Eight Members of Congress Invest in Island, But Deal Goes Sour
WASHINGTON (AP) _ Call it Paradise Lost: The saga of eight members of Congress who invested in an idyllic, 17-acre Caribbean island in 1988 and have been behind on the mortgage ever since.
″It’s one of those things that if we had to do all over again, we wouldn’t do it,″ said Rep. Robert Mrazek, D-N.Y., the group’s managing partner who initially agreed to bear the financial liability for the property’s operating debts. ″It seemed like such a straightforward thing.″
Mrazek and his partners, including Sen. Al Gore, D-Tenn., are delinquent on their $16,000 quarterly mortgage payment. Not only that, the financial killing they hoped to make on the sale of Pierre Island has evaporated.
Indeed, Mrazek’s plan to buy the sun-filled Bahamian island in 1988 for $475,000 has become a big, expensive headache. The congressmen hardly ever used the island and plans to sell it at a huge profit have fallen through.
Besides Mrazek and Gore, other investors are Democratic Reps. Butler Derrick of South Carolina; Edward Feighan of Ohio; William Lehman of Florida; Matthew McHugh of New York; John Bryant of Texas and Thomas McMillen of Maryland.
Mrazek’s group, which includes eight private citizens as well as the lawmakers, put down $75,000 cash. They formed a corporation, Douglas & Chamberlain Ltd., to hold title to the property.
As lead partner, Mrazek paid only $7,500 for his 25 percent interest. Gore put down $27,000 for 10 percent interest; other lawmakers pooled $13,500 for a 5 percent interest.
The island’s previous owner, Mitchell Marks of Melbourne, Fla., held a $400,000 mortgage. But the group is a month behind on the $16,000 due, he said.
″They always have been delinquent,″ he said in a recent telephone interview. ″When you sell something you want people to pay on time.″
When Mrazek and his fellow investors plunked down their money in December 1988, the vacation time-share was ″sort of a fantasy,″ the New York Democrat said.
Located about three miles from Eleuthra, a favorite of the jet set, Pierre Island has three cottages, a tennis court and lots of fishing. In short, it seemed a perfect place for a family vacation.
As it turned out, only a few lawmakers ever visited the island. ″It was pretty basic,″ said bachelor McMillen.
Bryant took his wife and three children to the island once, but concluded it was too expensive to get there, according to his aide, Carlton Carl. ″It cost an arm and a leg,″ Carl said. Besides, the family had to haul in their own food, water and supplies.
Derrick flew to the island once, before he invested in it, but Feighan has never seen it.
Less than six months after the lawmaker’s group bought the island, Geoffrey Brunning, a British-born Atlanta businessman, came along offering to purchase it. Mrazek jumped.
Not only that, Brunning agreed to pay $850,000, nearly double what the congressmen paid for it.
Mrazek gave Brunning and his investment group permission to use the island in late 1989. The Brunning group put down $66,000 in non-refundable deposits and mortgage payments, according to Mrazak.
Brunning, a former homebuilder now in the travel business, originally hoped to build a drug rehabilitation center on the island, but couldn’t get the financing. Instead, he and his partners decided to turn the island into a ″small, private resort,″ he said.
Buying the island depended, however, on approval by the Bahamas Foreign Investment Board.
Brunning filed with the government board last November, but the approval never came. So the deal is off, Brunning said.
″Technically, the contract has expired,″ he said. Were the Bahamas government to approve the sale, Brunning said he still might assemble a group to buy the property, but couldn’t pay $850,000. ″Things have changed,″ he said.
Chris Symmonett, a spokesman for the Bahamas information office in Nassau, said he did not know why the board had not acted on the Pierre Island transaction.
Meantime, Mrazek is figuring out his next move. ″If we can’t sell, we’ll have to refinance,″ he said.