fee). (He makes loans on casinos, the Queen Mary, etc.) Remember when you refinanced your house? Paid a "point" (1% of the loan amount) to buy down the rate? Try paying 12 points to buy down the rate to 12%. That is a really strong deal for the lender.

2. Is there a misrepresentation? The lender got their own appraiser from the best appraiser in Sowal- he said the land was worth $79 million dollars! So the "loan to value" was 50%. Apparently recent appraisals put the value at over $50 mil today- still way in excess of the lender's loan of less than $40 mil. Try buying your house with a 50% loan

This is the key: Any of you- I will finance your property right now, loaning you 50% of the appraised value of your property (I pick my own appraiser, and you pay his fee), I will charging you 12% loan fee up front (that is 12% of the loan amount), then 12% interest per annum, and you pay all the closing costs and my attorney's fees. I don't really care what you paid for it. Close in 7 days.

3. flip? looks like that is pretty apparent from the deed records, secretary of state records, title insurance, etc. there was a same day purchase and resale with related parties. If it was "mispreresented" it would have been hidden, and they would not have wanted to pay that ridiculously high deed stamps and fees and title premiums on the deal. They probably paid $200,000 extra to buy and resell it. You can't "reasonably rely" by doing the three monkeys act and not look at or read anything. On a land loan all the lender can loan on is the appraisal- the property has no operating income, no pro formas for cash flow, no NOI. So the appraisal is everything. Does it matter what the borrower paid for the land? The lender's deal is the same even if someone gifted the borrower the land- the lender just wants the points and the collateral

4. Detriment? looks like the property has a bunch of equity and the lender has no loss.

I read linney's lawsuit in Atlanta, the $13 mil case". Looks like a classic nuisance action. Simple summary seems to be: Linney and some other dude bought a property from Zohouri to redevelop. Linney defaults a third party loan, Zohouri buys loan and forecloses him out. Zohouri gets development loan. Linney's partner in deal dies. Linney sues Zohouri claiming if property is redeveloped (it is not), Linney should get half of equity plus punitives for "fraud". Just goes to show "anybody can sue anybody"

Would love to hear your thoughts on this if I am missing something

Your challenge to lend to A paper participants hard equity terms is gratuitous. Your characterization of hard equity rates/fees as excessive ignores the astronomical default rates. The lender was the only type of choice for these non-arms length borrowers. Who cares about state taxes/title charges/prepays at those margins when transfered? How would you like to be lifting 40 mil tonight, and the next few hundred nights because you've got 50 mil collateral you can't move? All in? Or should the klieg lights be focused elsewhere?

Your challenge to lend to A paper participants hard equity terms is gratuitous. Your characterization of hard equity rates/fees as excessive ignores the astronomical default rates. The lender was the only type of choice for these non-arms length borrowers. Who cares about state taxes/title charges/prepays at those margins when transfered? How would you like to be lifting 40 mil tonight, and the next few hundred nights because you've got 50 mil collateral you can't move? All in? Or should the klieg lights be focused elsewhere?

I guess that is why it is in default- one of the astronomical defaults.
Nice to know every SoWal owner is a A paper borrower!

Horace,

You make a lot of good points, and if that is as far as the story goes, and what you state are indeed facts, then there's no fraud.

But...being the skeptic that I am, there could possibly be more to this story that will come to light as the real estate frenzy continues to unwind. For instance, could it be possible that in other development dealings the stated value of this property was used to secure loans from elsewhere?

In researching the rise and fall of the RE frenzy, the tactic of engineering a quick bump up in the value of property assets (in order to secure loans for personal or business use from other sources) appears to have been a common occurrence. I'm not saying this was the case with Aquatera (nor do I have any proof that it was)...but let's just say if they discover it is, I wouldn't be in the least surprised.

So if another entity loaned money to a developer based on the fact that he held an asset he claimed was worth, say, $79 million, and later found that the value was arrived at by the use of smoke and mirrors, the claimant could say he 1. "reasonably relied " 2. "on a misrepresentation" 3. "to their detriment"....no?

good point. I have seen some investigations where they line up all the loan applications for all the loans borrowed and see if, as of x date, all of the loans are listed.

I guess that is why it is in default- one of the astronomical defaults.
Nice to know every SoWal owner is a A paper borrower!

In Orlando 3 of 4 borrowers are subprime, because of the service industry demographic. I'm guessing at the beach, the numbers are reversed. I'll bet the SoWal numbers are even higher. Hard equity is a niche market.

So if another entity loaned money to a developer based on the fact that he held an asset he claimed was worth, say, $79 million, and later found that the value was arrived at by the use of smoke and mirrors, the claimant could say he 1. "reasonably relied " 2. "on a misrepresentation" 3. "to their detriment"....no?

Shelly, who would lend based on what the borrower claimed their property was worth? :shock:

Shelly, who would lend based on what the borrower claimed their property was worth? :shock:

Let me guess......Probably the same guy who would lend based on what the borrower "claimed" they made in income??


.

Let me guess......Probably the same guy who would lend based on what the borrower "claimed" they made in income??


.

Is that your final answer or do you wish to use a life line?

Is that your final answer or do you wish to use a life line?

I'll stick with that answer Alex.

.

I'll stick with that answer Alex.

.

Stay tuned. We will be right back after the break. ;-)

2. Is there a misrepresentation? The lender got their own appraiser from the best appraiser in Sowal- he said the land was worth $79 million dollars!

The best appraisal firm in Sowal is Gary Scott's Coastal Property Consultants and they didn't do the appraisal. Just wanted to clear that up.

Very interesting thread.

Zahouri owns a big interest in RE/MAX of Atlanta, which I was informed today has been shut down in the last week or so.

Agents have not received their commission checks, as they have been told that the bank has frozen the escrow account that holds the funds.

The building that one of the offices is in is heading to the court house steps in foreclosure.

The saga continues...

Very interesting thread.

Zahouri owns a big interest in RE/MAX of Atlanta, which I was informed today has been shut down in the last week or so.

Agents have not received their commission checks, as they have been told that the bank has frozen the escrow account that holds the funds.

The building that one of the offices is in is heading to the court house steps in foreclosure.

The saga continues...

i'm so grateful for this bust!! it couldn't have happened to a better region

this place was becoming a haven for criminals, morally bankrupt "business people" and corrupt local officials who do not require investors to abide by state development laws.

the beauty of the bust is hopefully that it will stop this irresponsible development and criminal business behavior. hopefully people will understand that progress and development require infrastructure and community instead of condo after condo after condo. no more "give me your money and shut up". people who invest here will HAVE to make it a safe, happy and worthwhile place to live or they will know what REAL bad times are. HURRAH!

i'm so grateful for this bust!! it couldn't have happened to a better region

this place was becoming a haven for criminals, morally bankrupt "business people" and corrupt local officials who do not require investors to abide by state development laws.

the beauty of the bust is hopefully that it will stop this irresponsible development and criminal business behavior. hopefully people will understand that progress and development require infrastructure and community instead of condo after condo after condo. no more "give me your money and shut up". people who invest here will HAVE to make it a safe, happy and worthwhile place to live or they will know what REAL bad times are. HURRAH!

Big Real estate Ponzi scheme busted in Atlanta

http://www.dailyreportonline.com/Ed...sp?individual_SQL=3/16/2007@14147_Public_.htm

Re: Aquatera website

website gone; ZOL Developments website gone- offices closed
Most of his Atlanta properties gone in foreclosures; a few in Florida and Texas in BKR

i hear he is looking for funds to get out of the country

i hear he is looking for funds to get out of the country

Maybe he and Lou Pearlman will hang out.

Maybe he and Lou Pearlman will hang out.

at 7 Mile Beach grand Cayman. Has Pearlmann been indicteded yet?

well his private house (estate) was auctioned off at the court house steps on May 1, so there is something to this Karma thing!!!!!!!!!!!

The time has come -- Aug 10, 11:00am Courthouse steps, Defuniak Springs --
Bring your cash and you can buy the property once known for having a great pre-sale party (Aquaterra), unless Zohouri and his peeps can hand over about $44.5 million.

I wonder if EBSCO will pick it up at a steal.

OK, my lot at Aquaterra probably won't end up being a great investment. But my lot at "Chateau de Paris" is ok, right?

OK, my lot at Aquaterra probably won't end up being a great investment. But my lot at "Chateau de Paris" is ok, right?

...oui oui!!!!

The time has come -- Aug 10, 11:00am Courthouse steps, Defuniak Springs --
Bring your cash and you can buy the property once known for having a great pre-sale party (Aquaterra), unless Zohouri and his peeps can hand over about $44.5 million.

I wonder if EBSCO will pick it up at a steal.

maybe a play for JOE...adjacent to northern land holdings and across the street from Camp Creek...why not? besides maybe being a little strapped for cash (but they could figure it out)...will be interesting