When the jury’s verdict came back on May 8 clearing BankAtlantic of fraud charges, executives at BBX, BankAtlantic’s one-time parent company, left the courthouse and grabbed their phones to relay the news to employees and friends. By the time they arrived at the Fort Lauderdale headquarters that afternoon, BBX employees had covered the office’s glass windows with congratulatory messages in colorful dry-erase markers.
“Congrats. Persistence prevails!” wrote one manager.
Longtime friends and employees celebrated with champagne toasts and chocolates from Hoffman’s Chocolates, a chocolate manufacturer that BBX owns.
Then, in typical Alan Levan style, the chairman and CEO of BBX Capital returned to his office to keep working. Anyone who walked by could look through the decorated windows and see Levan at his desk making business calls.
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“It was a quick celebration, but back to work,” said Seth Wise, executive vice president of BBX and president of its real estate division. “And that’s Alan.”
I wake up every morning raring to go. With all these businesses [in the portfolio], there’s something going on all the time.
Alan Levan, chairman and CEO of BBX
Levan and his team have plenty to do. In the five years while the lawsuit was under way, BBX’s executives rebuilt their business from a portfolio of unwanted loans into a holding company with $1.5 billion in assets.
During that time, BBX broadened its holdings beyond its longtime sweet spot of real estate to include investments in home improvement, vacation timeshares and sweets. Its sweets and confections division, which didn’t exist a few years ago, earned BBX the 45th spot on this year’s North America Sweet 60, an annual list of the largest candy companies on the continent.
When the win was announced, BBX was on the verge of closing a $57 million-dollar deal to add another candy company to its portfolio. Within 10 days, the diversified holding company, which earns its money by investing in, managing and owning other businesses, filed a request to list on the New York Stock Exchange. The request was granted in July.
Said Levan, “I wake up every morning raring to go. With all these businesses [in the portfolio], there’s something going on all the time.”
Highs and lows
Levan, 72, has seen plenty of ups and downs during his nearly five decades doing business in Florida. First, there have been Florida’s various boom-and-bust real estate cycles. He has served as CEO of four NYSE-listed companies and steered a bank through the global financial crisis.
The SEC charges and the 2007 investor lawsuit it stemmed from were not Levan’s first court battles. In 1992, Levan and BankAtlantic sued national broadcaster ABC after it aired a segment suggesting the bank had misled its investors in real estate joint ventures. A federal jury awarded Levan and BankAtlantic $10 million in libel damages before the decision was overturned by a federal appellate court. BankAtlantic settled a separate suit with the investors out of court.
Levan also sued a bank analyst after the analyst published a report suggesting BankAtlantic was in financial trouble in July 2008. The parties reached a settlement in 2010.
For Levan, the 10-year-long SEC case brought a new low.
In 2007, investors filed a class-action lawsuit charging that BankAtlantic and Levan knowingly made false statements about the health of certain loans and failed to disclose concerns about the portfolio. Initially, a jury found the defendants liable; a federal judge threw out the decision and ruled in favor of the company and Levan in 2011.
[Alan Levan] tends to emerge from the crises better than he was when he went in. And he’s done it again.
Eugene Stearns, Levan’s longtime lawyer
The SEC opened a separate investigation into BankAtlantic and Levan shortly after the investors filed suit in 2007, examining the same loans. In 2012, the SEC filed its own investor-fraud lawsuit. The SEC’s complaint accused Levan and the company of misleading investors in filings and investor earnings calls to hide bad loans. It also charged them with hiding BankAtlantic’s losses using accounting tricks — losses that, when revealed, led to an immediate 37 percent drop in share price.
“BankAtlantic and Levan used accounting gimmicks to conceal from investors the losses in a critical loan portfolio,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a public statement at the time of the suit. “This is exactly the type of information that is important to investors, and corporate executives who fail to make that required disclosure will face severe consequences.”
In a 2014 trial, BankAtlantic and Levan were found liable. That decision was overturned on appeal. Earlier this year, a second jury trial was convened; the jury cleared BankAtlantic and Levan of all charges.
Even as other banks settled a wave of crisis-related lawsuits with regulators, BBX executives kept up the fight, spending $20 million in the process.
“The SEC was intellectually and morally bankrupt in bringing the charges,” Levan said. “We weren’t willing to do anything but get full exoneration and embarrass the SEC.”
During the litigation, Levan was forced to step down from his role as CEO. Some banks refused to lend to BBX. Potential business partners expressed worries about the lawsuit.
“How do you know how many opportunities we missed out on because people looked at us in a way where they were concerned about the SEC taint?” Levan asked.
But even with the specter of the litigation hanging over the company, BBX shares rose in over-the-counter and public trading trading from 35 cents at the end of 2011, before the SEC suit was filed, to its current price of $6.24 as of Aug. 11.
$1.5 billion BBX’s total assets as of June 30, 2017
“It’s one thing to prosper in good times. It’s quite another to prosper during bad times,” said Eugene Stearns, Levan’s longtime lawyer. “I think where Alan has distinguished himself is in good times he’s prudent, and in bad times he’s a survivor. He tends to emerge from the crises better than he was when he went in. And he’s done it again.”
Levan credits much of his success to persistence, one of his guiding principles. On his desk, he keeps an engraved Calvin Coolidge quote that begins, “Nothing in this world can take the place of persistence.” Talent, education and genius can’t compare, the quote goes on to say; only persistence and determination are omnipotent.
With the charges cleared, more doors are opening for the holding company. Executives at BBX (formerly BFC Corp.) said they’ve noticed an uptick in interest from businesses hoping to sell to or partner with BBX. They attribute the attention to multiple factors, including recent press and financial success, as well as attention from companies that were previously uncomfortable doing deals with a company in the middle of a fraud case.
This coming fall, BBX will also be opening pizza locations in Coral Springs, Kendall and Miami after announcing in 2016 a partnership with MOD Pizza to become the national fast-casual chain’s Florida franchisee. BBX plans to open 50 to 60 locations in the state over several years.
Business at a young age
Levan was born in Brooklyn and moved to Florida with his family when he was 13, in 1959. What attracts him to business, he said, is the creative possibilities of what he describes as an art form.
“I love starting with a blank sheet of paper and projecting out, drawing org charts and boxes,” he said.
As a college sophomore, Levan sold ads for the student directory. By the time he graduated from Tulane University in 1966, he was managing business for the directory, the yearbook, the radio and the newspaper.
As a student, he also learned the hard way. While president of his fraternity, only the most dedicated pledges made the cut, and the number of pledges dropped from 40 to 15. Then the dues came and he realized “the 25 extra pledges were paying the overhead,” Levan said with a laugh. After that, he had to re-think his strategy and build the pledge class back up. “It was a very early life lesson in managing a large budget.”
When Levan graduated, he moved to New York and entered JP Morgan’s bank analyst program. After two years of analyzing financial statements and learning how to identify healthy companies, he returned to Florida to work in real estate.
In 1971, at age 27, he founded his first company, IRE Financial Corp. The Florida-based company raised hundreds of millions of dollars selling real estate securities through SEC-registered public partnerships. The company expanded into the banking sector when it bought BankAtlantic Bancorp, a Florida savings and lending bank, in 1984.
A core team
One of the elements of Levan’s success has been a cohesive team that has worked together through thick and thin.
Everybody on the team gets the opportunity to share their thoughts and ideas, and dissent. If you disagree, you’re free to disagree and make your case and hopefully get to the best outcome.
Seth Wise, executive vice president of BBX and president of its real estate division
After investing in BankAtlantic, Levan joined its board of directors. Fellow board member John Abdo and he met for lunch.
Thirty-three years later, Abdo says his immediate impression of his future business partner was he was “very, very smart.”
“We talked about the banking business,” Abdo said, “and we talked about each other personally, our growing-up stories. We had a lot of similarities.”
Born a year apart, both were raised in South Florida and, coincidentally, had worked as ushers for the Wometco movie theater chain, watching films for free and earning 60 cents an hour, Abdo said.
The two became partners in multiple business transformations.
“I couldn’t imagine my business life without him,” said Abdo, who is now vice chairman of BBX. “He’s just a thoughtful, gracious person and a joy to be with.”
In 1985, at age 12, Levan’s son Jarett began working in the bank’s mailroom before rising to bank teller at age 15. He introduced his father to Seth Wise, Jarett’s childhood friend, who joined the bank briefly in 1992 as a loan analyst and returned in 1996. The younger Levan and Wise gradually took on greater responsibilities at the bank as they grew older, and eventually joined Abdo and Alan Levan to make the core of BBX’s executive management. The four attribute their successful partnership to their mutual respect.
“Everybody on the team gets the opportunity to share their thoughts and ideas, and dissent,” Wise said. “If you disagree, you’re free to disagree and make your case and hopefully get to the best outcome.”
The purchase of BankAtlantic kicked off a new era for the company. IRE changed its name to BFC Financial Corp., and under BFC’s direction, BankAtlantic more than tripled in size from a $2 billion company to more than $6 billion in assets to become one of the largest community banks in the state.
Under BFC’s direction, the bank transformed itself from a sleepy savings and loan bank to a major Florida player that marketed itself as a fun banking experience, known for its smiling red mascot and for staying open seven days a week.
With his success, Levan became involved in a variety of philanthropy and community activities. As a board member of the Florida Grand Opera board, he hosted pre-opening parties at his home. In 1991, he founded the BankAtlantic Foundation, now the BBX Capital Foundation, which has distributed over $15 million to local charities. Levan financially sponsored the building of dozens of homes in Broward, said Nancy Daly, the chairwoman for Habitat for Humanity for Broward, while employees also volunteered “countless hours” servicing mortgages, as well as building on their construction sites.
Hit by the global crisis
Then the 2008 financial crisis struck. Business worldwide, including at BankAtlantic, collapsed. The company held weekly strategic meetings and aggressively wrote down capital as losses mounted.
“It was a worst-case scenario every day,” Levan said.
Although the company survived, it continued to post losses as the Florida economy suffered. In 2012, Levan and his partners sold BankAtlantic. North Carolina-based BB&T acquired most of its assets, leaving BBX (then BFC) with only the most toxic assets that no bank would buy.
After the sale, Levan once again found himself looking at a blank sheet of paper.
The bank had hosted all of the company’s infrastructure. BBX now had no computer system, no phone system, no human resources division, no office space. What it did have was the strategy of its core executives, the relationships it had built during its tenure and the real estate assets nobody else would touch. All three proved fruitful.
SEC legal case
While BBX survived the financial crisis, regulators continued their scrutiny. In 2008, the SEC had notified BankAtlantic that it was investigating and planned to bring an enforcement action against the bank. In 2012, the SEC filed its lawsuit alleging BankAtlantic and Levan hid losses during the crisis by making misleading statements to investors and committing accounting fraud.
The SEC argued that executives knew in early 2007 that certain loans were in trouble but did not fully disclose what they knew until the third quarter of the year. Much of the SEC case revolved around statements made by Levan during investors’ earnings calls and over email.
In response, Levan and his lawyers argued that they had been alone early on in writing down loan values and disclosing problems to investors during the financial crisis. They believed the bank was scapegoated because it acted ahead of other banks and argued that no one could fully predict the catastrophic severity of the crisis.
The SEC case went to trial in 2014, and jurors found the defendants liable for fraud. A judge ordered the bank and Levan to pay $5.85 million in fines and barred Levan from serving as an executive of any publicly traded company for two years.
The defendants appealed, and in 2016 the decision was overturned pending a new trial.
Those close to Levan say he never let the accusations impact his work.
“I know for sure how it affected him. We talked about it,” said Jarett Levan, Alan’s son and president of BBX. “But he didn’t bring that to the office.”
Said Abdo, “Alan is very stoic and never gives anyone else his problems. He kept it inside. Of course, I knew it bothered him because it’s been a huge weight on him and the company and all of us.”
Even as Levan admitted it was “daunting” to take on the regulators, he focused on his business, insisting that persistence and optimism would prevail.
The team devised separate business plans for each of its hundreds of real estate holdings. Some they sold or foreclosed, others they decided to develop or hold, waiting for the value to appreciate as neighborhoods evolved.
“When presented with reams of data, Alan can really quickly tease out what the important parts are,” Wise said. “He’s just got a real good business sense of being able to look at a page full of numbers and really hone in on where we have the risk and where we have the opportunity.”
As real estate in Florida rebounded, so did the value of BBX’s positions. The company has continued building up the portfolio through acquisitions, investments and developments.
Through a series of acquisitions in 2013, the company also bought the Bluegreen Corp., a vacation timeshare company that has been one of the company’s primary profit drivers. The company owns and manages resorts in vacation destinations worldwide and enables bookings through a points system. BBX reported $321 million in revenue from Bluegreen in the first half of 2017, 86 percent of the company’s revenue for the period.
The company also developed a third strategy: investing in various businesses where their management expertise could add value. The first sweets company was Hoffman’s Chocolates, purchased in 2013. The deal developed naturally out of existing relationships — the local candy company had been a customer of BankAtlantic.
At the time, Hoffman’s was nearly 40 years old and had four Palm Beach County locations. The company now operates nine locations in Palm Beach and Broward, with plans to open in Miami-Dade.
With its purchase of Hoffman’s, BBX stumbled into an untapped niche. After the deal was announced, other mom-and-pop candy companies contacted BBX. Most were wholesale companies with $2 to $10 million in annual revenues — pocket change in an industry dominated by giants such as Hershey’s and Mars.
For BBX, combining operations and marketing functions while retaining individual brand identity has been a winning recipe. It now has eight confectioners in its portfolio that make a range of sweets including chocolate, coconut patties, hard candies and toffee.
Although BBX’s share price rose, some doors remained closed as the lawsuit continued.
The company approached the NYSE several times about possible listings and was told the exchange couldn’t consider an application while the litigation was pending. Some business deals pulled back at the last minute without explanation when companies began due diligence. Lenders remained shy.
Rather than focus on the negative, Levan looked for opportunities. “You can’t do business with everybody,” he said, but “we’re very resourceful. You do business with people who want to do business with you.”
BBX’s long-standing partnership with The Altman Companies, a Boca Raton-based developer, wasn’t affected “one iota” by the charges in the case, said Joel Altman, chairman of The Altman Companies and founder of its development division. The developer has worked with BBX since 2000, he said, “and we’re still doing business on many fronts, and I think that’s the true testament. I think [Levan’s] a very honorable person, and I think that he’s a good businessman.”
In March 2017, the second trial began. Nearly contemporaneously, the company began due diligence for its $57 million acquisition of IT’Sugar, a South Florida-based company that is the country’s largest specialty candy retailer.
“We knew that we had to continue running our business despite the trial,” said Jarett Levan, who led the IT’Sugar acquisition and also served as CEO while his father was barred from the position. “There was no thought about slowing down or stopping our activity because of the trial.” (The same Calvin Coolidge quote on persistence hung outside Jarett Levan’s childhood bedroom as a gift from his father and is now framed in the younger Levan’s office, too.)
On May 8, a judge’s clerk took nearly 20 minutes to read the final verdict in front of a packed couttroom. The defendants were cleared of all charges. The lawyers and executives celebrated first at the law firm, then again at BBX’s Fort Lauderdale headquarters. Then it was back to work.
BBX submitted its application for NYSE listing, and the request was approved on July 6. Trading began on July 13.
“We’re back to business as usual,” Abdo said, “which was always pretty action-packed. We’re always looking at new opportunities and new deals and how we can grow our business.”
In addition to the IT’Sugar deal, BBX also announced in June that it had completed and opened the first of three buildings in a Hialeah apartment complex, Altis at Bonterra, in partnership with The Altman Companies. Another joint venture with The Altman Companies is under construction in Texas, and three more are scheduled to break ground in the next 12 months.
For Levan, the lawsuit’s end was simply the beginning of the next chapter. “Retirement is not on my horizon,” Levan said. “I’m having too much fun. I get to come to the office every day.” His own father retired from his exterminator business at age 89.
One thing the company has retired, however, is investor earnings calls. Instead, the company will do more investor relations with its roadshow presentations, investor conferences and annual meetings. In September, the company is planning a day of investor meetings in the boardroom of the New York Stock Exchange, where executives will ring the opening bell.
Although Levan doesn’t foresee any crises soon, he wants to be ready when something happens. “We strive to be aggressive in our strategic planning and cautious in our risk,” he said. After all, the Florida market always has surprises.
“Florida goes from no cranes to construction cranes on every corner. And now we have cranes on every corner.”
Alan B. Levan
Title: Chairman and CEO of BBX Capital Corp. (formerly BFC Corp.), and chairman of Bluegreen Corp..
Community involvement: Founder and chairman of the BBX Capital Foundation (formerly BankAtlantic Foundation), which has contributed over $15 million to the South Florida community; member of the Nova Southeastern University (NSU) Board of Trustees; chairman of the NSU Finance Committee; co-founder and co-chairman of the Susie and Alan B. Levan NSU Ambassadors Board; chairman of the NSU Fellows Society; former chair of the Broward College Foundation.
Education: Bachelor’s degree in philosophy and English from Tulane University College of Arts and Sciences in 1966.
Honors and awards: Habitat for Humanity’s Spirit of Humanity, NSU Entrepreneurship Hall of Fame, Greater Miami Chamber of Commerce’s Cutting Edge, Sun Sentinel’s Excalibur Business Leader of the Year, Ernst & Young’s Entrepreneur of the Year for Florida, JD Powers Award for Customer Service in Banking, Tulane University Distinguished Alumni of the Year.
Family: Lives in Fort Lauderdale with his wife, Susie Levan; has five children and 11 grandchildren.