Deal may put speculator in jail

Don Connolly may have misled a friend over a loan, violated probation.

By JEFF TESTERMAN, Times Staff Writer
© St. Petersburg Times
published September 14, 2002

TAMPA -- Records indicate that land speculator Don Connolly may have misrepresented the facts in a loan agreement when he signed papers to borrow $30,000 from a friend in February.

If true, Connolly could find himself in hot water. It is a felony in Florida to obtain a mortgage by false pretenses.

Property records, including a foreclosure suit filed against Connolly in Hillsborough County this week, indicate he did not reveal all that he should have when he signed papers for a $30,000 loan from Arthur Delaski, a friend and member of Connolly's prayer group.

As collateral for the loan, Connolly pledged a 30-year-old, concrete block home, saying he would permit "no other lien ahead" of Delaski's loan. In fact, there was a first mortgage already on the property.

Now the mortgage holder is foreclosing on Connolly, an action that threatens to leave Delaski with nothing for the $30,000 loan he made.

Connolly already has been convicted of perjury and found to have violated the terms of his probation stemming from a 1997 tax fraud case. Last month, he was placed on house arrest. But Circuit Judge Debra Behnke warned him that another run-in with the law would land him in prison.

Connolly is the Valrico businessman who gained notoriety around Tampa Bay for his business strategy of trying to squeeze fat profits out of cheap tax deed purchases.

His best-known deal involved the purchase of a lakefront in north Pinellas where he erected a pink fence on the shoreline and demanded $30,000 apiece from 15 homeowners to sell back the waterfront view.

Connolly paid $1,000 for that lakefront. He tried to sell it for $450,000, but settled for his costs -- about $4,000 -- after his scheme attracted unwanted attention.

On Friday, prosecutors with the office of State Attorney Mark Ober declined to comment on Connolly's loan from Delaski, saying it could become the subject of an investigation.

Deputy Hillsborough Property Appraiser Warren Weathers reviewed the loan papers and concluded that Connolly had gotten the better of Delaski.

"It appears the property Mr. Connolly used as collateral is almost worthless to the mortgage holder" who made Connolly the $30,000 loan, Weathers said.

Connolly said Friday that recent problems have strained his finances, but said he expects to soon close a deal to sell the property pledged to Delaski. He declined to disclose the buyer.

"That property will not go to a foreclosure sale, and he will get his money," Connolly said.

This is how Delaski's loan to Connolly unfolded, according to recorded documents:

On Feb. 27, Connolly, as trustee for a land trust, purchased a 1,019-square-foot house at 1707 E Seward St. for $50,400. At the same time, he assumed an existing mortgage loan of $40,800 made by Alliance Funding.

On the same day, but under a separate land trust, Connolly pledged the property to Delaski, a Hillsborough engineer who attends Bible study sessions with Connolly, for a $30,000 loan. Connolly signed a mortgage saying he would permit no lien ahead of Delaski's.

But the foreclosure suit filed Thursday against Connolly by Alliance Funding says Delaski's $30,000 loan is "junior, inferior and subordinate" to the Alliance loan.

The suit asserts that Connolly did not make the April payment or any subsequent payments on the Alliance loan.

Connolly claims Delaski knew that the Seward Street house had an existing mortgage when Connolly pledged it. He said Delaski was fully aware his $30,000 loan was a second mortgage.

But Delaski said he knew nothing of the other loan. He said he had never seen the property, near industrial land south of Busch Boulevard, and was merely making an investment in Connolly's land business, which he viewed as "safer than the stock market."

Connolly agreed to repay Delaski at the rate of 18 percent, but has missed payments for the last two months, Delaski said.

Of the foreclosure suit, Delaski said, "You're bringing up something I'm unaware of."

"I've known Don for a long time," he said. "I think I know him. I trust he'll make good on the loan."

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