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Blaise Ingoglia used deceptive sales tactics, burned real estate investors say

In March 2007, about the time the Florida housing slump was starting to look like a full-blown collapse, Kathryn Morea attended Donald Trump's "Real Estate and Wealth Expo'' at the Los Angeles Convention Center.

Sharing the bill with celebrity pitchmen such as Earvin "Magic'' Johnson and Tony Robbins was Blaise Ingoglia, who touted himself as "CEO of one of the largest homebuilding companies in one of the fastest growing states in America."

Ingoglia said his Spring Hill company, Hartland Homes, could build no-frills houses at far below market value, according to Morea's notes from his seminar. With no money down, he said, investors could buy these homes and resell them before they were even completed.

"The message was that with very little effort or risk, you could easily make $25,000 and do it again and again,'' said Morea, 45, a Los Angeles area real estate investor who quickly agreed to buy a house from Hartland.

It wasn't until February 2008 that Morea visited Hernando County and discovered the full truth about Ingoglia's resale plan and her home, which Ingoglia had never told her was on a lime rock road.

Her GPS device took her down dusty, dead-end lanes in Royal Highlands, past grazing goats and scattered, foreclosed houses with broken windows and weedy lots.

Later, she saw Hartland homes listed for as little as $140,000, about the current value of her house — not thousands of dollars more than the amount of her current loan, as Ingoglia had assured her, but $55,000 less.

Ingoglia's pitch "was fiction,'' Morea said recently. "And I think it was fiction from the beginning. He had to have known he had built too many homes for that market and they weren't being absorbed.''

• • •

Ingoglia said Hartland sold hundreds of homes to buyers who live in them now or turned a profit on resale. Morea, he said, was burned by falling real estate values, not his sales presentation.

"She lost money. A lot of people lost money.''

And, yes, Morea acknowledged, she should have known better than to fall into the age-old trap of buying Florida property sight unseen.

So why dissect this deal?

Because easy opportunities for home buyers in Hernando were a thing of the past by early 2007, and a real estate insider such as Ingoglia had ample opportunity to know it.

Because by however much Ingoglia overstated his statewide ranking (he said a local business journal ranked him as the 35th-largest builder in the Tampa Bay area), Hartland did build more houses in Hernando than any other local company — most of them for speculators who helped inflate the housing bubble.

Because Morea is not alone. She is part of an informal group of 10 Hartland buyers on both coasts who say they were hooked by promises of easy profit that were backed by inflated appraisals from a single Brooksville company. The organizer of this group, Mike Kulish, referred Morea to the Times.

And, finally, because Ingoglia has business connections with powerful political figures and is powerful in his own right.

Morea said Hartland arranged for the sale of her house to be handled by Realtors Ana Trinque, former chairwoman of the Republican Executive Committee, and her husband, Art.

The Trinques now work for the real estate agency owned by state Rep. Robert Schenck, the Novo Group, which is featured on Hartland's Web site and rents space from Ingoglia. In March, Schenck and Ingoglia formed a new company — inactive so far, Ingoglia said — the Novo Group of Florida LLC.

The charismatic salesman Morea described at the Los Angeles seminar is the same one who led the "Government Gone Wild'' crusade against county spending in 2007. His self-funded advertising campaign helped defeat two Democratic incumbents in the 2008 County Commission elections. His election, in April, as chairman of the Hernando Republican Executive Committee means his influence will probably continue to grow.

• • •

This, according to Morea's notes and the seminar's promotional material, was the heart of Ingoglia's pitch:

Ingoglia told his audience that "1,900 people a day move to Florida'' and handed out a collection of upbeat newspaper quotes about Florida real estate under this heading: "Housing Bubble? … Think Again!!!"

In such a robust market, a house that Hartland could build for $218,000 would be appraised for $305,000. Even after closing costs and incentives offered to ensure a quick sale — a year's worth of homeowners insurance, for instance — investors could easily clear $25,000.

Ingoglia doesn't argue with the accuracy of Morea's notes, just the context.

He was not trying to lure investors, he said. "We were teaching people how to make money in new home construction.''

But for an earlier expo in 2007, Hartland billed itself as an "investor only'' company. Advertisements for the seminar in Los Angeles repeatedly mentioned opportunities for "investing'' and "investors.'' And Hartland representatives were on hand to take orders for homes.

"He was there specifically to sell houses to investors,'' Morea said.

• • •

If that's the case, did Ingoglia know, or should he have known, that his deals couldn't work as advertised in the crumbling housing market?

Probably, in fairness, this was less clear then than now.

The average price of houses sold in Hernando didn't start to fall decisively until early 2007. And, at the time, the University of Florida's Bureau of Business and Employment Research, which Ingoglia cited as the source of his population figures, was still reporting rapid growth, even if the estimates were based on the questionable assumption that people were actually living in most of the state's new houses.

But the bureau does not track the gross number of people who, as Ingoglia said, "move to Florida,'' said demographer Scott Cody. This figure is "very misleading,'' he said, because it doesn't account for people leaving the state.

A more revealing statistic, the net number of people moving into the state, averaged 924 per day between 2000 and 2007, according to bureau statistics.

"It looks as if he's got it about twice that high,'' Cody said.

There also were many widely reported signs of trouble that Ingoglia didn't mention in Los Angeles.

In 2006, three of the nation's largest van lines reported that they were moving more people out of Florida than into it for the first time in decades. Public school enrollment, after rising for years, had suddenly gone flat.

The number of building permits for single-family homes in Hernando had fallen from a peak of 495 in December 2005 to 67 in March 2007.

Home sales, as tracked by Realtors, had dropped from 483 in March 2005 to 217 two years later, while the inventory of unsold homes had climbed from about 800 to more than 4,000.

Said Vladimir Hucko, a Spring Hill real estate broker: "By 2007, only people with no brains and no education didn't know where the market was going.''

• • •

In May 2007, Morea received an appraisal estimating the value of the house Hartland would build for her at $280,000.

Appraisals of market value, based on sales of similar, or "comparable,'' properties, are supposed to be independent to protect the interests of buyers, sellers and lenders.

But the appraisals for some of Hartland's deals appear to have been used for a different purpose: to justify the sales pitches made either by Ingoglia or the Fort Myers Realtor who marketed the company's homes before mid 2006, Morea and Kulish said.

Kulish, who has seen the appraisals of all the Hartland buyers in his group, said every one was performed by Kim MacKeil of the now-defunct Willoughby's Co. of Brooksville. And none of the buyers were able to sell for near the appraised price, said Kulish, who refused to pay off his construction loan and is now negotiating a settlement with the bank.

Ingoglia, who agreed to a brief interview three weeks ago but did not respond to later calls, said Hartland never tried to tell MacKeil how to appraise a house. He didn't order the appraisal for Morea's contract, he said, and never even saw it.

If MacKeil worked on a lot of Hartland deals, he said, that's because she was approved by the Alabama-based lender, Superior Bank. And if the mortgage company Ingoglia co-owns, America One Home Loans, had a hand in choosing MacKeil, it was done by his managing partner, Z. Vernon Hall, who did not return phone calls to his office.

But Kulish said MacKeil also performed appraisals on Hartland contracts financed by three other banks. Superior didn't select MacKeil, and its approval process consisted only of making sure she had a valid license, said bank spokesman Tom Jung: "She was chosen through America One.''

• • •

Relying too heavily on one appraiser is not illegal, but it is an indication that Hartland and MacKeil may have worked together, said Frank Gregoire, a St. Petersburg appraiser and former chairman of the Florida Real Estate Appraisal Board.

Generally speaking, cooperation between a builder and an appraiser is not illegal either, said Ron Weaver, a Tampa real estate lawyer who isn't familiar with Morea's deal. Only proof, for example, that the appraiser accepted undisclosed payments or intentionally lied about important facts could take it into an "illegal realm,'' he said.

Neither Morea or Kulish has that proof. The appraisal is, however, clearly inaccurate, Gregoire said, which is another sign of collaboration.

"The balance of the (appraisal) report just appears to be contrived,'' he said. "It seems very likely the builder supplied the (comparable sales), and that is a very common tactic used to inflate values.''

MacKeil, whose license was issued in the name of Kimberly Lewis, wrote that Hernando's "growth rate is among the highest in the nation by percentage.'' It actually ranked 95th in 2006, according to the Hernando County Statistical Abstract.

She stated that "all necessary and commonly used support services — schools, hospitals, stores, etc. — are in close proximity'' to Morea's lot, which was then about 8 miles from the nearest supermarket.

Two of the houses used as comparable sales do, in fact, seem similar to Morea's — about the same size and built to the same bare-bones specifications: plain stucco exteriors, laminate countertops and unshaded, 12- by 10-foot concrete patios.

But given their sales history — one of them, for example, sold for $265,000 in 2007 and was recently under contract for $98,000 — it seems likely the original prices were inflated by incentives offered to the buyers, Gregoire said.

Two other so-called comparable properties were really not comparable at all, said Gregoire and Barbara Quist, broker/owner of RE/MAX Advantage Realty in Spring Hill. Both of those houses offer granite countertops, jetted tubs and stainless steel appliances.

One of those homes is 230 square feet larger than Morea's, has one more bedroom and a shaded lanai. It's also on Centralia Road, which is paved.

Even so, MacKeil, who did not return repeated calls to her cell phone, appraised Morea's house at $280,000, or $1,000 more than the December 2007 selling price for the home on Centralia.

What was Morea's house really worth at the time?

About $188,000, according a report Quist ran of houses the size and age of Morea's that sold in Royal Highlands during early 2007.

"If I had seen a listing (as high as Morea's appraisal) at that time, I would have said, 'You're out of your cotton-picking mind,' '' she said.

• • •

At first, Morea thought Hartland had made good on its Web site promise of "instant equity.''

The price of $177,000 seemed reasonable. A reserve payment of $10,000 for the bank and $5,541 paid to two of Ingoglia's companies, America One and Juris Title of Hernando, helped bump her construction loan up to $199,000. Still, that was $81,000 less than the appraised value.

Then the house lingered on the market for weeks. Then Art Trinque mentioned in passing that her house was near a paved road — Centralia — which was the first she'd heard that it wasn't on one.

(Ingoglia didn't reveal this, he said, because he didn't own the lot, just built on it. But Morea produced a document with a Hartland letterhead stating "your lot and subdivision will be chosen for you.'')

After Morea's discouraging trip to Hernando, it was no surprise when the bank told her it couldn't issue a mortgage against the value of her house; it wasn't worth enough.

She she is now stuck with a $195,000 interest-only loan. To keep up with payments, she has had to borrow against her primary residence in California.

Morea thought she still had a lifeline to recoup her losses on the house, which is now being rented but stood empty for months. The "purchase with confidence plan'' in her contract stated Hartland would pay as much as $10,000 if she couldn't rent it for enough to cover her loan payments.

Hartland paid $2,331 before ignoring her calls to its office, she said. When she sued, in March, to recover the payments, Hartland's attorney countered that she had not met several terms of her contract, such as putting her house up for sale by a required date.

"That (guarantee) was the one thing that could have helped soften the blow and keep me from going underwater,'' she said. "For him not to come through on that was heartbreaking.''

• • •

What does this mean to the rest of us?

As you probably know, Ingoglia has presented himself as a spokesman on subjects ranging from growth management to economic development. And, as Executive Committee chairman, his words now carry the weight of the party.

Is he working in the public's interest when, for example, he proposes a county-funded incentive plan for home buyers, as he did earlier this year? Or is he promoting his own business?

Knowing how he bent the truth in Morea's deal puts us in a better position to judge. It gives us what she wishes she'd had before she signed her contract with Hartland: fair warning.

Times researcher Shirl Kennedy contributed to this report.

"I think it was fiction from the beginning.''

Kathryn Norea, one of 10 real estate investors who say Ingoglia used inflated appraisals to lure buyers

"She lost money. A lot of people lost money.''

Blaise Ingoglia, who says falling real estate values, not his sales tactics for Hartland Homes, are to blame for investors' losses

Blaise Ingoglia used deceptive sales tactics, burned real estate investors say 08/15/09 [Last modified: Saturday, August 15, 2009 1:13pm]
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