JACKSONVILLE BUSINESS JOURNAL: Conch House in foreclosure, lawsuit filed

Conch House in foreclosure, lawsuit filed
Jacksonville Business Journal - July 27, 2007by Christian ConteStaff Writer
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ST. AUGUSTINE -- After owning the Conch House Marina Resort for more than 60 years, members of the David M. Ponce Jr. family were ready to move on to other projects. So when Thomas E. Coghill Jr. agreed to buy the site and some adjacent vacant land for $27 million in October 2005, David M. Ponce Jr. considered it the perfect opportunity.

"He seemed to be a go-getter," Ponce said. "He seemed to ask all the right questions and say all the right things."

The Ponce family sold the local landmark in December 2005, lending Coghill and other buyers some of the purchase price as part of the transaction, according to documents.

Now the family is trying to prevent foreclosure, claiming its loan to the buyers was not repaid and that a bank is improperly foreclosing upon the family, according to a lawsuit filed against the bank that loaned Coghill and others money to buy the site at 57 Comares Ave., St. Augustine.

When the family agreed to sell the property to Conch House Builders LLC, it did not know that the U.S. Attorney's Office in the Western District of Virginia had indicted Coghill in November 2004 on six counts of fraud relating to his Virginia-based homebuilding business, Ponce said. Coghill was released from federal custody on a bond in December 2004 and allowed to return to Florida and help his family build two homes with the condition that he refrain from entering into any new financial responsibilities, according to court documents.

Coghill pleaded guilty to one count of bank fraud and one count of wire fraud in August 2005. Ponce said the family was not aware of the plea when it was negotiating with Coghill.

Between his indictment and the beginning of what was originally a 33-month prison sentence in May 2006, public records and other documents indicate that Coghill was involved in several real estate investments in Northeast Florida, including the acquisition of the Conch House.

Coghill denied a request for comment through a prison official for a previous story. Prison officials did not respond to requests for an interview relating to the Ponce family's recent filings.

The deal
The Ponce family entered into an agreement to sell the Conch House, which includes a 200-wet-slip marina, a 17-room motel, a restaurant and a dockside lounge, along with some adjoining property, to Conch House Builders LLC in October 2005, the claim states. The Riverfront Developement (sic) Revocable Trust, an entity Coghill created in September 2005, was an original member of Conch House Builders, according to its original operating agreement.

On Dec. 21, 2005, Conch House Builders LLC closed on a six-month, $17.5 million loan from Intervest National Bank, about 70 percent of the purchase price of the property.

To cover the rest of the price, the Ponce family agreed to merge the assets of the Ponce Family Limited Partnership into Conch House Builders LLC in return for $10 million, plus interest, Ponce said. The agreement also entitled the Ponce family to an interest in all properties owned by Coghill personally and through his trust, in the event of a default of the $10 million repayment, according to the lawsuit. Ponce became the managing member of the merged Conch House Builders LLC.

As part of the merger agreement, investors in the original Conch House Builders LLC were to buy back interest from the Ponce family, ultimately removing them as owners, Ponce said. The family never received that compensation and in addition is still owed $10 million from the sale, he said.

Coghill managed the Conch House for a short time, after the Intervest loan closed and before he began his prison sentence, Ponce said. After Coghill left, Ponce said he resumed managing the business, which employs about 200 workers, so it would not close.

The Ponce family claim states, in part, "Plaintiff Intervest National Bank assisted Thomas E. Coghill Jr., a convicted felon (bank fraud) in perpetuating a fraud upon the Ponce family."

Further, it states, "The Plaintiff either knew, or should have known of the criminal background of Thomas E. Coghill Jr. at the time a loan request was submitted to Intervest and at the time of the funding of the loan."

The 25-page lawsuit, which includes the Ponce family's answers and affirmative defenses to Intervest's attempt to foreclose on the property, was filed July 17 in the 7th Judicial Circuit Court in St. Johns County.

Intervest National, based in New York City, is a full-service commercial bank with a Florida division that includes six branches in Pinellas County, in the Tampa Bay area. The bank is a wholly owned subsidiary of New York-based Intervest Bancshares Corp. (NASDAQ: IBCA).

Intervest attorney Joshua Magidson, from the Clearwater law firm Macfarland, Ferguson & McMullen, declined to comment about the case. During a July 18 hearing, he said Intervest did not interact with Coghill and that the claim submitted by the Ponce family's attorney had no merit.

"There's nothing in this complaint, there's nothing anywhere that says what the bank did," Magidson said. "What the bank did was loan them $17.5 million. It's easy to smear the bank and say, 'Oh, a crook took my money.'

"What meat do they have on these affirmative defenses? They have nothing."

Cross-claim
In a cross-claim filed July 17, the Ponce family is suing Robert Graubard, who signed documents as managing member of Conch House Builders LLC after the merger and as a guarantor of the $17.5 million loan, and Charles Kelly Smith, who also signed as a guarantor of that loan.

Graubard said he and Smith planned to file defenses and counter-claims against the Ponce family. Smith did not return phone calls seeking comment.

"We are taking appropriate legal actions," Graubard said. "We will defend the suit against these unfounded charges and we will set the appropriate counter-claims against the Ponces."

Graubard said he has documents that show the family's claim is not valid. As of press time, Graubard said he had not been served the lawsuit.
Also as of press time, Judge Michael Traynor had not ruled on whether to set a trial date.

cconte@bizjournals.com | 265-2227