X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Another nail has been hammered into the coffin of Wynwood, Fla.’s Dade Foreign Trade Zone in what could spell the end to any hope that the 12.6-acre blighted Miami neighborhood will ever be developed as planned. The developer now says it has been unlawfully evicted from the property by the very company it had struck a deal with to develop the land — Wynwood Community Economic Development Corp. Inc. “They ripped up the lease after we spent all of this money,” said Robert Stok, who represents the Dade Foreign Trade Zone. “I can’t let my clients forfeit an $11 million investment.” Stok filed suit in Miami-Dade Circuit Court this week against WCEDC and three of its directors — William Rios, Gamaliel Rivera and Nilsa Velasquez. According to court documents, the three formed a management company — OSJ Management and Development Inc. — and asked the Dade Foreign Trade Zone to pay it hundreds of thousands of dollars in management fees once the trade zone was completed. The trade zone did not pay the fees because it never opened. However, the suit alleges that the management fees, had they been paid, were to go into the executives’ pockets while they “sat idly by” watching the Dade Foreign Trade Zone invest millions into the project. The question, Stok said, is how the principals of a nonprofit organization could turn around and form a for-profit company through which the nonprofit channeled money. Marc Douthit, WCEDC’s attorney, did not return repeated phone calls. The number to WCEDC has been disconnected. According to state corporate records both WCEDC and OSJ Management have been dissolved. Efforts to reach the three directors were unsuccessful. The long-standing dispute over the project that first pit the land’s owners and developers against the city of Miami, now has them squared off against each other. It dates to 1990, when the city deeded the land to WCEDC with the idea that it would be turned into a bustling foreign trade zone. There, imported goods would be warehoused, packaged and assembled, free of customs and duties and then re-shipped overseas. WCEDC entered into a 50-year lease agreement with the Dade Foreign Trade Zone Inc., headed by real estate developers Oded Meltzer and partner Martin Comart, to construct and operate the trade zone. Meltzer co-developed The Landmark, a residential high-rise in Aventura. State corporate records show he and Comart as principals of some 30 Florida companies, a majority of which are, or were, in the business of real estate development. The trade zone project was to be funded, in part, by a $5.5 million loan from the U.S. Department of Housing and Urban Development. WCEDC claims that when Miami officials saw that a grant was forthcoming, they attempted to take back the project. In 1994, WCEDC sued the city alleging that city officials had engaged in a pattern of unlawful interference with WCEDC’s business activities by attempting to take control of its board of directors. The two sides settled in February 1995 with the condition that Miami apply to the Department of Housing and Urban Development for a $10 million loan, which the Dade Foreign Trade Zone was to repay. The city breached that agreement, Stok said, by among other things not applying for the loan in the allotted time and by failing to provide WCEDC with a clear title to the land. The city argued it didn’t apply for the loan because of concerns about management and a possible default. Stok contends that his client has learned that the city’s delays were in response to WCEDC’s failure to produce the documents necessary to secure the loan. “City officials testified that there were always delays and WCEDC wasn’t able to provide the city with sufficient financial disclosure,” said Stok, who now calls WCEDC’s battle against the city was “merely a pretext to allow it to free ride on the litigation efforts of the Dade Foreign Trade Zone.” Though no management fees were paid, the suit claims that WCEDC violated its articles of incorporation as a nonprofit by setting up a for-profit company, and that the three partners “perpetrated a fraud” by forcing the Dade Foreign Trade Zone to “forfeit its interest in a project meant for the benefit of the impoverished citizens of Wynwood.” WCEDC “got the land from the city through the guise of being a community development company,” Stok said “but then they created a for-profit company where the owners would have gotten rich by siphoning off all of the benefits derived from the land.” Though trade zone developers knew about the management arrangement from the get-go, Stok contends his clients “weren’t sophisticated” to the ways of what nonprofits could do. “My clients went into this because they saw an opportunity to develop land and they proceeded with what they thought was a good deal,” Stok said. It was only after taking discovery that Stok said he learned it was WCEDC that “at every turn” made it impossible to go forward with the project. The suit seeks restitution for the millions in improvements made by the Dade Foreign Trade Zone and damages for the money lost as a result of WCEDC’s alleged breach of its agreement as well as division of the property. “WCEDC failed to cooperate with the city in such a manner as to compound the delays and to cause the city to feel uncomfortable with going forward with the project,” Stok said. “What was a coordinated and highly structured joint venture has turned into a grab bag and that’s not the way partners are supposed to treat one another.”

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.