A judge ordered the Conrad Fort Lauderdale Beach developer to pay back $2.7 million in loans and interest to project financiers who allegedly have ties to the Odebrecht corruption scandal.
Jose Luis Zapata and the Viyella family, through their CFLB Partnership, developed the 24-story oceanfront condo-hotel with 290 units at 551 North Fort Lauderdale Beach Boulevard. It opened in October 2017, late and over budget.
Lenders Diamond Blue International, based in Anguilla, British West Indies; and Fundacion Lemar, of Panama City, sued CFLB in 2016 alleging default of $1 million in financing each had issued the prior year.
An attorney for CFLB Partnership alleges the lenders are tied to the sons of former Panamanian President Ricardo Martinelli, Luis Enrique and Ricardo Alberto Martinelli. The brothers were arrested last year in Guatemala on charges they facilitated the payment of $28 million in bribes on behalf of Odebrecht.
The Brazilian construction giant pleaded guilty in 2016 to charges tied to a $700 million corruption scheme to generate business for the company by paying bribes to government officials in Panama and elsewhere.
The lenders’ attorney did not return requests for comment on the litigation or the Martinelli brothers’ alleged ties to Odebrecht.
At the heart of the legal tiff is whether CFLB Partnership was exposed to the debt. The loans were issued to another linked group called CFLB Management.
Miami-Dade Circuit Judge Michael Hanzman said yes, writing in a final judgment that both CFLB groups are owned by Zapata and the Viyellas. The management entity transferred the funds a day after receiving them to the partnership company.
This amounted to Zapata and the Viyellas family playing a “shell game” in which they merely “moved the funds from their right pocket into their left pocket,” Hanzman wrote in his July 13 final judgment. Although CFLB Management, which did not own the property, received a higher stake in CFLB Partnership in exchange for conveying the funds, this did not matter, Hanzman concluded.
The judge followed up with an Aug. 11 order, writing that this is a simple case despite CFLB Partnership’s success at delaying “the day of reckoning” for five years. That order struck the developers’ push for another hearing.
When the loans became due, “CFLB Partnership ran for cover, insisting that the money was owed only by CFLB Management,” Hanzman wrote. At the same time, it kept selling Conrad units.
The nearly $2.7 million judgment includes $2 million in loans and $661,337 in interest.
Leoncio de la Peña, the attorney for CFLB Partnership who filed a notice of appeal on Thursday, disagreed with Hanzman’s conclusion that the two entities have the same owners. Although CFLB Partnership owns the management company, there are layers of entities between the Viyella family and the partnership entity.
The order poses an “existential threat” to real estate financing, as it is typical for a subsidiary of a project owner to borrow financing as was the case with the Conrad.
“There was no debt against Partnership,” de la Peña said.
CFLB Partnership sold a 51 percent stake in the Conrad to Quebec-based Heafey Group and the Pegula family in December 2016. The deal was for nearly $100 million.
According to de la Peña, CFLB Partnership sold its remaining stake in the property to the same buyers in 2019.
In addition to being delivered late, the Conrad has been mired in other litigation. A previous developer envisioned the project as a Trump International Hotel & Tower, with a licensing agreement with the Trump Organization, but that plan fell apart.