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Fifty years ago, they were screwed-up kids sent to the Florida School for Boys to be straightened out. But now they are screwed-up men, scarred by the whippings they endured. Read the story and see a video and portrait gallery.
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Bankruptcy may not be final act
Investors question how a high flier's assets disappeared.
By LUCY MORGAN
Published May 13, 2007
[Courtesy of Florida State University website]
Investors say Don Reinhard bilked them out of millions, including retirement savings.
CORRECTION (06/05/07): In a May 13 story about a bankruptcy action pending against Don Reinhard, bankruptcy officials compared Reinhard's disclosures on his 2005 federal tax return with his petition for bankruptcy but did not allege that the tax return was falsified.
TALLAHASSEE - They trusted former Seminole Booster president Don Reinhard with millions of investment dollars. When they discovered their entire portfolios had evaporated, they accused him of fraud and deceit.
Now Reinhard has filed for bankruptcy, and an array of investors and court officials have accused him of a new round of fraud and deceit. They say he is trying to use bankruptcy court to unlawfully avoid his debts.
They say he hid real estate transactions, falsified his federal tax return and moved into his $4.5-million beach house in Seaside to claim a homestead exemption on the property.
Reinhard is not only in bankruptcy court, he's in criminal court and divorce court. He was charged with aggravated assault in January after a friend said Reinhard pulled a gun on him.
On March 12, Reinhard's wife of 22 years filed for divorce.
It is a dizzying fall for a man who had all the trappings of success when the fraud allegations surfaced four years ago. He had a collection of vehicles a Porsche, a Hummer, a Mercedes roadster, a Harley, and a collection of homes (a mansion in Tallahassee, the beach place in Seaside, a multimillion-dollar place on Lake Toxaway in the North Carolina mountains).
When Reinhard filed for voluntary Chapter 7 bankruptcy in November, he said only the $4.5-million beach house is left. He wants to protect it from creditors, but bankruptcy laws allow people to protect only $125,000 in homesteaded property.
Those who invested with him said he took advantage of his Seminole Booster connections and the good reputation of his father-in-law, John B. Mowell, a well-known Tallahassee investment manager. Some said they were bilked out of everything they were saving for retirement.
Several tried to get their money back through a National Association of Securities Dealers arbitration panel. But Reinhard filed for bankruptcy three days before the panel was to hear the case. Such arbitration proceedings are halted once bankruptcy proceedings are filed.
In bankruptcy documents, Reinhard said he has $37,000 in monthly expenses, no income and debts totaling more than $4.5-million, including $178,000 due to American Express. He drives a leased Land Rover.
U.S. bankruptcy trustee Felicia S. Turner has asked Judge Lewis M. Killian Jr. to deny bankruptcy protection.
In an unusual complaint filed in March, Turner said Reinhard liquidated more than $12.6-million in real estate holdings in 2005 as lawsuits and claims were being filed against him; falsified his 2005 federal tax return; and concealed, destroyed, falsified and failed to preserve documents that would allow a review of his financial condition.
She noted that Reinhard executed a mortgage on the Seaside property to his father-in-law on Sept. 1, 2005, but did not record it until January 2006.
When Reinhard sought bankruptcy protection, he did not list any of his 2005 real estate transactions. Asked about them at a hearing in February, Reinhard told bankruptcy officials he did not deem a property sale to be a transfer of assets.
He said he does not keep bank statements, canceled checks or ledgers, which left officials unable to determine exactly how he disposed of money.
Officials did determine that he transferred more than $1.2-million in cash to family members and others during 2005 and 2006. His 2005 tax return indicated he sold $4.1-million in stock through his Ameritrade account as well as other stock, but he failed to disclose the sales to bankruptcy officials.
Two dozen of the people who invested with Reinhard's Magnolia Capital Advisors also have petitioned the bankruptcy court to recover their money.
The next divorce court hearing is scheduled May 29.
The next bankruptcy court hearing is scheduled May 25.
Researcher Caryn Baird contributed to this report. Lucy Morgan can be reached at firstname.lastname@example.org.