TAMPA — Sunshine State Savings has filed a lawsuit to foreclose the $400,000 loan Buddy Johnson used to buy a 20-acre tract and small home in Plant City two years ago.
The suit says Johnson has missed all five of his $2,728-a-month payments on the mortgage since November, the month he lost his re-election bid for supervisor of elections. He owes $394,085, plus interest, late charges and attorneys fees.
But it's the elderly couple who sold Johnson the property who stand to lose big.
The mortgaged property off Thonotosassa Road was the longtime family homestead of Cecil Bass, 80, and Nita Bass, 78, before they sold it to Johnson in March 2007 and loaned him $520,000 to complete the purchase. They say Johnson told them his payments would provide better investment income than cash they could get at closing for a savings account.
Now, as Johnson has stopped paying on the Bass loan and the bank has begun foreclosure, the Basses face the loss of their $520,000 retirement nest egg. While they did receive about $280,000 at closing, they have little chance of reclaiming the property — which their family has held since the '30s — because the bank is first in line to take the land.
"This is a sad development," said Morgan W. Streetman, a Tampa attorney representing the Basses. "This was their family homestead, and now they are in jeopardy of losing their property and all the money — $520,000 that they really counted on.
"The way Buddy played it, there was safety in this venture and in the loan they gave him, but it doesn't look that way now. What could happen is the bank will end up with the property."
The Basses sued Johnson over the transaction in January, alleging that he committed fraud by secretly altering the terms of the sales contract in a conspiracy involving Sunshine State Savings and a local title company.
Using the corporate name Fort Bully East LLC, Johnson bought the property for $800,000. He signed a contract saying he would finance $760,000 of it, with $240,000 from Sunshine State Savings. Instead, Johnson negotiated a $400,000 loan from the bank but never disclosed that to the Basses, the couple's suit says.
At closing on the $800,000 purchase, Johnson signed for two loans totaling $920,000 and walked away with $158,177 in cash "for his own personal benefit," according to the lawsuit.
When the loans were made, Sunshine State Savings's president, Floyd Hall, was the treasurer of Johnson's re-election campaign, and Johnson's campaign account was at Hall's bank.
After the Times raised conflict-of-interest questions about Hall's roles in the real estate financing a year ago, Hall resigned as campaign treasurer and Johnson moved his campaign account.
In the foreclosure action filed April 1, Sunshine State Savings named both Johnson and his company as defendants because he signed a form personally guaranteeing the $400,000 loan.
The FBI is investigating the transaction. In February, agents contacted Plant City appraiser Jack T. Gibbs, who performed the appraisal on the Thonotosassa property when Johnson sought financing from Sunshine State.
The FBI also is investigating money matters involving the Hillsborough elections office while Johnson was supervisor. Agents are looking into how he illegally overspent his budget last year by almost $1 million, as well as whether he spent tax dollars earmarked for "voter education" to promote his re-election campaign.
The Sunshine State suit is the second recent foreclosure action against Johnson. In January, a foreclosure judgment of $415,878 was entered against him after he stopped making payments on a luxury condo he purchased in downtown Sarasota in 2006.
The loans used to buy the Sarasota condo and the loans to purchase the Bass property brought Johnson's debt to $1.6 million when his election job's salary and stipend as director of a restaurant holding company totaled about $142,000 a year.
After taking title to the Bass property, Johnson's stated plans for it kept changing. Initially, he said he intended to develop the land. He platted it and renamed the acreage Oak Creek Estates.
Asked if being a developer might interfere with his job as elections chief, Johnson said he had no plans to develop the land. He said his only wish was that his three children might build homes there, next to his own.
Next, Johnson said he had dedicated the land to agricultural use. He utilized a $20-a-year lease with a cow exhibitor to win a "greenbelt" tax exemption that reduced the taxable value of the property by more than $560,000.
Finally, Johnson put the land on the market, offering it for "exclusive residences" in a deed-restricted subdivision.
Johnson's agricultural exemption lowered his 2008 property taxes from about $14,300 to about $3,500. He has not paid the taxes, which became delinquent April 1. If the bank completes the foreclosure, it likely would have to pay the back taxes.
Jeff Testerman can be reached at firstname.lastname@example.org or (813) 226-3422.