Sapphire Cove Shareholder Loses Florida Case

A well known Irish business figure has had a final judgement against him in a Florida court for over US$130k the Sunday Business Post has learned. John Burke of 65, St. John’s Park East, Clondalkin, Dublin 22, a former director and current shareholder in the Sapphire Cove project in St. Lucia, lost his case against fellow Irishman Garrett Kenny who owns the Coldwell Banker estate agency franchise for Davenport in Florida.

The action was taken in relation to the purchase of 44 unimproved lots in the Reunion development in Orlando and 17 unimproved lots in Hammock Beach, also in Orlando, which Burke bought through Kenny in 2002. Burke supplied Kenny with a list of high net worth clients he claimed were looking to buy in the Hammock Beach area and Kenny, a well known developer in this part of Florida, subsequently negotiated a deal with the Ginn Company, owners of the massive Reunion resort, to acquire the lots. He then agreed a deal for Burke to pay over six months, so he could get the alleged buyers lined up. Kenny says he personally signed the agreement with Ginn Company, thus putting his own reputation on the line. Burke gave Kenny twelve signed contracts from the buyers in Ireland, which Kenny then used to take out loans of just under $3 million from CNL Bank. Burke also furnished documents from his accountant claiming he had a net worth of $3 million, listing companies he owned in Ireland including Storm Computer Manufacturing Limited. It subsequently turned out that Storm was wound up in January 2004, had never traded and had no assets.
 
According to the affidavit filed by Kenny, possession of the lots was taken but Burke failed to deliver the clients whose contracts had been presented. Kenny says Burke then asked him to increase the valuations of the properties so his clients would need to put no money down but Kenny refused. At this stage Burke claimed his inability to pay was due to the fact that his company, Storm Computers, had a container load of computers stuck at sea. Kenny accepted the story and put a further $120k into the venture. At this stage a joint bank account was opened but Kenny claims Burke’s total investment in the project was just $100, a claim backed up by the judgement. When the loan came up for repayment six months later Burke had disappeared. Kenny advised the bank of the problem but they demanded repayment regardless. He requested, and was granted, a six month extension on the loan and cancelled all contracts signed with Burke and his clients. It had been agreed that they would supply the funds for the deal 50/50 but Burke never fulfilled his part of the deal. 
 
Kenny subsequently resold the lots at a profit and repaid the outstanding loan. Three months later Burke informed Kenny, via his solicitor, that he wanted to inspect the records relating to the deal and demanded a share of any profits that were made. Kenny says that at this stage he legally considered Burke to be a disassociated partner as he had never contributed the 50% of the capital required for the deal. Burke’s attorney’s response was “that Mr. Kenny was a high profile developer who would not like to be sued.” Burke then raised a law suit against Kenny looking for a share of the profits. Kenny produced some 5,600 documents in court to show how the venture had been managed. He claims that the production of all the paperwork cost him in excess of $100k.  Kenny has been awarded the $130k by the court and all accusations were dismissed against him.

The judgement states that “although Burke acquired legal title to Reunion Lot 126 on November 8, 2002, he paid no consideration for same. To date, Burke has never repaid Emerald Enterprises and/or Kenny for Reunion Lot 126. As such, any claimed interest in Reunion Lot 126 by Burke is void and without merit as Reunion Lot 126 was held in trust and for the exclusive benefit of Emerald Enterprises. Emerald Enterprises was free to convey, sell or dispose of Reunion Lot 126 at its sole discretion.“

This it would appear, is only the beginning of Burke’s troubles. Documents have been passed to the Office of the Director of Corporate Enforcement alleging that he used a false US residential address on documents submitted to the Irish Companies Registration Office. The address used by Burke in registering company no. 375912, Premier Resorts Limited, is 8220 Phillipsbay Drive, Orlando, Florida, an address which doesn’t exist. Ironically enough it is, in fact, a derivative of Mr. Kenny’s former address in Orlando, an area in which Mr. Burke has never been resident. Burke did own two properties in Florida but he foreclosed on one of these, located at 337 Riggs Circle, Davenport, FL, which was sold by the bank last November. A final judgement of foreclosure was also entered on his property in 108 Grosvenor Loop, Davenport, FL on December 16^th last but the bank issued a notice of voluntary dismissal shortly before the foreclosure was to occur.

If nothing else the release of details from the case may slow down the virtual frenzy for overseas property that is being exhibited across the country at the moment. It should focus the minds of purchasers abroad on the fact that just because they are dealing with Irish individuals or companies does not mean that they should not ask questions about their track records as well as seeking and investigating business references from companies who have dealt with them. Kenny comments, "this experience has made me very wary of who we will do business deals with going forward and I have learned to do rigorous background checks on all parties with whom we are contemplating entering business relationships."

Diarmaid Condon is an independent overseas property advisor with significant agency experience. Should you have any queries or comments he can be contacted through his website on www.diarmaidcondon.com.