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Florida man's mountain deals in N.C. are a mystery

By Lucy Morgan, Times Senior Correspondent
In print: Sunday, July 20, 2008

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ADVERTISEMENT “I got nothing to hide. I worked too hard to hide anything,’’ developer Domenic Rabuffo says.

CASHIERS, N.C. — Florida retirees escape the summer heat to this laid-back haven of waterfalls and mountain views. But now it's buzzing with talk.

A man with a colorful history is up to something on Big Ridge, a mountain community about 10 miles from the nearest stop light. No one is quite sure what is going on.

The man is Domenic Rabuffo, a Miami resident whose onetime business partner, the "fat man,'' was killed in a 1987 mob hit as he dined at Bravo Sergio, an Italian restaurant in Manhattan.

Rabuffo and his partner were accused of masterminding a $49-million mortgage fraud. Rabuffo pleaded guilty, went into the witness protection program and served a brief prison sentence.

Now, amid the huge downturn in the real estate market, he is shepherding a real estate development that is completely out of character for the area. He is building huge luxury homes sandwiched on 1-acre tracts, in a gated community he values at more than $200-million.

Rabuffo has been buying land, often paying dramatically more than it's worth, and selling it to people who pay even more. The buyers, some having never laid eyes on the property, all obtain big mortgages. Though Rabuffo is calling the shots, his name does not appear in most of the documents relating to the project.

It's the big mystery on Big Ridge, where curious residents call Rabuffo "the mobster.''

"That's because I'm Italian,'' he told the St. Petersburg Times. "I've gone through that all my life. I don't know any mobsters. Tell everyone I am not the Mafia. And I've owned my Rolex since 1982.''

Rabuffo in New York

It has been 14 years since Rabuffo walked out of a federal prison.

Facing as much as 80 years in prison and having to repay millions of the $49-million he took in fraudulent loans, he became a federal witness against others. He paid a fine of about $11,000 and served five months behind bars.

His business associate was not so lucky. Irwin Schiff, a 350-pound financial consultant, was shot twice in the head by a lone gunman who entered the Italian restaurant through a side door that was usually locked. Three members of the Genovese crime family were indicted for the murder.

FBI agents listening on a court-approved wiretap had heard mobsters planning the murders of "the fat man'' and crime boss John Gotti, but they could not immediately identify Schiff. Only Gotti was warned.

Rabuffo won't talk about Schiff ("I don't want to talk about my life before yesterday — it's ancient history'') and denies he was in the witness protection program (though New York court files say he was).

Federal court files say their mortgage fraud scheme bilked dozens of banks and financial institutions. They used some of the money to bribe bank officers and New York tax officials.

Rabuffo won't talk about it other than to say that "a lot of the crap that was written about me'' was not true.

Rabuffo in Florida

After prison, Rabuffo moved to South Florida and, according to court documents, went to work for a construction company operated by a former high-ranking but unnamed official from the U.S. Department of Justice.

By 1999 he was helping build a Ritz-Carlton in Coconut Grove and being lauded for his generosity to the Boys & Girls Club of Miami.

His partner from the Coconut Grove project went to jail in New York two years ago. Bruce Fahey, president of McCann International and McCann of South Florida, the initial builder at the Ritz-Carlton, was convicted of bid-rigging and paying kickbacks to New York officials as his business declared bankruptcy.

McCann was removed from the Coconut Grove project amid a sea of unpaid subcontractor bills, lawsuits and other problems. Rabuffo emerged with ownership of the $2-million penthouse at the Ritz-Carlton.

Stetson Glines, a Miami architect who filed suit against Rabuffo over another Miami project, says Rabuffo once came downstairs to a meeting at the Ritz-Carlton wearing an old-fashioned undershirt, pajama bottoms and flip-flops and said he was "the man'' in charge of the deal.

Rabuffo in N.C.

About four years ago, Rabuffo bought a house in these mountains, which are renowned for the awesome views. He has been buying property since — often overpaying, according to prices stated when the deeds were recorded.

Leland McKeown, a Brooksville resident, owned a 2.17-acre tract here with a small 100-year-old home on it. He didn't have it for sale when Rabuffo started making offers. In 2006, it was on the tax roll for $98,500. Rabuffo bought it for $600,000.

A house built on 14 acres in 1972 was on the tax roll at $162,800. Rabuffo bought it for $1.6-million.

He controls about 150 acres, most of it listed in the names of corporations he controls or in the name of his ex-wife, Mae Rabuffo.

"We're good buddies, business partners,'' Rabuffo says of the wife who divorced him in 1987.

Some who have worked with and sued Rabuffo say he has boasted that he keeps most of his holdings in his former wife's name to keep himself judgment proof. Rabuffo has denied it.

Initially Rabuffo talked about building a five-star hotel here and obtained county approval for a 170-unit hotel.

Now he says he doesn't think market conditions are right for a hotel and instead plans to build Blue Ridge Mountain Estates, a high-end development. He says that he has invested about $42-million and that it will take about five years to develop the villas, clubhouse, spa and houses.

The homes range from about 4,000 to more than 12,000 square feet, packed onto 1-acre parcels. A 20-acre tract that Rabuffo purchased for about $900,000 was subdivided into 23 lots and transferred into the ownership of Mae Rabuffo Estates. Most of the lots were sold for $650,000 each — reaping a total of $13.6-million, according to the taxes paid on the transactions.

Selling the land

Lawrence Ashe, an Atlanta lawyer, recently sold a house to Rabuffo for $500,000, almost twice what Ashe thought it was worth.

"I think it's nuts,'' Ashe says. "Where's the money coming from? He's putting mansions within a few feet of each other. I don't know why anyone would buy what he is selling.''

But buying they are. With no advertising.

There are no signs to identify the project, no ads in the local papers, no fancy real estate brochures, no local Realtors involved. The only signs say "No Trespassing.''

Rabuffo says he plans to put up signs and a real estate office soon. Meanwhile, he says he has used brokers in Atlanta, Miami and Philadelphia.

With no advertising, the cool real estate market and mortgages increasingly unattainable, Rabuffo has sold more than 100 lots.

Deeds recorded in Jackson County indicate the undeveloped lots have been sold for $650,000 an acre, an astronomical sum for land on Big Ridge, where an acre usually goes for no more than $50,000.

"Something is very wrong with that; $650,000 an acre is incredulous,'' says Dennis Ford, project superintendent for Sims Valley, another development off Big Ridge Road. "Nobody is selling that kind of lot up here. It's just bizarre to build houses that size on the side of the mountain. They are going to wash down the hill.''

Many of the people recorded as owners of the land declined to be interviewed about their purchase. Several of those who talked said they had never seen the property and were buying it as an investment.

Joe Hamilton, register of deeds in Jackson County, said there is no way to know if the sales price reported by the buyer and seller is correct. "All we are allowed to do is ask them if money was exchanged and how much it was, they don't have to present proof of price.''

If, for example, the price were inflated, more money could be borrowed than the property is worth.

Buyers are taking out mortgages that average $487,500 for the property alone. They live in St. Petersburg, Tampa, Brandon, Dunedin, Tarpon Springs, Miami and a handful of other places.

Donald D. Busby Jr., a mechanical engineer at Baxter Healthcare Corp. in Largo, said he did not visit the development before buying four half-acre lots for $1.2-million. He has mortgages totaling $2.7-million and is building a 4,160-square-foot house. Busby said he made the investment after hearing Rabuffo make a dinner presentation in the Tampa Bay area, he couldn't recall where.

Other buyers include a convicted sex offender from Miami whose picture appears on state law enforcement Web sites, the owner of a Tampa window blind company, Odessa residents who own an Internet site that offers views of naked women, and dozens of other Florida residents.

The buyer with the most holdings is Yolanda Serrano, a 44-year-old native of Colombia. She lives in Rockledge, near Cocoa Beach, but now she's a resident of the Brevard County Jail.

Serrano lived in a walled estate on the Indian River. In an article published last year, Space Coast Living magazine described the multimillion-dollar home as "Mexican Villa meets Caliph's Palace.'' Serrano's husband, Xavier Mudavachery, a native of India, told neighbors he owned and operated a local BP service station.

Serrano paid $2.4-million for eight lots in Rabuffo's development, a total of 5.25 acres, and is building two houses. Her outstanding mortgages total $4.1-million.

She was arrested in Brevard on April 7, charged with stealing $12-million from her employer, Southeast Petro Distributors. At the time of her arrest, she was planning to build a $3-million Japanese pagoda in front of her walled compound in Rockledge.

Southeast Petro also filed a civil suit against Serrano, saying she signed an agreement to turn over all of her North Carolina property to the company but attempted to hide some of her holdings, and now she is refusing to sign any of it over.

"I don't know her that well,'' Rabuffo says. "But I don't believe she stole it. I only believe half of what I read in the papers.''

Mortgages and liens

Almost every lot in Rabuffo's development is heavily mortgaged.

Those who have pulled permits to build houses have each obtained mortgages for more than $1.5-million. Many of the loans came from SunTrust and were processed by a single bank officer in Miami, where Rabuffo has lived since the mid 1990s. SunTrust officials declined to comment.

SunTrust holds about $34-million in mortgages on lots in Rabuffo's development. Bank of America holds mortgages totaling about $8-million, Wachovia about $7.3-million and Regions Bank about $5.4-million.

Fourteen mortgage foreclosure suits have been filed against individual property owners to force immediate payment of $19-million in mortgage money loaned by SunTrust. Rabuffo is not a named defendant in any of the suits.

"That's just SunTrust trying to get out of their loans because they are upside down,'' Rabuffo says. "The loans aren't delinquent, they are all paid up.''

Fourteen houses are in various stages of construction, but little has been done lately. The original contractor, Schmitt Construction Co., of nearby Highlands, left the job this year after filing $650,000 in liens against the properties. The liens have been settled; owner Gary Schmitt says he has worked out an agreement to complete the houses and SunTrust has extended financing.

There is also the matter of unpaid property taxes. Last month the Jackson County tax collector included Rabuffo, several of his corporations and many of the individual property owners in a list of delinquent taxpayers, noting more than $150,000 in unpaid taxes for 2007.

And last week an Ohio company that furnished building materials for the project filed a $135,000 lien against Rabuffo's land.

It's my hill

Rabuffo, who turned 72 this month, says he plans to move back to his beloved New York and spend more time with his eight children and 14 grandchildren.

He says he is selling his $2-million penthouse in Coconut Grove and turning more of the work overseeing the North Carolina development to Ray Olivier, a Tampa engineer.

Rabuffo's legacy in North Carolina will be some 150 acres, carved into 1-acre lots, surrounded by pristine acreage where Christmas tree farms and the summer homes of other Floridians dot the landscape.

"He's damaged the property, I don't know if it's recoverable,'' says Craig Cotterman, a Largo resident who has owned land here for 35 years and has a clear view of the buildings Rabuffo is putting up.

"It surely isn't what we dreamt of when we bought our property about 25 years ago and built our house,'' says Coral Gables resident Mimi Armstrong.

To those who say he's ruining what makes the area special, Rabuffo says that he is not only building a new resort here, he also is buying and fixing up old houses. And raising property values.

Residents are well aware of what's happening to property values — and are unhappy to see their tax values double and triple because of Rabuffo's project.

The closest neighbor of the project is the Big Ridge Baptist Church, established in 1902 by some of the area's early settlers.

Church member Dorothy Fisher's family has lived here for more than 100 years. Much to her dismay, the assessed value of her home, about 2 miles beyond Rabuffo's project, nearly doubled last year. "I think they've ruined the place,'' she says. "Those houses don't fit in with the lay of the land.''

Rabuffo shrugs it off. "I got people who like me and hate me up here. At 72, it rolls off my back. I know this hill. I feel I've been here 100 years.''

Times researcher Caryn Baird contributed to this report. Lucy Morgan can be reached at lmorgan@sptimes.com.