By Jim Weiker
The Ohio Division of Securities has accused the developers of a major Short North condominium project of lying to investors and improperly distributing funds to themselves.
An attorney for the developers denied the allegations and said he plans to
dispute them.
The allegations are the latest twist in the six-year saga of Ibiza, a proposed 11-story, 135-unit condominium at Hubbard and High streets.
The securities division accuses developer Apex Realty Enterprises of lying to potential investors in 2006 by stating that 120 of the 135 condominium units had been sold for a total of $68 million.
In fact, says the division, none of the units had been sold at that time.
Apex’s attorney, Timothy Miller, said the figures came from an estimate of the project’s future earnings that was distributed to potential investors and was not a statement of actual sales.
The division also alleges that Apex’s four principals each took about $80,000 in investor money without disclosing it to outside investors. The principals are Raymond Brown, Michael Council, Wilbur Ischie and Rajesh Lahoti, all of Columbus.
In addition, Council improperly received an $80,000 loan from the investment fund, according to the securities charges.
Miller said the principals were entitled to all the money they withdrew and much more that they didn’t.
“They put in more money than that — hundreds of thousands of dollars that they lost on this deal,” said Miller, a lawyer with Isaac, Brant, Ledman & Teeter of Columbus. “They were also entitled to a million-dollar development fee they never took.”
Miller said he will seek a hearing with the securities commission by the end of the week to fight the allegations. “I feel very confident that we will prevail on the claim simply because our clients haven’t done anything wrong,” he said.
The commission said it will issue a cease-and-desist order against the developers if they do not appeal or if a hearing fails to change the allegations. The order is essentially a ruling that the developers violated Ohio securities law but is not a criminal charge.
Brian Laliberte, a Columbus lawyer who represents buyers who lost deposits on Ibiza condominiums, said the state’s allegations reinforce his belief that developers mishandled money.
“The division’s findings confirm everything we believe to be true about the project,” he said.
The allegations provide a further glimpse into the financial collapse of what was to be the biggest condominium development in the Short North, a luxury complex with prices ranging from $159,999 to $1.5 million for a penthouse unit.
Starting in 2008, Apex and its sister company, ARMS Properties, collected 5 percent deposits on 75 of the units for a total of $1.16 million, an average of about $15,000 each.
The project never broke ground, however, and Apex filed for Chapter 11 bankruptcy protection in April. In a reorganization filing, Apex has proposed reimbursing condominium depositors an average of $2,600.
Other developers are eyeing the property for an apartment complex.
The allegations are the latest twist in the six-year saga of Ibiza, a proposed 11-story, 135-unit condominium at Hubbard and High streets.
The securities division accuses developer Apex Realty Enterprises of lying to potential investors in 2006 by stating that 120 of the 135 condominium units had been sold for a total of $68 million.
In fact, says the division, none of the units had been sold at that time.
Apex’s attorney, Timothy Miller, said the figures came from an estimate of the project’s future earnings that was distributed to potential investors and was not a statement of actual sales.
The division also alleges that Apex’s four principals each took about $80,000 in investor money without disclosing it to outside investors. The principals are Raymond Brown, Michael Council, Wilbur Ischie and Rajesh Lahoti, all of Columbus.
In addition, Council improperly received an $80,000 loan from the investment fund, according to the securities charges.
Miller said the principals were entitled to all the money they withdrew and much more that they didn’t.
“They put in more money than that — hundreds of thousands of dollars that they lost on this deal,” said Miller, a lawyer with Isaac, Brant, Ledman & Teeter of Columbus. “They were also entitled to a million-dollar development fee they never took.”
Miller said he will seek a hearing with the securities commission by the end of the week to fight the allegations. “I feel very confident that we will prevail on the claim simply because our clients haven’t done anything wrong,” he said.
The commission said it will issue a cease-and-desist order against the developers if they do not appeal or if a hearing fails to change the allegations. The order is essentially a ruling that the developers violated Ohio securities law but is not a criminal charge.
Brian Laliberte, a Columbus lawyer who represents buyers who lost deposits on Ibiza condominiums, said the state’s allegations reinforce his belief that developers mishandled money.
“The division’s findings confirm everything we believe to be true about the project,” he said.
The allegations provide a further glimpse into the financial collapse of what was to be the biggest condominium development in the Short North, a luxury complex with prices ranging from $159,999 to $1.5 million for a penthouse unit.
Starting in 2008, Apex and its sister company, ARMS Properties, collected 5 percent deposits on 75 of the units for a total of $1.16 million, an average of about $15,000 each.
The project never broke ground, however, and Apex filed for Chapter 11 bankruptcy protection in April. In a reorganization filing, Apex has proposed reimbursing condominium depositors an average of $2,600.
Other developers are eyeing the property for an apartment complex.
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