Auction of a dozen disputed lots owned by ‘King of Coconut Grove’ put on hold; 42 bidders
The auction of 12 undeveloped lots in Coconut Grove has been put on hold while the Third District Court of Appeal reviews a loan company’s request to cancel the bulk sale.
The auction, scheduled for Friday, had attracted 42 bidders and an opening bid of $16.5 million for prime properties that were owned and marketed by Grove developer Doug Cox, who is accused of fraud by his ex-business partner and buyers who put down millions of dollars in deposits and haven’t been able to move into their homes. A court-appointed receiver now controls the assets of Cox’s company, Drive Development, which include 12 nearly finished townhouses on Coconut Avenue.
While the receiver, retired Miami-Dade Circuit Court judge Alan Fine, says the auction is necessary to raise cash to pay back some of the $83.5 million owed to creditors, lender Altamar Financial Group has opposed what it calls “a fire sale.” Altamar’s attorney, Mitchell Mandler, was granted his emergency motion for review by the appeals court, which issued a temporary stay of the auction Thursday evening.
Altamar lent Cox $34 million in 2019, with Cox’s two dozen properties as collateral. Those properties, in the heart of one of the hottest real estate markets in the country, have doubled in value to $65 million to $70 million — twice the amount of the original loan. As the first lien holder, Altamar should be first in line for repayment, Mandler has argued in court.
After Cox defaulted on the loan, Altamar granted him six extensions with rising interest rates, even though Cox was not closing any sales. Up until a Miami Herald report was published in March, Cox was signing double and even triple contracts with unsuspecting buyers on many of the properties, successively selling them for higher prices and collecting larger deposits over the past five years as the market boomed.
READ MORE: They bought their dream homes from the ‘King of Coconut Grove.’ They still can’t move in
Cox, accused of running a Ponzi scheme by buyers and his ex-partner, Phillip Sylvester, collected more than $20 million in deposits — including $3.3 million from four buyers on one townhouse, court records show. That money has disappeared, and forensic accountants can’t find it, Fine said.
24.5% interest rate on loan
With the loan’s interest rate up to 24.5 percent, and a running tab of $22,251.37 per day, Altamar filed for foreclosure against Cox in May. But Fine placed a stay on the foreclosure as he began the process of sorting through Drive Development’s deals and searching for missing millions that Cox says he doesn’t have.
Cox and his domestic partner Nicole Pearl, who was real estate agent and lawyer for Drive Development, were evicted from their $12,000-per-month Coconut Grove house for nonpayment of rent. Three months after the eviction notice was filed, some of their possessions and toys belonging to their three children were thrown out on the street Aug. 16.
Fine chastised Cox, Pearl, Altamar and their attorneys for stonewalling in his latest receivership report filed with the court Monday.
“My professionals and I continue to work as efficiently as is possible and we all have been hampered by the complete lack of any traditional and orderly books and records of the receivership defendants, the lack of responsiveness of Ms. Pearl and Mr. Cox and the vexatious litigation tactics employed by Altamar, including, most recently, an utterly frivolous appeal and emergency motion for stay,” Fine wrote.
Fine criticized Altamar for refusing to meet with him to discuss the validity and possible settlement of its claim. Altamar did not respond to an offer of $25 million from Sylvester to settle its claim or to negotiate.
“I hope Altamar will change its current posture and engage in the dialogue I have repeatedly invited, including with respect to the default interest that is allegedly accruing at 24.5 percent per annum and extension and forbearance and other fees it has charged and collected,” Fine wrote.
Miami-Dade Circuit Court Judge Jennifer Bailey has called Altamar’s loan to Cox and its steep interest rate “the elephant in the room.”
Cox and Pearl have impeded Fine’s investigation by withholding information, Fine said. In response to one of his requests, they sent him records of 25 bank accounts, but the account numbers were partially redacted so he couldn’t examine them. Fine’s team of accountants has “extracted tens of thousands of lines” on transactions from some accounts but “the forensic accounting work is not done, and additional discovery will be required to obtain a clearer picture of the flow of funds into and out of these bank accounts.”
Cox has declined to answer questions from the Herald.
Removing items from houses
Fine also reported that Cox was seen entering and removing items from two townhouses on Shipping Avenue that Drive Development had been building and selling. Cox often told his clients that the townhouse at 3157 Shipping was to be his family’s future home.
“I have serious concerns about Mr. Cox’s behavior and flaunting of the order appointing receiver which includes strict and clear instructions to Mr. Cox, and others, not to interfere with the assets and property of the receivership estates,” Fine wrote.
As for the postponed auction, some buyers prefer that it not go forward. Eight of the 12 undeveloped lots have contracts on them. Some of those buyers just hope they can get their deposits back. Others want to keep the properties. They’ve been waiting in some cases years, and nothing has happened on the lots.
