FEDERAL COURTS

Feds’ investigation into Miami affordable-housing developer, Carlisle, baffles supporters

 

jweaver@MiamiHerald.com

Shock is a common reaction when people first see The Beacon, a spanking new gray-and-glass apartment building in Overtown, Miami’s once-proud but long-struggling historic black neighborhood.

The 13-story edifice, standing on a city block surrounded by a railroad track, a highway and an elevated transit rail, is home to 90 rental apartments for low-income people. The developer, Carlisle Development Group, also donated much of the ground floor to after-school care, computer labs and other educational services.

“The first thing people say is, ‘This is Overtown?’ ” said Saliah Nelson, vice president of Urgent Inc., the nonprofit that operates the programs. “Yes, this is Overtown.”

Nelson described the $25 million complex as Carlisle’s “big gift” to the community — not unlike dozens of other affordable-housing projects that the Miami-based company has developed over the past decade in South Florida and elsewhere.

But Carlisle’s reputation for building modern apartment complexes that lift up people’s lives seems suddenly at risk: A federal grand jury is investigating allegations that Carlisle and its chief executive officer, Matthew S. Greer, the scion of a prominent Miami-Dade family, and others associated with the company bilked a U.S. government subsidy program designed to promote affordable-housing development.

News of the investigation, headed by the U.S. attorney’s office, has already affected Carlisle, the state’s biggest and the nation’s third-largest affordable-housing developer, with more than 80 completed projects valued at $1.4 billion.

Miami-Dade Commissioner Audrey Edmonson, whose district includes The Beacon and several other Carlisle projects, said the federal investigation is baffling in light of the level of governmental scrutiny of the company’s projects and its philosophy of helping the community.

“It did catch me off guard,” said Edmonson, who, like other commissioners, has received substantial campaign contributions from Carlisle and its executives. “I couldn’t believe it.”

In May, commissioners delayed a decision to certify 11 affordable-housing developers because of the Carlisle investigation. Mayor Carlos Gimenez’s administration cited a Miami Herald report that revealed that prosecutors suspect Carlisle of defrauding the federal government of tax-credit subsidies granted to builders of low-income rental apartments.

The board had been scheduled to approve Carlisle as one of its pre-qualified vendors to develop affordable housing on county-owned public housing sites. Qualifying for the pool does not guarantee future work, but implies that the vendor has “successfully demonstrated its qualifications” for projects in the pipeline.

Barbara “Bobbie” Ibarra, executive director of The Miami Coalition for the Homeless, echoed Edmonson’s sentiments of support. She said Carlisle’s Greer has helped transform the county’s portfolio of affordable housing — including providing rental apartments for teenagers in foster care who turn 18 and “age out” of the foster system.

Ibarra said Carlisle set aside 12 apartments for foster-care teens at the 208-unit Santa Clara complex in Allapattah, and has allocated nine more apartments in the 22-unit Anchorage Apartments in Liberty City, which plans a ribbon-cutting ceremony Monday.

“I personally think Matt Greer is passionate about helping this community and dealing with social issues so the whole community benefits,” Ibarra said. “He comes from a successful family that has a tradition of responsibility to the community. ... It is part of who they are and who Matt Greer is.”

Asked about the federal investigation, Ibarra added: “It is not consistent with who he is.”

Joseph Klock, a lawyer and friend of the Greer family, said Matthew Greer’s mother and father, attorneys Bruce and Evelyn Greer, have not only achieved great success in their professions but have also donated their lives to community service.

Bruce Greer, president of Fairchild Tropical Garden’s board of trustees, has raised millions of dollars for the attraction. Evelyn Greer is a former Miami-Dade School Board member and mayor of Pinecrest.

“They are wealthy people, but they are very generous with their money and very generous with their time,” Klock said. “To suggest the Greers are dishonest is just wrong.

“They have raised their children to believe you can be successful but you also give back to the community,” he added. “Matt Greer does the kind of work he was raised to do.”

Greer’s attorneys, Hy Shapiro and Roy Black, have declined to comment.

The federal investigation into Carlisle started in late 2011 when two senior executives quit and went to the U.S. attorney’s office with their allegations of fraud. The executives, a former chief financial officer and chief operating officer, have struck cooperation deals with the FBI, Internal Revenue Service and U.S. Attorney’s Office.

Carlisle is suspected of committing fraud by padding construction costs of rental apartments to generate higher government-issued tax credits for itself and its investors, according to sources familiar with the probe. Prosecutors are trying to prove that top executives of Carlisle, a for-profit company, worked in cahoots with a Fort Lauderdale building contractor, BJ&K Construction Services, to split the resulting profits unlawfully, the sources said.

Tax-credit applications are reviewed carefully on a project-by-project basis by the Florida Housing Finance Corp., which doles out millions of dollars in credits under strict Internal Revenue Service guidelines. The bids, scrutinized at the front end by developers’ lawyers, are later examined by the state’s underwriters and auditors. Approved credits are then sold to investors, such as banks, to generate tax deductions for them and investment capital for affordable-housing developments.

The federal grand jury is focusing on two of Carlisle’s chief executive officers, Matthew Greer and retired CEO and founder Lloyd J. Boggio, as well as a general contractor, Michael K. Runyan, president of BJ&K, according to a subpoena obtained by The Miami Herald.

The subpoena, issued in January in connection with “an official criminal investigation of a suspected federal offense,” named Carlisle and its development entities, along with the three businessmen. It sought loan and other records for two of Carlisle’s rental projects built by Runyan’s company, in the low-income Little Haiti and Allapattah neighborhoods. Both the city of Miami and Miami-Dade governments partially financed the high-rise apartment projects, Villa Patricia and Amber Garden.

Runyan and his attorneys could not be reached for comment.

According to sources, prosecutors are focusing on Carlisle’s joint venture in those two developments and other mid-2000-era projects with Biscayne Housing Group, once headed by developers Michael Cox and Gonzalo DeRamon. Attorneys for both men, whose relationship with Carlisle ended after a 2009-10 legal dispute, declined to comment. Cox and DeRamon are not believed to be targets of the federal investigation.

The grand jury subpoena, however, is a mere snapshot of the broader federal probe.

Carlisle’s lawyer, former federal prosecutor Jeff Marcus, declined to comment but previously said in a statement that “Carlisle intends to cooperate fully with this investigation and looks forward to a speedy resolution so it can get back to helping provide affordable housing for Miami’s neediest.”

Other defense lawyers involved in the federal probe, with the exception of Klock, also declined to comment.

Carlisle was founded by Boggio and Bruce Greer in 1997. Boggio was the active participant, as chief executive officer, and Greer was a silent investor. Matthew Greer joined the development company in 2004 and rose to CEO four years later, after buying out Boggio’s interest. Boggio remained as a principal.

Boggio, in an industry trade magazine, Apartment Finance Today, said he thought Greer, with two degrees from Columbia University and a stint on Wall Street, would be a short-timer “until he found other worlds to conquer — but it got to the point where he kind of got the bug.”

“The biggest thing he’s done is really change the culture of the company,” Boggio said in July 2008, after Matthew Greer purchased his interest in the firm. “I’m very much a legal pad and ballpoint pen kind of fly-by-the-seat-of-your-pants kind of guy, and Matt’s much more a product of the 21st century.”

Boggio’s attorney, Scott Srebnick, declined to comment.

Carlisle has garnered kudos over the past decade — despite a rough patch in the aftermath of the nation’s 2008 financial crisis — as a socially- and environmentally-conscious developer.

The company’s website lists awards won by Greer, including the 2009 Urban Land Institute’s Young Leader prize and the South Florida Business Journal’s 40 under 40 recognition.

During the real estate boom and subsequent bust, Carlisle has competed with other top South Florida affordable-housing developers, including Pinnacle Housing Group and Landmark Companies.

In Broward County, Carlisle has teamed up with the Fort Lauderdale Housing Authority to rebuild the long-distressed black neighborhood surrounding Sistrunk Boulevard. The partnership’s biggest project: Northwest Gardens, a 30-acre area with 559 low-rise rental apartments. The project, which is being built by BJ&K, cost $109 million.

“There’s so much tradition and so much history here — it’s more than about bricks and mortar,” said Fort Lauderdale Commissioner Bobby DuBose, who grew up in the area and still lives there. “If you had to grade the impact on the community, it’s been an A+ hands down.”

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