$70,000 regret taints a dream

The building was the perfect spot for this couple's restaurant. So they decided to make a deposit.

By JODIE TILLMAN, Times Staff Writer
Published October 21, 2007

Kristi and Jeffrey Gonzalez in the Palms Cafe, their Caribbean restaurant in Gulf View Square. They struggle with credit card debt after an ill-fated real estate deal took their $70,000 deposit.
	[Stephen J. Coddington | Times]

Asking price on the Main Street building? $465,000. The couple agreed to pay it.

But as their financing got delayed, and the seller got antsy, the Gonzalezes made a decision that continues to haunt them: They handed over a $70,000 deposit.

Two months later, the deal fell apart. Their deposit disappeared, and so did their financial stability: They have racked up nearly $60,000 in credit card debt, paying bills and chasing down money that even a favorable court ruling hasn't helped them get back.

Debt is often accompanied by a long list of regrets. The Gonzalezes have only one this one, this one simple transaction.

"I'd always had the feeling we'd get the money back," said Kristi Gonzalez. "We've been going with this hope that there would be a resolution."

And now? "I feel ashamed and stupid."

* * *

In March 2006, when optimism was high, the Gonzalezes went to court to get their money back. They sued the building's seller, Freddy's Bar and Grill, a now-defunct company headed by Fred Charos. Here's what the lawsuit filed in the 6th Judicial Circuit says:

The two sides signed a contract on Oct. 14, 2005, with Freddy's agreeing to sell the property for $465,000.

They had to amend the agreement twice in November as the Gonzalezes struggled to get financing for the full amount. Their difficulties stemmed not from any credit problems but from an appraisal that put the value of the building at only $390,000.

In an interview, the couple says Charos called them and asked them to release the deposit early to make up for the delays. Worried he'd lose interest in them, the Gonzalezes agreed after their real estate lawyer gave them the go-ahead. They used proceeds from a second mortgage they had taken out on their Holiday home.

The lawsuit says the Gonzalezes paid $90,000 in deposits, though the couple says in an interview that figure is wrong: They actually released $70,000 - an initial $5,000 down payment plus one for $65,000 - in the escrow account set up by Fox and Fox, the Clearwater legal firm that representedFreddy's.

By January 2006, it was clear the loan company would not finance the sale at its full price because of the appraisal. The deal wasn't going to go through. The Gonzalezes' lawyer asked Fox and Foxfor a refund, citing a portion of the contract that says they could get their deposit back if any terms of the contract aren't met.

But they never did.

Victory, not money

In February 2006, Freddy's Bar and Grill lawyer Gregory Fox sent a letter to the Gonzalezes' lawyer saying his client believed the couple had defaulted on the contract and would be keeping the deposit as damages. That was the last time they heard from anybody. The couple hired another lawyer, Randall Love of New Port Richey, and went to the 6th Judicial District Circuit court.

In August 2006, the court ruled in the couple's favor. The reason? Freddy's Bar and Grill never mounted a defense, never even showed up to court. The couple won by default, though Love said he's confident they would have won the case on its merits, too.

"There's no question my folks were entitled to get the money back," he said.

But here's the hitch: They sued a company that, as far as anyone can tell, has no assets. Shortly after they won, Love told the couple they would have to keep spending money in legal fees to track down assets that may or may not exist.

"If the corporation doesn't have any assets," said Love, "the judgment doesn't do you any good." That's why people set up corporations, he said. In some cases, these corporations are what he calls "judgment proof."

Deposit goes missing

So who's left after the company disintegrates? The former president and seller, Charos.

According to state and county court records, Charos, 51, is also the president of Relaxation Station, which does business as Dusk Til Dawn, an adult entertainment club in Hudson. He has a Florida arrest record that dates to 1979 and includes nearly 30 charges, ranging from moving violations to assault on a law enforcement officer. Many of those charges were dropped.

Charos, who gave a Dunedin mailing address in a September state corporations filing, said in an interview that he never saw the Gonzalezes' deposit and has no idea what became of it.

"The lawyer put it into an account that's unaccounted for, for some reason," he said.

He said he hasn't talked to the lawyer, Gregory Fox, in months and has cut ties with him over his handling of an unrelated case. He said he didn't know about the Gonzalezes' lawsuit.

Notice of the suit was served on Fox in March 2006, according to court documents. The investigator who dropped off the documents said in court filings that he followed Fox to his office parking lot and asked him to accept the documents.

"He asked who they were on and we showed him the paperwork. ... He advised he was running late and advised to come back again," Palm Harbor investigator Howard Bennett wrote. When the investigator returned nine days later, a woman at the office said Fox was in a meeting and would not be coming out. She would not accept the documents. The investigators left the documents on the front counter.

What Fox thinks of the lawsuit is unclear. He did not return several phone messages left with a staff member and on a company voice mail.

Neither man has anything to do with the Main Street building any longer. In February 2006, just one month after the deal with the Gonzalezes fell through, Freddy's sold the property for $385,000. It was later split into three units, one of which recently opened as a frame shop.

Money problems

All this has meant the Gonzalezes fear losing their foothold in the middle class.

Kristi's father was a factory worker for General Motors, and Jeffrey's mother raised him alone. Both families sent strong messages about managing your money: Save. Pay your bills. Don't run up your credit cards.

"Everything I've worked hard to get has been crumbling away," said Kristi, 38. "Nobody ever gave me and Jeff anything. We got everything we have on our own."

The couple, who have been married nearly a decade, have two children, ages 8 and 4. Kristi works as a teacher at J.W. Mitchell High School. Back when he figured they'd get their money back, Jeffrey, 36, forged ahead with his plans to open a restaurant.

In August 2006, he used credit cards to open the Palms Cafe, a Caribbean restaurant in the food court of Gulf View Square. Business has been okay, he said, but not enough to make up for the hole they're in.

Bankruptcy, he said, is looking like an option. Kristi's thinking about getting a second job. They'll do anything to hold onto their home, which Pasco County values at $219,175.

Like a lot of money problems, this one has caused a rift between wife and husband. She wants to keep fighting, to get an answer about the money, to tell everybody she meets to be careful about who you deal with. He doesn't want to think about it anymore.

"I have to put it away now - and, it's eating at you, isn't it?" he said to her one day at the food court. She nodded, and he said, "I can't go back in time and change it."

Times researcher Shirl Kennedy contributed to this report. Jodie Tillman can be reached at jtillman@sptimes.com or 727 869-6247.

[Last modified October 20, 2007, 20:25:54]