Neils and Renata Teichfuhs had many reasons to move from Germany. High taxes squeezed them. Neils, a chef, had suffered a heart attack and doctors told him a warm climate might improve his health. Their 22-year-old daughter Maren dreamed of joining the U.S. Navy.
So in late 1995, when Neils saw the advertisement in the daily Hamburger Abendblatt that read, "Live and Work in Florida," he called immediately.
Thus began the Teichfuhses' ill-fated relationship with one Anton Ludwig Philipp, a German-born real estate wheeler-dealer in Miami Beach.
Neils Teichfuhs sued Philipp in 1996, terming the Stuttgart native's condominium conversion business a "criminal enterprise" designed to bilk unsophisticated middle-class Germans. New Times interviews with two investors and several other business associates of Philipp, as well as inspection of court and city records, imply that Philipp is something less than an ideal landlord and businessman.
Several other investors contend they were scammed but did not file suit. Tenants of the buildings he operates describe flooding, broken appliances, bad wiring, and insect infestations -- as well as less than reputable, cash-only practices. And the state is investigating Philipp's holding company and two of his associates after complaints about their management procedures. In the past seven years Miami Beach code enforcement inspectors have cited his properties for more than 100 violations.
Philipp, who agreed to several telephone interviews for this story, vigorously denies his critics' claims, stressing that the operation of his projects, and of his holding company, EFS Properties, Inc., is aboveboard. The critics, he says, are either bitter, irresponsible, or themselves scam artists. He adds that he is working to remedy any code violations and has responded to the Teichfuhses' lawsuit with a counterclaim, blaming Teichfuhs for the failure of a conversion of the Riviera Apartments. Moreover, Philipp is charging ahead with at least two other condo conversion projects in Miami Beach and recently completed another.
Judging strictly from appearances, the five-foot, ten-inch, 41-year-old Philipp has succeeded in his business. A resident alien, he lives on the 25th floor of one of the poshest condos on the Beach: tony South Pointe Tower. He lives there with his wife Alina Vallenilla, whom he married in April 1996. He drives a Mercedes-Benz and has a reputation for throwing and attending extravagant parties, according to tenants, investors, and ex-employees. Philipp's visage once appeared in Tara Solomon's "Queen of the Night" society column in the Miami Herald.
Yet by his own account, Philipp has been convicted of a crime. In a sworn deposition in the Teichfuhs case, Philipp admitted that he was convicted in 1982 of fraud in Germany. He said he had "about a hundred employees" in a condo-conversion business there. Just a few of them "defrauded people by taking the deposit ... and even though I never saw the money and I never had any contact with [these clients], I was ultimately the president of the corporation and held responsible, and that was the basis of the conviction." He was sentenced to two years' probation.
Philipp says he immigrated to New York City in 1986 and continued converting apartments and hotels to condominiums. After three years he moved to Palm Beach County, then settled in Miami Beach in 1990 and began looking for small rental properties ripe for conversion.
Condo conversion is a common enterprise in Miami and Miami Beach. Entrepreneurs make a profit by buying buildings at a discount, selling individual units at a premium, paying off their bank loans, and then ending their involvement. State rules governing the process require inspections and full disclosure of financial arrangements.
Philipp's lengthy list of projects, all but one located on South Beach or Normandy Isle, includes at least seven buildings. He has lost or sold some of his projects. He never owned the Riviera Apartments on North Shore Drive, in which the Teichfuhses invested in 1996, though he leased it with an option to buy.
He is still selling the Sevilla Apartments at 642 Michigan Ave. and the Fashion Apartments at 818 Pennsylvania Ave. In April Philipp sold his controlling interest in a firm he established to operate Lucy's Apartments at 2033 Calais Dr. The new owners there claim they found the place in a physical and financial shambles. The Alawra Hotel at 1455 Michigan Ave., which Philipp began working on in 1996, has been converted to condos.
Physically and financially, these properties have been troubled. At the Riviera the owners terminated his lease in August 1996 after his Riviera Ventures, Inc., hadn't made rent payments for several months. A mortgage holder at the Alawra sued for foreclosure last August. That case is still pending. Mortgage holders at Lucy's and Sevilla filed to foreclose but recently dropped their cases. Lucy's, the Alawra, and Fashion have been cited for code violations such as broken stucco, doors and windows in need of repair, water damage, improperly installed air conditioning units, and uncovered electrical boxes. According to city records, none of these problems has been remedied.
When the Teichfuhses first contacted Philipp, he described this deal to them: They would invest $50,000 in Riviera Ventures. Philipp promised the Teichfuhses a cut of both rent from the apartments and profits from the condo conversion, according to the Teichfuhses' complaint. The family would also get an apartment and jobs as building managers.
Philipp also agreed to arrange for them to receive investor visas. Such E2 visas can be granted to aliens from certain countries (including Germany) so they can stay indefinitely while directing a U.S.-based business in which they have made a substantial investment. The standard tourist visa allows only a six-month stay; if the whole family could obtain the investor visas, the Teichfuhses reasoned, their daughter would have ample time to square away her immigration status and join the navy.
So Teichfuhs wired $25,000 to Philipp's attorney's trust account in April 1996 and agreed to pay the other half later, his complaint reads. They sold their car and most of their furniture, put their few remaining belongings on a Miami-bound cargo ship, and moved to Miami Beach in May 1996.
At the Riviera, they found squalor. "There was no place to sleep, there was no air conditioner, no stove, no fridge, nothing," moans Renata Teichfuhs from the family's current digs in Naples. "It was so horrible."
The Teichfuhses say they spoke with another German investor in the Riviera who had struck a similar deal with Philipp. The man hadn't been paid in six weeks for his job managing the apartments -- which was the job Neils Teichfuhs thought his family was getting.
Concluding he had uprooted his family and spent the better part of his life savings in a deal that now appeared dubious, Neils Teichfuhs took his family to a hotel and waited for the next two days for Philipp to return from a trip. When they met, Teichfuhs demanded his money back. Philipp then said he wouldn't secure investor visas for the family, their complaint states.
Though Philipp says he has helped several other German investors obtain E2 visas for his projects, at least one immigration expert thinks it unlikely that the Teichfuhses' investment could have merited such a visa. The $50,000 that Teichfuhs paid is only about one-third of what immigration authorities would have demanded, said Ira Kurzban, a nationally prominent immigration attorney. "For a business converting major rental properties into condominiums, $50,000 would not be deemed a substantial investment, in my opinion," Kurzban says.
Instead of slinking back to Germany, the Teichfuhses decided to stay and fight. They moved to Naples and got visas that would allow them to work on foreign-flagged cruise ships. Then they filed suit in the circuit court against Philipp. They are seeking their money back, plus $100,000 in damages.
"Somebody has to stop this guy," says Renata Teichfuhs. (Her husband speaks little English.) "He ruined us completely."
Philipp denies misrepresenting the deal to Teichfuhs. Philipp's counterclaim alleges breach of contract and breach of fiduciary duty. In the counterclaim, Philipp states that Teichfuhs worked as the manager for two days, and that approximately $5000 in rent money was "lost due to the conduct of Teichfuhs"; that "Teichfuhs is responsible for the collapse of the venture"; and that Teichfuhs caused Philipp's corporation to lose $200,000.
The Teichfuhses never intended to follow through on their agreement, Philipp alleges. In the counterclaim he states that Renata Teichfuhs told him "that the area on 71st in Miami Beach is dangerous for their son, who has a drug habit."
Renata denies making this statement, and denies that her teenage son Bjorn has a drug problem.
Philipp also questions Neils Teichfuhs's integrity. "[Teichfuhs] has three warrants for his arrest in LYbeck, for fraud," Philipp asserts. "And his real name is not Neils, it's Heinz Hermann." He chuckles softly. "That will give that whole suit a new twist. Tell [the Teichfuhses' attorney] Cindy Jacobs she should contact her client before he commits perjury."
Maren Teichfuhs, the 22-year-old aspiring sailor, responds that her father's full name is Neils Heinz Hermann Teichfuhs, and that as far as she knows her father is not wanted by the law. The Teichfuhses' case against Philipp has been scheduled for a jury trial in March 1999.
Axel Heydasch was born in Hamburg, Germany, but has been practicing law in Miami since 1991. Seated at his desk in a Brickell Avenue high-rise, Heydasch reaches for a pack of cigarettes. "I've become very Americanized, but smoking is one of those little European things I just can't seem to kick," he says a bit sheepishly, then lights up.
Heydasch almost exclusively handles European clients. Once he represented a client against Anton Philipp. The lawyer says he has heard complaints from "at least twelve" other German investors who have put money into various of Philipp's condo-conversion projects. He is not involved in the Teichfuhs case, but he has read their complaint and says that the scheme they describe is almost identical to other stories he has heard about Philipp in the past six years.
Heydasch claims he first heard of Philipp in 1992, when a distraught young German couple approached him. "They had invested $50,000 in the Charles Hotel. They were supposed to be given a lease on a store there and were promised a condo. The lease never panned out; neither did the condo." Like others who have allegedly complained to Heydasch, the couple decided it wasn't worth spending $20,000 in attorney fees to take a chance on recovering $50,000, Heydasch relates.
Heydasch and one investor who wouldn't give his name say Philipp generally uses investor money for a down payment for the buildings. Then he gives investors shares in exchange for their cash.
The scheme of offering shares in a company that operates an apartment building is particularly tempting to Germans unfamiliar with U.S. law. "These people don't realize that any idiot can form a company here, and that these shares are quite literally not worth the paper they're printed on," Heydasch says.
"He may or may not go through procedures to convert them into condos, but in the meantime he fleeces the building," Heydasch says. "He'll grab the rent money, which is usually all cash." Very little of this money ever goes to mortgage payments, property taxes, or upkeep on the buildings, Heydasch alleges. Most of it, Heydasch adds (echoing three other Philipp associates), goes straight into financing Philipp's lavish lifestyle. "He's very much a party animal," Heydasch says with amusement.
"Carsten," a German investor interviewed for this story who asked to be identified by a pseudonym, is still hoping to get some return on his investment with Philipp. Carsten declines to say how much he invested because he's afraid Philipp might be able to identify him. "Maybe he sues me, or he makes sure I don't see a penny," he frets.
He agrees with the Teichfuhses that Philipp must be stopped.
"Here, it costs years and money, before you have, maybe, your money back," Carsten laments. "People just say, okay, forget it, it's not worth it to fight from Germany, to hire an American attorney, deal with language problems, then maybe go to court in America. That is what Anton is calculating and planning."
Philipp dismisses both Carsten's and Heydasch's objections. He traces Heydasch's criticism to bitterness over a bar complaint Philip filed last year. The dispute arose when a group of mostly German investors hired Heydasch to represent them in a squabble with Philipp over a medical office building in North Miami Beach. Philipp, who owned part of the building, tried to block sale of the place. That battle ended when Heydasch's clients paid Philipp a $6000 settlement. Philipp filed the complaint against Heydasch for his conduct in the case, claiming conflict of interest, among other things. The complaint was dismissed in February.
"Axel Heydasch is obviously very pissed at me," Philipp states. As for the dismissal, Philipp snorts, "The Florida Bar? A joke. They protect their own."
He insists he does not abscond with the funds his buildings generate. He states that he's committed to involving his fellow Germans and occasionally Austrian, French, and Swiss citizens in the booming condo-conversion business in Miami Beach. He emphasizes that each one knows what he's getting into, and that he has "many happy investors."
A woman who claims she is a former employee of Philipp's EFS Properties confirms Heydasch's description of the more predatory aspects of her onetime boss's approach to finding foreign investors. An ex-receptionist who asked to be identified only by her first name, Brenda gestures around her kitchen in the Sevilla Apartments, pointing out what she says are hints of Philipp's dismal management.
There's no stove, and the top of a gas pipe is covered with a plastic bag. An air conditioner doesn't work. The freezer of her refrigerator is barely cold enough to work as a fridge; the bottom section is room temperature. Brenda reports that her apartment floods regularly. She says her apartment is an example of what many tenants must endure in the Sevilla.
Philipp denies that Brenda ever worked for EFS or Sevilla Ventures. "She was hired and fired by Miguel Acosta, who was an independent real estate broker selling units for me," Philipp says. He says she's just upset because he's trying to evict her for nonpayment of $2600 in rent.
He adds that he is quite proud of the rent-to-own plan, which Brenda criticized. To qualify for a mortgage on a $60,000 condo, for example, a prospective owner would usually require a $20,000 down payment, he says. But EFS accepts $2000 as a down payment and provides a second mortgage for the rest of the $20,000.
"We have very many happy clients," Philipp crows. "Without our program it would not be possible for them to own real estate. I shouldn't be telling you my business secrets. I started this in Stuttgart, then every broker woke up and started copying me. I did the same thing in New York. Now everybody will copy me on the Beach."
Over several weeks Philipp twice offered to give New Times names and phone numbers of satisfied investors and rent-to-own clients. By press time, he had not done so.
Brenda says the reason she faces eviction has a lot more to do with Miguel Acosta than Anton Philipp. As soon as she was hired, Brenda says, Acosta withheld rent money from her paycheck. When she told him she would rather get all of her pay, the burly Acosta said sure, but on one condition: "That I sleep with him," Brenda says, with a disgusted look on her face.
She eventually complained to Miami Beach police about Acosta's alleged harassment. After Brenda described numerous occasions when Acosta groped her, Miami Beach officers advised her in December to contact both the State Attorney's Office and the Equal Employment Opportunity Commission.
Brenda also was at the center of a recently concluded conflict between Philipp and his mortgage holders at Sevilla. In a September 29 letter to Philipp, Dorothy Sandler, on behalf of the mortgage holders, wrote that she was "very concerned about the way the Sevilla is being run. Unauthorized expenses are being paid, while the 1st and 2nd mortgage holders are not receiving their payments in a timely manner." Those mortgage holders began foreclosure proceedings, but by the end of April both dropped their suits.
Among Sandler's complaints: An employee of EFS -- Brenda -- was living in Sevilla "rent-free." Brenda doesn't know for sure where her purported rent money was going, but she has a pretty good idea. "We all joke that we own that apartment [where Anton Philipp lives in South Pointe Tower]," she says. Philipp reiterates that he is not directly involved in the management of Sevilla and dismisses all of Brenda's accusations.
Miguel Acosta, reached by telephone, denies he ever harassed Brenda. He says she was, in fact, living in the apartment rent-free as part of her compensation. He states that he fired her after he discovered that "she stole money from two apartments." (Brenda denies this accusation.) The harassment complaint came only after he fired her in November, he says, adding that the police have never approached him about the matter.
Acosta, who hasn't worked with EFS since February, says he left because Philipp "couldn't afford to pay me any more." Acosta estimates Philipp owes him $6200 in salary and commissions. Philipp acknowledges this, stating that Acosta will receive his money in due course. Acosta denies that anyone at EFS was trying to force tenants out or to improperly pocket cash. He bears Philipp no animosity, describing his former colleague as "a hardworking guy with a lot of expenses."
Brenda says she was fired in January, not November, as Acosta contends. She complained about EFS, Acosta, and another Philipp associate to the state. In a March 5 letter to Brenda, the Department of Business and Professional Regulation wrote that her complaint was "legally sufficient," meaning that, if the allegations are true, they would fall under DBPR's jurisdiction. Brenda says investigators from the Miami office are trying to corroborate her allegations. If the investigation confirms her charges, Acosta and the other broker could lose their real estate licenses.
Even a man still in business with Anton Philipp questions his management. At Lucy's Apartments, Klaus Gebhardt is cleaning up after Philipp. Gebhardt is a consultant to Munich-based W&H Capital Corp., which bought out Philipp's shares in Lucy's in April and now holds the second and third mortgages. Philipp still has a contract to be the exclusive sales agent for the units there, and he says he has an interest in the company.
But it's Gebhardt, an eighteen-year Miami resident, who is running the place from his office in apartment five. The concrete-floored, barren two-bedroom apartment looks out on the channel just north of Normandy Isle.
Gebhardt and his staff picked up trash and bug-bombed the roach-infested apartment six, among other messy jobs. "The maintenance of this building was none," Gebhardt says of the management reign of Miguel Acosta. He adds that each of the ten apartments needs about $17,000 of electrical, plumbing, and paint work to get up to code. He says he was "just barely" able to keep the City of Miami Beach from filing liens against the property for existing violations. After the units are squared away, he adds, W&H plans to convert the building to condos.
Acosta calls Lucy's "a real tough property." He says he had difficulty collecting rent and was responsible for it only until November. It had some small violations then but nothing major, he says.
In April,the financial state of the company Philipp formed to manage and sell apartments in the two-story building was also sorry, Gebhardt contends. Sorting through the books of Lucy's Apartments, Inc., an accountant discovered that an estimated $38,000 in expenses was unaccounted for. Gebhardt says Philipp has not yet responded to a letter asking for invoices, canceled checks, or other documentation of these outgoing funds.
"Sometimes I feel like I'm Sherlock Holmes," Gebhardt jokes. "It's difficult to get a picture of what the hell was going on here."
Philipp says he has never seen such a letter and sincerely doubts that dollar figure. The rental income of Lucy's totaled between $4000 and $4500 per month, he says. "If you multiply that by the time Acosta was managing it [from May until November], and then take out the taxes and utility bills, there's not very much left." Philipp also strenuously denies that he had anything to do with undocumented funds.
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Philipp is likely to continue operating his businesses, Axel Heydasch says. He recalls a conversation with one police officer who said that cases like this should be dealt with in civil court.
"You can't take care of this in a civil suit because Philipp is judgment-proof," Heydasch states. "I don't know who owns the apartment he lives in, but I don't think it's his." According to Dade County property records, the apartment belongs to a Klaus Anton Philipp, Philipp's brother -- whom Philipp describes as "a famous boxer" in Germany.
Philipp says his brother's ownership is not sinister. Once conversions get rolling, neither investors nor anyone else will have anything to gripe about.
"When you're successful and better than others, it's very difficult for others to admit they're not as good as you," he explains. "It's easier for them to accuse you of a crime.