While checking on August foreclosure auctions, Peter Filippello found a townhouse in Largo he liked.
He did "a little digging" and discovered that the company foreclosing and the company being foreclosed were headed by the same person — Clearwater lawyer Roy C. Skelton.
"I smelled a rat so I got out," Filippello said. "The plaintiff was one and the same as the defendant. How can somebody sue themselves or put a judgment on themselves?"
Filippello wasn't the first person to have issues with a foreclosure auction involving Skelton-connected companies. Last year, a judge threw out the $458,100 sale of a Redington Beach condo because of what he called an "unscrupulous" scheme by Skelton to trick bidders.
That controversy had barely died down when the Largo townhouse that Filippello eyed came up for sale in a foreclosure auction. That time, a bidder almost lost $112,300.
The Florida Bar confirmed it has a pending case against Skelton but would give no details. He said the Bar asked him to describe his actions in the Redington Beach auction.
"I've done that," Skelton said. "They've not advised me that I'm in any violation of rules of professional conduct. I don't think I've done anything wrong. When it comes to judicial sales, the law in Florida is buyer beware."
A licensed attorney since 1984, Skelton is also a real estate investor. He acquired several properties through homeowner association foreclosure auctions.
Just as a bank can foreclose on a delinquent borrower, an HOA can foreclose on a member who hasn't paid association dues. If the winning bid is high enough to cover the amount owed, the bidder can get title to the property and rent it out or live in it until the bank forecloses.
At an HOA auction two years ago, one of Skelton's companies, Outbidya, got title to the Largo townhome with a bid of $157,800. Skelton then created First Florida Residential Mortgage Company.
First Florida issued two mortgages to Outbidya — in effect, one of Skelton's companies was loaning money to another.
In June, First Florida got a final judgment of foreclosure against Outbidya, paving the way for an auction Aug. 14.
It drew the attention of Filippello, who was looking for a place for his granddaughter. Townhomes in the same community had recently sold for up to $189,000 and he thought he might get this one for much less because the judgment amount was only $101,846.
"I wanted to submit a bid, but because I'm a businessman, I look stuff up," said Filippello, a former wholesale produce broker.
Searching in corporate records, he found that First Florida and Outbidya had the same principal: Skelton. Filippello checked with a title company, which told him: "This thing is too involved; this guy's got irons in all the fires."
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Filipello also noticed that the auction was on a second mortgage. That meant a bank holding a first mortgage could foreclose and take back the townhouse. A bidder could pay more than $100,000 only to have nothing to show for it.
Filippello decided not to bid. He didn't like that the auction was on a second mortgage and that Skelton was connected to both the plaintiff and the defendant.
"Being a lawyer, he shouldn't be doing things like that," he said.
Twice, bidders got stung on auctions involving Skelton's companies.
In 2015, his Outbidya took title to the Redington Beach condo with a bid of $157,800 at an HOA auction. Shortly after Wells Fargo began foreclosing on the first mortgage, Skelton created Deutsche Residential Mortgage and issued a second mortgage to Outbidya.
Last year, with the bank's case moving slowly, Deutsche got a final judgement of foreclosure on its mortgage At auction, Orlando Realty Group bid $458,100. Only later did the company's owner, John Houde, discover that the bank had a first mortgage and could foreclose.
That would have left Orlando Realty with no condo and out almost half a million dollars — money that would have gone to Skelton's mortgage company.
At a hearing to vacate the sale, Pinellas County Circuit Judge Jack St. Arnold agreed Houde should have done more research. But he called Skelton's actions "conniving."
Deutsche Residential "was not a legitimate lender," the judge said, and its sole purpose was to further a scheme to reap "an unconscionable profit."
Barely a month after the Redington Beach condo flap, Skelton's other mortgage company — First Florida Residential — was involved in a similar auction. It made its first attempt to foreclose on the Largo townhouse.
Dream Homes & Creative Renovations of Palm Harbor submitted the winning bid of $112,300.Its owner assumed the money would be paying off a first mortgage so Dream Homes would get clear title to the property. Then he realized the auction was on a second mortgage and that the money would go to Skelton's company.
He hired attorney Matthew Weidner, who got the townhouse sale invalidated. For more than a year nothing else happened until Filippello saw the property up for auction again.
Skelton said his mortgage companies — Deutsche and First Florida — are legitimate even though they are not state-licensed and only loaned to another of his companies, Outbidya. He said the loans were real, too, not "phony mortgages" that created a reason to foreclose and try to get bidders to pay more than Outbidya did for the properties.
"I personally lent money to Outbidya, which gave me (what's known as) demand promissory notes," Skelton said. "I took those and exchanged them for shares of stock in Deutsche.''
If this is confusing, it shows why bidders at foreclosure auctions need to know what they're doing, said Pinellas Clerk of Court Ken Burke, whose office administers the sales.
"You have to be a sophisticated buyer or get legal help need to make sure what you're bidding on is what you think it is," he said. "We make no warranties and we're not supposed to as to what's being foreclosed. We do put warnings on our web site but we can't say, 'Gosh, watch out for this one.' That would be improper."
With all three auction sales falling through, Skelton's companies still have the Largo townhome and the Redington Beach condo.
Skelton, through his Deutsche Residential Mortgage, has appealed the judge's order vacating the sale of the three-bedroom, two-bath gulf-front condo. He's been renting it out for $2,5000 a month after trying to sell it for $623,000.
The first mortgage for the condo is now held by a Delaware firm, which recently got a final judgment. The foreclosure sale is set for Oct. 19.
Skelton has never rented out the Largo townhome. "I'm just waiting," he said, "for the bank to foreclose."
Contact Susan Taylor Martin at email@example.com or (727) 893-8642. Follow @susanskate