Wednesday, November 26, 2008

Conch House fights foreclosure

Conch House fights foreclosure

200-slip marina, restaurant, motel, homes, retail area part of dispute

Publication Date: 07/28/07

The family of David M. Ponce Jr., which has owned Conch House Marina Resort at 57 Comares Ave. since 1946, is now fighting a lawsuit by a New York bank to foreclose on that property.

Circuit Court Judge J. Michael Traynor issued an order late Friday denying Ponce attorney Jason B. Burnett's motion to dismiss the case outright. The judge said Burnett, or Gray Robinson, Jacksonville, had failed to create a basis on which to dismiss.

The foreclosure lawsuit initially was filed by Intervest National Bank of New York, which in 2006 loaned five real estate investors -- four St. Johns County residents and a Virginia man -- $17 million for six months to buy the Conch House and adjacent property.

On the table are a 200-slip marina, 17-room motel, three single-family homes across Comares, a restaurant, dockside tiki bar, Salt Run Tavern on Anastasia Boulevard, the antiques store on Comares and Anastasia Boulevard and an empty lot on Comares.

Documents at St. Johns County Courthouse show that the total selling price was $27 million.

At the time, Ponce said 2005 had been good for business.

"Even with all the storms, it was the best year we ever had," he said. "But it's time to move on and enjoy myself. All I've ever done is work."

The five investors, doing business under the name Conch House Builders LLC, consisted of local businessmen Robert M. Graubard of St. Augustine, C. Kelly Smith of Vilano Beach, Jay Culberth of Interstate Hotels and Resorts, Paul Braugart whose address is unknown and Thomas E. Coghill Jr., convicted in federal court of bank and wire fraud in Virginia.

An August 2005 story in The Hook, a Charlottesville, Va., news magazine, said Coghill, now 47, faced 35 years in prison and a $1.25 million fine. He was charged with defrauding merchants, banks and mortgage companies of about $3 million. One of Coghill's victims called him "a silver-tongued devil."

The Ponce family's suit claimed that Robert Graubard, the managing partner of Conch House Builders, negotiated a $17 million loan to buy the property, but that the loan was closed without their knowledge and before the property was transferred to the consortium's control.

They called it a "fraudulent scheme" by Graubard.

Graubard did not return phone calls about this lawsuit. Culbreath, Smith and Braugard could not be located.

Coghill broke his probation in 2006 by master-minding four new land deals in Florida, so he is now serving his 33 month sentence in prison, according to The Hook.

The Conch House Builders told the Ponces that they didn't have enough money to pay the entire $27 million, so they asked the family if they could help finance the acquisition by agreeing to become an investor themselves. For that, they would be paid $10 million in cash and be bought out over time.

The Ponces say that money was never paid. They also did not return phone calls.

Still unknown is who has the $17 million paid by Intervest National Bank.

Payments were made on the loan, bringing its principle down to $16.3 million.

But the last payment was made in February this year.

In their defense, the Ponces claim that the bank charged $3 million as collateral for the loan and charged high interest rates, and that the members of Conch House Builders and the bank "knew or should have known" of Coghill's felony record.

The suit also implied collusion, saying, "These individuals have business relationships in other real estate development projects."

They say the investors did not tell them there would be a third-party financing the deal. "The loan was not commercially reasonable," the Ponce's suit said.

The family is still running the Conch House for now.

In January 2006, when he announced the sale to the world, he said prophetically, "I'm sure it will be a shocker and one of the biggest land deals anyone has ever seen in St. Augustine."

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© The St. Augustine Record

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