Hospital investor has had troubles
By ASJYLYN LODER
Published March 17, 2007
Fifteen years ago, Terence J. McCarthy pleaded guilty in a real estate scheme that cost the federal government nearly $1-million.
Three years later, he hit trouble again. St. Petersburg police were called 118 times in a year to a hotel McCarthy owned. He'd been fined for not meeting minimum housing standards, and code inspectors noted chronic violations.
Now, he's one of five investors buying the old Brooksville Hospital from the Hernando County Commission for $1.1-million.
McCarthy's piece of the deal? He'll oversee the marquee tenant for the renovated 100,000-square-foot complex: a 60-bed assisted-living facility.
McCarthy's attorney, Robert Johnson of GrayRobinson in Tampa, commented on his behalf.
"These things were a long time ago," Johnson said. "He's turned around his life. Model citizen."
In the last five years, McCarthy has purchased five assisted-living facilities in Florida, including two in Hernando County: Forest Oaks in Spring Hill, which he bought for $3.65-million in October, and Spring Oaks in Brooksville, which he bought for $900,000 in August 2005, according to the property appraiser.
But he has already encountered some trouble with Spring Oaks.
In August, a mentally ill resident went missing three times, the woman's daughter said. The third time, she was found dead in the woods nearby.
"I see a lot of red flags here," said Commissioner Diane Rowden.
The hospital sale - unanimously approved by the County Commission on Feb. 6 - isn't final. The county and the buyers have a "due diligence" period to look for problems and, if necessary, back out.
The sale is slated to come back before the County Commission on March 27.
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McCarthy, a former basketball player for the University of North Florida, has "acquired, brokered and developed real estate since 1979," according to the biography his investment group provided to the county. His companies - TJM Properties Inc, formerly known as McCarthy Properties - developed and sold 850 properties in Florida.
A St. Petersburg Times investigation in 1989 chronicled McCarthy's dealings, and resulted in an FBI investigation. He and an associate were investigated for buying cheap houses, reselling them at inflated prices, and helping unqualified buyers secure government-backed mortgages with phony down payments.
Many of the buyers defaulted, and the federal government had to pay off the loans. The U.S. Department of Housing and Urban Development later claimed the scheme cost the government as much as $1-million.
In 1992, McCarthy pleaded guilty to two counts of helping to falsify loan applications. He was put on probation for three years, and ordered to pay $100,000 in restitution.
He continued to invest in real estate. He and two other partners bought the Caulfield House in St. Petersburg in 1994.
But in the year after McCarthy bought the 77-room hotel, police responded to 118 calls ranging from drug offenses to fights. Hotel regulators fined McCarthy $1,200, and threatened more fines for problems that included lack of hot water, broken sinks and termites.
McCarthy sold the building in December 1995, a year after he bought it.
Johnson said he didn't recall the exact details of McCarthy's plea in the real estate scheme. As for the Caulfield, McCarthy and a partner bought the troubled building and worked with the police to turn it around, Johnson said. Realizing their efforts were futile, they sold it. "It was out of control."
A new direction
McCarthy began investing in assisted living in 2002, purchasing the Oaks of Clearwater. He bought a Winter Haven facility in 2004, and two more in the summer of 2005, including Spring Oaks in Brooksville.
In August, Linda Heman, a mentally-ill resident of Spring Oaks, wandered away from the facility for the third time, according to her daughter, Dawn Christy.
She was missing for five hours before anyone noticed, Christy said. The Grove Road facility has an "open door" policy that allows residents to sign themselves in and out. But Christy said her mother had been refusing her medication, and was often disoriented. Heman left the facility barefoot, without signing out.
The next day, a police helicopter located Heman's body in the woods beyond the back door. An autopsy cited a heart defect as the cause of death. Christy and her family tried to sue, but were told that the undiagnosed heart ailment could have killed Heman even under the best of care.
Christy said her mother was mentally ill for more than 20 years, and could be difficult to care for. "But my mother deserved a lot more dignity than she got."
Johnson said that Heman needed more care than an assisted-living facility could provide. "They can't force you to sign out, or sign back in. You're not in a lock down situation. If she decides to leave and goes without her shoes, they can't stop her. They can't physically restrain her. They can't call the police."
Not aware of past
County officials said Friday they weren't aware of any problems in McCarthy's past.
"It's certainly something the county needs to investigate," said County Commissioner Dave Russell said.
McCarthy's business partner, Bill Rain, said he likewise didn't know about McCarthy's guilty plea. He didn't know about Heman's case, either, even though he's an investor in Spring Oaks.
McCarthy's stake in the redevelopment of the old Brooksville Hospital will not necessarily derail negotiations, Russell said.
But Russell said he wants more from the sale than just money. He also wants to make sure the development benefits the community.
The county considered renovating the vacant hospital into government offices. But the County Commission couldn't find the money for the costly renovations, and was hemorrhaging $50,000 a month to maintain the vacant hospital on Ponce de Leon Boulevard.
The County Commission decided to sell, but interest was limited. Out of three bids, only 55 Ponce de Leon LLC - the investment group including McCarthy and three others - demonstrated the financial clout to buy and renovate the building.
The partnership includes Rain, a developer from Ohio who said he has redeveloped more than 1-million square feet in his career; Gerald Weiner, founder of eLogic Learning in Tampa, who provided financial backing for the deal; and David S. Mallitz, an accountant from Ohio who works with DeBartolo Development, whose projects include shopping centers in Sarasota, New Port Richey, and Jacksonville.
On Friday, Rain said the group added a fifth partner: Richard Corbett, developer and investor in the International Plaza in Tampa.
They proposed a mixed-use project that would include shops, offices, and assisted living.
Rain said he still had full confidence in McCarthy. "He's a good operator," he said.
The Oaks Towne Centre, as the planned development is known, will help revitalize Brooksville, Rain said.
"It's going to be a great project."
Times researcher John Martin and Times staff writer Scott Barancik contributed to this report. Asjylyn Loder can be reached at email@example.com or 352754-6127.