By Chuck Strouse
By Scott Fishman
By Terrence McCoy
By Ryan Yousefi
By Ciara LaVelle, Kat Bein, Carolina Del Busto, and Liz Tracy
By Pepe Billete
By Ryan Yousefi
By Kyle Swenson
In the aftermath of Hurricane Andrew, MMI and county commissioners amended the original Black Point lease in a number of significant ways. The county agreed to reduce the amount of money MMI was required to spend on publicizing and marketing the marina, from $60,000 per year to $24,000. It agreed to waive the company's monthly rent for up to six months, until October 1, 1994, and it gave MMI a $5000 rent credit to help cover the cost of getting connected to the county sewer system.
Most important, county commissioners agreed to allow MMI to use the marina lease as collateral against a bank loan -- a marked departure from its previous opposition to encumbering the lease. The company needed money for reconstructing the boat barn and other parts of the damaged operation.
Final approval of the loan and the other lease amendments took from October 1993 until February 1994, a delay MMI would later blame on the political machinations of then-County Commissioner Larry Hawkins, whom the company contends wanted to award the marina lease to a helpful constituent in his South Dade district.
But finally MMI had the amendments it needed and received a $1.5 million construction loan from Ocean Bank, a Miami lender.
The loan from Ocean Bank wasn't the only money Graham was raising at the time. On the same day county commissioners signed the new lease with MMI, another set of documents was also being executed.
On February 1, 1994, three husbands and wives put their signatures on a partnership agreement. David Graham was there to witness the signatures -- he had expended considerable energy bringing the partnership about.
The partners all knew each other. That day they were happy because they no doubt believed they were going to make a killing on a great investment.
The six investors were Alan and Kathi Glist; Dr. Richard and Carol Phillips, respectively the son-in-law and daughter of Graham's business partner, Jacob Kushner; and Dr. David Korn, a cardiologist, and his wife Allyn. Dr. Korn and Dr. Phillips were colleagues at Mount Sinai Medical Center in Miami Beach. In the coming weeks three other people would join the partnership: Dr. Robert Goldberg, a Mount Sinai gastroenterologist, and his wife Patricia Etkin, a lawyer; and Maurice Gozlan, Dr. Goldberg's accountant.
According to a prospectus promoting the partnership, the venture was to be called Pirate's Point, Ltd. (PPL). A separate corporation, YS Marketing, Inc., owned by Graham's wife Tamea Behrendt, would own half of Pirate's Point, Ltd. and act as the general partner in the enterprise, taking care of the day-to-day operations. The investors would be limited partners, receiving a juicy twenty percent annual return on their investment money, plus some tax advantages related to the depreciation on two buildings.
One of the buildings in question was the 50,000-square-foot boat barn at Black Point Park and Marina. The other building was also a storage facility for boats, to be built on an adjacent piece of private property known as Pirate's Spa. The investors understood from the prospectus and from the partnership agreement that PPL was to be the "owner" of both structures.
Investor Patricia Etkin, one of the latecomers to the deal, says she didn't scrutinize the Black Point arrangement, or David Graham to the extent she otherwise might have. Her husband's medical partner, Dr. Phillips, introduced her to Graham. Phillips was married to the daughter of Graham's business partner and, according to one source, had shared Graham's Fort Lauderdale home after Hurricane Andrew. Etkin says she also assumed that Pirate's Point, Ltd. had the imprimatur of Dade County government, since the boat barn was located on public land. "It appeared to be something that had very little risk," Etkin recalls. "We always assumed the county was sort of overseeing this."
Not only did Pirate's Point, Ltd. not have the blessing of Dade County, as was legally required, it didn't even exist. In bankruptcy pleadings three years later, Graham claims he simply forgot to prepare the legal paperwork necessary to establish the limited partnership. It would be some time, though, before the investors discovered that fact, or before the county knew anything about the Pirate's Point venture. In the meantime, money began flowing toward Graham.
Korn, the Mount Sinai cardiologist, transferred $300,000 to Graham's trust account on October 15, 1993. Then the transaction began to get complicated.
The Korns say they were under the impression that their fellow investors had also each put up $300,000 of their own cash for the Pirate's Point partnership. But in fact the Phillipses and Glists got their $600,000 in the form of a loan from Comerica Bank of Fort Lauderdale. In December 1993, the Korns say, Graham asked them to put up $200,000 in stocks and bonds as collateral for a short-term loan he needed from a bank. The loan, they discovered, "was not a short-term loan to Graham, but was in fact a loan to third parties Carol Phillips, Richard S. Phillips, Kathi Glist and Alan Glist in the amount of $600,000."
Later, when payments weren't made on the $600,000 Comerica loan, the bank seized the Korns' collateral. The bank also sued Phillips and Glist, the loan signatories. Richard Phillips has since filed for personal bankruptcy.