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Miami Beach resident Edward H. Okun is accused by a bankruptcy court trustee of improperly diverting $130 million in assets that helped him buy Gulfstream jets, a helicopter, a Cigarette boat and an array of exotic cars.

Bankruptcy court cases involved in the collapse of Okun's empire have cast a chill over the largely unregulated industry for tax-free real estate swaps by divulging risks unforeseen by investors.

Trustee Gerard A. McHale Jr. said Okun's 1031 Tax Group, an umbrella for many of the operations, had more than 300 open exchange contracts, but books and records were incomplete and in a state of disarray.

Some investors have lost nearly all their life savings, accounts of the situation indicate. Exchange programs are popular because investors can sell property and have six months to buy similar ones without having to pay capital gains taxes. Okun's companies were supposed to act as safe harbor intermediaries to facilitate the swaps.

Okun's problems sunk a 1 million-square-foot, $75 million lease that was supposed to add 300 jobs at Centergate at Gratigny in Hialeah.

When Okun's Indianapolis-based Crossroads Transportation and Logistics signed the lease in the spring, it was widely viewed as cushioning the blow of the 1,035 jobs cut by ABC Distributing, the former tenant.

Crossroads "didn't perform" financially, and property owner Higgins Development Partners terminated the lease in October, said Eugene A. Preston, a Higgins senior VP. However, McHale is facing off with Higgins in bankruptcy court and wants to know what Higgins did with $3.5 million in escrow.

McHale's trustee statement in the case of Investment Properties of America Ltd. said he is trying to stabilize assets and Okun's executives no longer run the company.

"This effort has been, and will continue to be, particularly difficult due to certain actions of Okun, both in the acquisition of the debtor's assets, and in his mismanagement thereof. These actions appear to have diminished - and, in some cases, possibly destroyed - the value of these assets," Higgins said in the November filing in U.S. Bankruptcy Court in New York.

Public records indicate Okun has a home at 394 Hibiscus Drive, on exclusive Hibiscus Island, off the MacArthur Causeway in Miami Beach. The 5,434-square-foot home on Biscayne Bay has six bedrooms and seven bathrooms. It was built in 1930 and sold for $5.15 million in 2005.

Dow Jones News Service reported that a judge ordered the sale of Okun's vehicles to recoup assets. Listed were two Gulfstream jets, a Learjet, a helicopter, seven boats, two Ferraris, two Lamborghinis, a Bentley, a Rolls-Royce, four Indy race cars and an Aston Martin.

Okun and his wife reportedly get to keep two homes.

The San Antonio Express-News reported that Okun has a $10 million home in New Hampshire and that one of his yachts was 136 feet. The newspaper said Okun is a Toronto native who became a U.S. citizen in 2004.

McHale said Okun's companies owned or operated residential properties, malls and warehouses under a complex structure that involved numerous limited liability companies.

Deals involving the property led to notes and mortgages that served as collateral security for more loans, the trustee said.

Brickell Key condos

McHale's report lists Higgins' WH Hialeah Investors V LLC as the only creditor for Crossroads Miami Logistics Center (now Centergate).

Two Okun LLCs - Simone Condo I and II - list the Carbonell Condo Association, at 901 Brickell Key Blvd., as the only creditor for an unknown amount.

The list of secured creditors says Simone Condo I was a guarantor on a $3 million loan for Unit 3404 and Simone Condo II was the guarantor for a $3 million loan on unit 1808. The secured creditor was a few miles away in Coconut Grove - Cordell Consultants Money Purchase Plan, a retirement plan trust.

That trust is also a secured creditor on a $2.5 million loan for an industrial park in Indianapolis. Cordell Funding LLLP is also listed for a $13.41 million loan involving an industrial park in Shreveport, La.

Robin Rodriguez, listed as registered agent for Cordell Funding LLLP, could not be immediately reached for comment.

On Oct. 29, WH Hialeah Investors V LLC started proceedings in circuit court against the Crossroads LLC, but the case was tossed into U.S. Bankruptcy Court.

McHale's legal response said Higgins' complaint in South Florida violates a stay in bankruptcy court proceedings elsewhere. He also wants to know what Higgins did with $3.5 million in escrow money.

"The landlord has obtained $3.5 million from potentially a fraudulent conveyance from Okun under Florida and/or bankruptcy law," McHale said in a Nov. 6 filing.

Judge Robert Mark has ordered McHale to provide a further response by Dec. 7.

McHale and Joaquin J. Alemany, the Holland & Knight attorney representing Higgins, could not immediately be reached for further updates. Calls to Okun's attorney, Howard Berlin of Kluger Peretz Kaplan & Berlin, were not returned by deadline.

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http://southflorida.bizjournals.com/southflorida/stories/2007/12/10/story1.html?page=1

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