Builder plays blame game

The contractor says his customers, staff and bank all contributed to his bankruptcy.

By James Thorner, Times Staff Writer
Published May 10, 2007

A couple of hours into his bankruptcy hearing Wednesday, St. Petersburg builder Jesse Battle III suggested his customers shared the blame for sinking his company.

"They didn't even want to take possession of their homes because they're in a soft real estate market, " Battle said during the course of labeling his customers "speculators."

The comment set off Kathleen Egan, an Apollo Beach real estate investor facing financial ruin from the purchase of two of Battle's homes.

"I think he's full of c---, " Egan said. "It wasn't me delaying it. He was delaying it."

Disbelief was the prevailing emotion at the six-hour hearing in downtown Tampa as Battle, owner of Construction Compliance Inc., faced down creditors owed more than $10-million.

At one point taunts spilled so thickly from some of the 50 creditors in attendance that Battle ripped off his glasses and turned red-faced to the crowd.

"This is real funny!" he fumed.

"Shyster!" someone shouted from the back row.

"It's not fun for us either, " another person added.

In hundreds of deals hatched with Coast Bank of Bradenton from 2004 to 2006, CCI agreed to build no-money-down investment homes in Sarasota County's North Port community. CCI would deliver the homes for 10 percent below appraised value so investors could flip them for a quick profit.

It didn't work as planned for customers of 482 homes left uncompleted when Battle went bust last fall. They are on the hook to repay construction loans to Coast that in some cases amount to $80, 000 for an empty lot.

Theresa Boatner, the U.S. trial attorney who ran the hearing, expressed amazement that Battle could have missed signs of insolvency as early as 2005 and continued to sign up new customers. The company's federal tax forms for 2004 and 2005 showed losses totalling more than $6-million.

Several times she appeared flummoxed when Battle purported not to recognize affiliated companies incorporated under his name.

"You formed a company and you don't know what it is?" Boatner said, one of many times she adopted a prosecutorial tone.

Battle was polite and composed for most of the hearing, usually framing his answers with "yes, ma'am." and "no, ma'am." He claimed he was left out of the loop by incompetent underlings, especially his accounting department. "I had no idea we were heading toward this turmoil, " Battle said.

Alan Tannenbaum, a Sarasota lawyer who represented more than 100 CCI customers, latched onto Battle's testimony that it was Coast Bank vice president Phil Coon who originated the easy-money home deals in the first place, along with John Miller of American Mortgage Link in Tampa.

According to Battle, Coon urged CCI to put some home contracts under different corporate names to make it appear Coast's loans were not concentrated with one builder.

"They're deep into the whole architecture of the scheme, " Tannenbaum said of Coast, which has become a merger candidate since the story of the CCI debacle broke in January.

Creditors meetings such as Wednesday's are routine in cases of bankruptcy. Facts gleaned from the meeting will flesh out Battle's already voluminous bankruptcy file from April.

Boatner warned Battle about several omissions in the original filing signed under penalty of perjury. She questioned whether CCI was a legitimate candidate for Chapter 11, which suggests a company can be reorganized and put right. Battle has left hundreds of customers stranded with no hope of completing their homes.

One of them was Ross Kass, an investor from New York who flew to Tampa for the hearing. He signed up for a home in September 2005. Though the lot sits empty, he owes Coast $84, 000.

"You don't lose millions and not know you're under the eight ball, " Kass said of Battle. "He's lying through his teeth."

Fast Facts:

The CCI story so far
- Construction Compliance Inc., a St. Petersburg builder, declared bankruptcy after promising - then failing - to build "no-money-down" homes for hundreds of buyers seeking to resell the houses quickly during Florida's housing boom.
- CCI's lender, Coast Bank of Bradenton, financed most of those mortgages - millions in loans that will probably not be repaid.
- Now CCI and Coast are busy blaming each other for their financial woes. But the Florida business climate changed rapidly when the housing market soured.

To read about the events leading up to CCI's bankruptcy hearing, visit tampabay.com.

James Thorner can be reached at thorner@sptimes.com or 813 226-3313.