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Jury Convicts Two of Four Land Company Executives On All Counts

August 5, 1992

Undated (AP) _ Also moving on the financial wire. By CATHERINE WILSON AP Business Writer

MIAMI (AP) - A federal jury today convicted the president and a vice president of General Development Corp. on 40 counts accusing them of defrauding thousands of prospective Florida homebuyers.

The chairman and another vice president were convicted only of a conspiracy count after a complex, nine-month trial.

Prosecutors said 10,000 customers were deceived into buying overpriced homes that sold for an average $74,000, although they were worth only $52,000 or less. Many of the victims were out-of-state people looking for a bargain on a Florida dream home.

The defense argued the Miami developer had no obligation to tell customers about the 30 percent to 50 percent difference between its prices and actual market value, appraisals and competing prices.

The president, Robert F. Ehrling, and the former vice president, Torre DeBella, were convicted by the federal court jury of mail fraud, conspiracy and interstate transportation of people in furtherance of the mail fraud.

The former board chairman of GDC, David F. Brown, and former vice president Richard A. Reizen, were convicted only on the single conspiracy count. They were acquitted on the mail fraud and transportation counts.

Outside the courtroom, Assistant U.S, Attorney Norman Moscowitz, the lead prosecutor, said the verdict ″tells the American public that it’s never right to cheat your customers.″

The four defendants showed no emotion and had no comment after the verdict.

″Obviously we’re disappointed,″ said DaBella’s attorney, Clark Mervis. He noted that Ehrling and DaBella had received more corporate memos on the company’s sales practices, possibly explaining the different verdicts.

Mervis and the other defendants’ attorneys said they will appeal.

Each defendant had faced a possible 250-year prison term if convicted of all 40 counts: 29 counts of mail fraud, 10 of transportating people to execute the fraud and one of conspiracy. The conspiracy counts carry a possible five- year term.

U.S. District Judge Lenore Nesbitt set sentencing for Oct. 19. The defendants remained free on bond.

The criminal charges targeted mailed company brochures and Southward Ho trips, known as SoHos, for flying prospective buyers to Florida for carefully managed promotional tours.

Facing a similar indictment in March 1990, the company changed management, filed for bankruptcy protection - generating $5 billion in claims - and pleaded guilty to fraud conspiracy. The sentence required a $160 million homeowner restitution fund.

The company emerged from Chapter 11 protection in March with new stockholders, the new name of Atlantic Gulf Communities Inc.

General Development’s nine Florida communities - built mostly in cow pastures and open fields - are home to 225,000 people.