Naples cemetery investigation
spreads to Bonita mining operation
State investigates second local business of Candler and Fitzgerald
Sunday, December 15, 2002
By ALAN SCHER ZAGIER, aszagier@naplesnews.com
A state investigation of two prominent Naples businessmen who helped
create Palm Royale Cemetery and Mausoleum has expanded to include a probe
of a Bonita Springs mining operation.
The cemetery is licensed by the state Department of Banking and Finance,
which in July opened an inquiry into whether Asa W. Candler III, 59, and
61-year-old William E. Fitzgerald — who controlled a land trust that in
1999 sold the cemetery corporation 25 acres on Vanderbilt Beach Road —
remain involved as shadow partners, which would violate state disclosure
laws.
The complaint was initiated by a local funeral home owner who hoped to go
into business with the new cemetery, which in 2000 became only the second
in Naples.
As that investigation unfolds, the same state agency is also pursuing a
complaint lodged by another ex-partner of Candler and Fitzgerald, this
time over their management of Corkscrew Excavation and Grading Inc. and
Corkscrew Mining Ventures.
And the state's cemetery licensing probe has widened to include a review
of possible securities violations, records obtained by the Daily News
show.
The latest charges were lodged by Estero resident Bryan Chambers, a mining
operator who recruited Candler and Fitzgerald to help raise capital for a
venture in which gravel, rock and other building materials would be
harvested from mine pits, followed by redevelopment of the excavated sites
as lakefront housing.
Chambers declined to discuss his complaint, filed with state regulators in
November, as did his attorney, Robert Henderson of Fort Myers. But in a
June 6, 2001, letter to limited partner investors announcing his
resignation as a company officer and director, Chambers said he was cut
out of management after raising questions about the lack of money to
purchase necessary equipment.
"Our problems arose when I sought funds budgeted for the purchase of
equipment, and was advised by Mr. Fitzgerald and Mr. Candler that the
funds, although received from the limited partners and budgeted for that
purpose, were not available," Chambers wrote.
A further review of the two companies' checkbooks and financial statements
showed "rather significant disbursements in the forms of loans,
management, syndication and real estate fees ... paid to either Mr.
Candler or Mr. Fitzgerald directly or to entities which they control."
Neither Candler nor Fitzgerald could be reached for comment through phone
calls to their homes as well as to their offices at The Fitzgerald Group
in Naples.
However, attorney Judith McCaffrey did provide copies of two rebuttal
letters sent by Candler and Fitzgerald to mining company investors after
Chambers' initial salvo. In the first reply, dated Thursday, Dec. 12,
Candler and Fitzgerald railed against "some person, whose identity is
unknown to us" for distributing false information about the two disputed
projects "in plain white envelopes with no return address."
Calling the unsigned letters "bizarre and unscrupulous" and part of a
"malignant, vicious campaign," Candler and Fitzgerald reported that the
mining operation has a new management team in place and is now turning a
profit. Without mentioning Chambers by name, they noted the project's
"rough beginning" after it was placed "under the management of an
individual who lacked sufficient skills to successfully operate the mining
business." They further accused him of doctoring a memo to make it appear
that money from another Candler business venture was commingled with
mining money.
And in a Friday status report sent to Corkscrew mining investors, Candler
reported significant progress, with rising revenue, increased demand and
expansion plans. Further, he called "the recent unmarked envelope of false
and misleading information one of the most cowardly examples of
back-biting that Bill Fitzgerald and I have ever experienced."
Candler also acknowledged "in hindsight" that the management fees for
Corkscrew Grading and Excavation "seem excessive, because the business
failed." To mitigate the losses, investors in that failed venture were
compensated with equivalent shares in the spinoff mining operation.
McCaffrey said Chambers and Todd Muller, co-owner of Muller-Thompson
Funeral Chapel, have their own axes to grind and noted that "the mine is
doing extremely well. They've got good management in there."
"You're receiving one side of the story," she added. "We have people out
there putting out falsehoods and misrepresentation." The company hopes to
soon hire a public relations firm to help deliver its side of the story,
she said.
One investor not sure which side to believe is Joseph Anderer of Naples.
After receiving Chambers' letter, Anderer said he "lost faith" and asked
to be bought out of his "several hundred thousand dollar" mining
investment. Candler and Fitzgerald complied, he said.
"The issue got down to whether their projections were realistic and to
whether they knew what they were doing," Anderer said. "It was a gray
area, one that I didn't have the time or interest in exploring."
In the Palm Royale case, the Florida Department of Banking and Finance,
which licenses and regulates cemeteries and funeral homes, is
investigating whether Candler and Fitzgerald remain involved with the
Naples cemetery as partial owners, calling the financial shots from behind
the scenes.
In previous interviews, Palm Royale representatives, including Candler,
have strenuously denied the charge, which is being levied by Muller, a
former Palm Royale board member who backed out of a deal to sell his
business to the cemetery group. Muller has also asked the Collier County
attorney's office to look into the deal.
County commissioners rezoned the 25-acre parcel near I-75 from
agricultural to commercial use in 1998.
James Field, president of Palm Royale Cemetery and Mausoleum Inc., has
said that Candler and Fitzgerald "have no involvement" with the cemetery
but merely considered ownership interests earlier in the process.
However, in an Oct. 25, 2001, letter written on Palm Royale letterhead,
Fitzgerald advised investors, "We are now ready to raise the balance of
the money necessary to complete the construction of the cemetery." The
letter asked investors to contribute an additional $4.93 million needed to
cover shortfalls and make up for a low estimate of the project's
"acquisition and development cost."
Other documents provided to the Daily News by Muller or obtained by the
newspaper from the state agency under Florida's public records law show
the two men retained significant involvement with the project well beyond
the sale of their land.
A $50,000 check paid by Palm Royale to an insurance trust fund on Sept.
14, 2000, bears Candler's signature, as does a $500 Palm Royale check paid
to the state comptroller on Oct. 5, 2000, for a certificate of approval.
Those checks were signed on the company's behalf when Candler and
Fitzgerald were on board as paid consultants, Field said. The pair no
longer hold those jobs, said Palm Royale's president.
According to a July 29 letter to Muller from Department of Banking and
Finance analyst Tim Wheaton, the state is investigating Palm Royale for
possible violations of these two laws:
A statute that forbids cemetery license applicants from "attempting to
procure, or procuring, by bribery, material misstatement, or fraudulent
misrepresentation, a license to operate a cemetery company, a certificate
of authority, or any other (cemetery and funeral home) license." Such a
violation can be considered a third-degree felony.
A state rule requiring approval by the Board of Funeral and Cemetery
Services as well as the Department of Banking and Finance of any "change
of director, chief executive officer, president, principal or general
manager or the addition of any new directors (or) executive officers"
during the first two years of a cemetery's operation.
Mark Mathosian, a white-collar crime expert who heads the Department of
Banking and Finance's regional office in Fort Myers, declined to discuss
any of the pending investigations involving Candler, Fitzgerald and their
local business ventures.
In general, he said, such investigations require a significant amount of
time and resources before reaching a conclusion.
"These types of cases tend to take a year or more," he said. "It usually
involves a lot of record-keeping and interviews."
Among those interviewed is Muller, who said he met Friday with a state
economic crimes investigator. In addition to the cemetery licensing
complaint and the mining company, regulators are also looking into
possible securities violations involving Palm Royale, Muller said.
The case rests in the hands of agency lawyers after a panel of the Board
of Funeral and Cemetery Services found probable cause to continue an
investigation.
The primary question involves the roles of Candler and Fitzgerald, whose
local projects include the Flamingo Island Flea Market in Bonita Springs
and the Bonita Gateway/Home Depot shopping center.
Fitzgerald resigned as a Palm Royale trustee in 1999. According to minutes
from the state Board of Funeral and Cemetery Services' October 1999
meeting, "Mr. Fitzgerald was opposed to giving the Board the historical
sketch and financial statement, therefore he withdrew as Trustee."
Both documents, as well as criminal background checks, are part of the
lengthy list of paperwork required by state regulators for cemetery owners
and operators. The financial statement is required of all officeholders,
directors, and stockholders owning more than 10 percent of voting stock,
and includes a list of assets and liabilities.
The historical sketch asks principals to list their employment histories
and asks whether they or any past companies had filed for bankruptcy or
had been party to an unfavorable legal judgment.
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