Saturday, June 23, 2018
Business

Bankrupt gold dealer's Tampa palace heads to foreclosure auction

TAMPA — An Avila megamansion modeled after a 17th-century royal palace is now headed to the foreclosure auction block, the latest disgrace for gold dealer Mark Yaffe and what was once Tampa Bay's most expensive estate.

The 29,000-square-foot castle, which took seven years to build and went on the market in 2008 for $25 million, will become perhaps the biggest seizure from Yaffe, who bankruptcy trustees said used his National Gold Exchange, once one of the world's largest precious coin wholesalers, as a personal piggy bank.

Completed in 2004, the Jacobean manor boasts 10 bedrooms, 13 bathrooms, a grand ballroom, a marble basketball court and 14 fireplaces. Bidding for the mansion at an online auction next week will start at $100.

The palace, where 15,000 square feet of terraces pour across 6 acres of Tampa's lavish Avila enclave, has stood for years as a porcelain-white elephant of Yaffe's extravagance. The home's showpiece was a museum featuring his world-class collection of antique music machines.

The auction will come four years after Yaffe's firm, which once did about $500,000 worth of business every week, filed Chapter 11 bankruptcy under a $36 million mountain of debt.

Sovereign Bank, the gold exchange's largest creditor, told a bankruptcy court they suspected Yaffe had skimmed $10 million from his company to build the opulent estate.

A final judgment last month found the Yaffes still owed $10.5 million to Bank of America, including $8.8 million in loan principal, $1.2 million in interest and $380,000 in taxes and insurance.

For five years, luxury real estate agents have marketed the mansion worldwide to the ultra-elite. But the home never sold, and in March its price was slashed to a modest $12.9 million. The Yaffes' attorney did not respond to messages Monday.

If bids are too low at the Dec. 18 morning auction, the bank could choose to keep the mansion. The estate's final-judgment debt is twice as much as the 24 other foreclosed homes scheduled for auction that day, combined.

Through trade shows and Home Shopping Network sales, Yaffe, a college dropout, turned his and his brother's small Massachusetts coin and hobby store into an international juggernaut, with gold operations in Paris, London, Zurich and Brussels. In 2008, National Gold Exchange's sales peaked at $285 million.

But in filings in bankruptcy court, Miami bankruptcy trustee Joseph Luzinski said Yaffe routinely shuffled around his gold inventory to inflate their accounts; silently owned an "independent" coin grader to prop up values; funded personal coffers with "large sums of money" from the company account; and paid his wife and father $500,000 in two years of salaries for doing little to no work.

To evade detection of his "reckless and wasteful spending," Luzinski wrote, Yaffe filed false invoices and coached employees "to shred business documents on a daily basis."

In 2009, Sovereign Bank representatives showed up unannounced to check on the stores of gold named as collateral for Yaffe's $35 million line of credit. When they were nowhere to be found, the bank canceled his credit and seized $18 million worth of rare vault-stored coins and antique music machines.

Luzinski, who also served as trustee in the bankruptcy of NFL quarterback Michael Vick, said Yaffe's coin dealership "reaped the success of (his) business savvy as well as its failure caused by his greed." A bankruptcy settlement agreement was reached last year.

The mansion's winning bidder will need to post a 5 percent deposit before the sale and pay the rest of the bid within the next business day, a potentially monumental task.

But bank attorneys aren't exactly sure what to expect when bidding for the home begins. Drew Jenkins, a Bush Ross attorney representing Bank of America, said, "We'll have to see what the action is."

Contact Drew Harwell at (727) 893-8252 or [email protected]

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