Northpinellas: Suit blames developer's lawyer for loss

It seeks to pin the blame for money lost in three failed housing projects, two in Tarpon Springs and one in St. Petersburg, not just on the developer who proposed them, but on his lawyer.

And amid the normally straightlaced language of litigation, this lawsuit coins a new word -- "Enroning" -- to describe the investors' belief that attorney R. Carlton Ward helped developer Robert Swain deceive them.

"We've turned it into a verb," said Tampa attorney Michael C. Addison, who represents investors Dr. A.H. Rodriguez of Clearwater and Edward G. Gonda of Boca Raton. Enron collapsed after the world discovered that its accountants had made the Houston-based energy conglomerate look stronger than it really was. Addison said something similar happened to his clients.

In a suit filed Feb. 28 in Pinellas-Pasco Circuit Court, Rodriguez and Gonda sued Ward and his firm, Richards, Gilkey, Fite, Slaughter, Pratesi & Ward. They already have a separate lawsuit pending against Swain, Addison said.

The new suit, which seeks more than $15,000 in damages, said Rodriguez invested $225,000 and Gonda invested a total of $125,000 in three of Swain's projects: Tarpon Pointe and Tarpon Highlands in North Pinellas and Rutland Estates in St. Petersburg.

The investors contend that Swain "plundered and pilfered" those companies of money they and others had put in. They estimate the loss to them and others at more than $3-million. They also allege Swain manipulated and doctored the companies' books to hide the diversion of funds. And they allege that Ward helped Swain do it.

"We believe that Mr. Ward and his firm assisted Mr. Swain in accomplishing that diversion of the money from the corporation that my clients have an ownership interest in," Addison said. "The money just disappears, and it couldn't be done, in our view, without the cooperation, participation and collaboration of the attorney."

That is not true, Ward said Friday.

"We did nothing wrong . . . and if these investors have a complaint it would be with Mr. Swain," Ward said. "It just appears that because they've not been able to recover from Mr. Swain, they're seeking what appears to be a deep pocket for themselves."

Ward, 54, is an attorney who receives the highest reviews in confidential surveys of other lawyers for his legal acumen and personal integrity. He is the chairman of the board for the United Way of Pinellas County. In 28 years of practicing law, he said Friday, he has never faced something like this.

"It was totally out of the blue," Ward said. "We did not do what they're alleging and we did not do anything the way they're alleging. We represented the entities to the best of our abilities and did not do anything, to my knowledge, to the detriment of the investors.

All three companies were set up to develop and sell luxury townhouses, according to the lawsuit. Tarpon Pointe was proposed for about 3.6 acres on the Intracoastal Waterway in Tarpon Springs. Tarpon Highlands covered another 5.5 acres off Keystone Road, near the north tip of Lake Tarpon. Rutland Estates consisted of 14.2 acres next to the historic 1913 Rutland mansion in St. Petersburg.

In each case, however, the project foundered and ended up in bankruptcy court, leaving behind unhappy investors and unpaid subcontractors. In St. Petersburg, an engineer hired by the city has recommended tearing down the three unfinished townhouses that do exist.

In their lawsuit, Rodriguez and Gonda contend that Swain would not have been able to misappropriate or misspend money without Ward's help.

Among other things, they allege that Ward and his law firm helped prepare documents that allowed Swain to divert money from the three development companies to settle a lawsuit brought by a company to which he personally owed $400,000.

The new lawsuit contends that once that debt was settled, Swain could proceed with the purchase of The Newport Creamery, a New England restaurant chain. Since the purchase in 1999, the Newport Creamery has run into financial problems of its own. Swain has been kicked out of its management, and a court-appointed trustee has sued Swain and his wife for $9-million, accusing them of looting the company. He did not return a call on Friday.

But Ward said the suit includes information that isn't accurate. For example, he said the investors contend he provided office space for Swain.

"He was a tenant of ours in our building" and paid rent, Ward said. "He was a tenant first and a client second."

Swain is no longer a client of the firm, he said.

"We didn't participate in offering investments in the entities," he said. "We didn't participate in arranging the bank loans for the entities. The client and the entities did their own investing (and) did their own bank loans. . . . We assisted them in closing (loans) that they obtained, but not in acquiring loans."

The firm did act as an escrow agent for proceeds from real estate sales, Ward said, but those monies were handled according to the contracts that the companies signed.

"I'm sorry for the loss of these investors, but I don't feel that we did anything wrong in representing these corporations," Ward said.

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