Fraud didn't create loss, investor says
By JEFF TESTERMAN
Published February 21, 2007
TAMPA - To obtain a $9.04-million loan on his Amberwood Apartments in 2001, New York real estate investor Steven Green gave a Tampa bank a fake Social Security number and copies of three tax returns he had never submitted to the IRS.
A year later, after a fire at Amberwood displaced dozens of residents, Green quit making loan payments, and the lender ended up unloading the apartment complex for a $4.1-million loss.
But while Green defrauded the bank in applying for the loan, he had no direct responsibility for the multimillion-dollar loss, according to testimony Green's lawyers introduced in federal court Tuesday.
Instead, Green's attorneys said, the loss was attributable to tenants who vandalized the apartments like "animals," a rabid press that fed the Amberwood chaos with "tabloid" coverage and agents for the lender who prevented a rehab effort at the complex by holding back renovation money.
"It's obscene to say that Mr. Green should be responsible for this loss," said attorney Edward M. Kratt. "He did everything in his power to fix things."
Is Green responsible?
The debate over Green's role in the financial loss came in a sentencing hearing before U.S. District Judge Susan C. Bucklew. The judge said she needed more time to review financial exhibits submitted by Green's defense team. Bucklew, a Stetson law school graduate appointed to the federal bench in 1993, will resume the sentencing hearing Monday.
If Bucklew finds Green's fraudulent actions led to the $4.1-million loss claimed by U.S. prosecutors, he would be eligible for a prison sentence of 51 to 63 months. If the judge decides Green was not to blame for any loss, he could get probation.
Green pleaded guilty in November to fraudulent use of a Social Security number and failing to file tax returns for 1999, 2000 and 2001.
Tenants were 'animals'
In May 2002, after a fire damaged 20 units at Amberwood, county inspectors visited the complex in northern Hillsborough and found hundreds of code violations. Officials shut down the complex, displacing dozens of residents.
The fire was started by a candle lit by a resident whose power had been turned off for nonpayment, according to testimony Tuesday by Sharon Valenti, an apartment manager for Green. Later, under the glare of the media spotlight, Valenti said, Amberwood residents vandalized smoke detectors and fire alarms in an effort to trigger code compliance writeups that would bring rent rebates.
"There were some undesirable people starting things," said Valenti. "The people just became animals."
After more than $760,000 in insurance was disbursed after the fire, servicing agents for the lender refused to forward the money to Green to make repairs. Instead, the agents held on to the money to "mitigate their loss," testified Robert D. Manning.
Manning, an expert on commercial banking, is featured in the movie In Debt We Trust, about America's debt problems for which Green served as executive producer.
'He walked away'
But Assistant U.S Attorney Robert A. Mosakowski argued that Green is liable for the entire $4.1-million loss at Amberwood.
"He borrowed $9-million and one of the potential risks was that he wouldn't repay the loan, and he didn't," said Mosakowski.
The renters who turned into animals? They were good, paying tenants before the fire, the prosecutor offered.
The delay in insurance money? By the time the lender's agents elected not to forward the insurance money to Green, he had already skipped three mortgage payments, Mosakowski pointed out.
Was Green really so strapped for cash that he was unable to find the money for renovations to get Amberwood up and running again? No, said Mosakowski, Green owned two dozen rental complexes.
"He could have come up with the money somewhere else." Instead, "he walked away."
Jeff Testerman can be reached at 813 226-3422 or email@example.com.
[Last modified February 21, 2007, 01:34:39]
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