By Dan Christensen, browardbulldog.org
Las Olas Company president and chairman Irving Bowen mortgaged the venerable hotel to obtain the short-term loan. Three months later, he was fired by the company’s board of directors.
Barbara Wells, heiress to a large Broward family fortune that includes The Las Olas Company, sued Bowen in August for allegedly squandering “tens of millions of dollars” of her corporate and trust fund money. She claimed Bowen used her riches to live the high life, while “running the company into the ground.”
Bowen declined to discuss the lawsuit, the mortgage loan or say why he went to a law firm and not a bank to borrow $6 million for The Las Olas Company.
“My attorneys have advised me not to comment,” said Bowen.
The borrower was The Las Olas Company subsidiary, Riverside Hotel Holding Company LLC. The lender was LORH LLC – a Delaware company incorporated two days before the mortgage was signed.
LORH LLC’s managing member was David Boden, Rothstein’s legal and business advisor at Rothstein Rosenfeldt & Adler. RRA drew up the mortgage and handled the transaction.
Federal agents arrested Rothstein on Tuesday on federal racketeering conspiracy and other charges. Authorities allege that for the past four years Rothstein used his law firm as headquarters for a $1.2 billion Ponzi scheme.
Prosecutors are seeking the forfeiture of tens of millions of dollars worth of Rothstein’s real estate, cars, boats, cash, bank accounts, jewelry, business interests and other personal possessions. LORH LLC is not among the Rothstein holdings sought for forfeiture.
Prosecutors also want millions more in allegedly swindled dollars that Rothstein doled out to local charities like Fort Lauderdale’s Holy Cross Hospital and Hollywood’s Joe DiMaggio’s Children’s Hospital, the Republican Party of Florida and individual politicians like Florida Gov. Charlie Crist and Chief Financial Officer Alex Sink, a Democrat who is running to succeed Crist. Crist is now running for a U.S. Senate seat.
While there are indications that Rothstein is cooperating with authorities, he has pleaded not guilty and is jailed without bond as a flight risk. Authorities have not publicly identified any co-conspirators, but have indicated more arrests are on the way.
Boden is named with Rothstein and others as a defendant in a Broward civil lawsuit brought by several groups of wealthy investors in Broward and elsewhere who claim to have lost in excess of $100 million to Rothstein’s scheme. The suit filed by Fort Lauderdale lawyer William Scherer last month identifies Boden as Rothstein’s “right-hand man and an essential participant in the scheme.” It says Boden recruited investors and drafted bogus documents.
Boden did not respond to requests for comment relayed through his Fort Lauderdale attorney, David Vinikoor.
The Las Olas Company removed Irv Bowen as president and chairman on July 22.
Public records don’t say where LORH LLC got the $6 million to loan out, or state the purpose of the loan. But they show that the Riverside Hotel mortgage was paid off on Oct 19.
Three days earlier, The Las Olas Company borrowed $10 million from a limited partnership controlled by Louis and Janine Flematti, owners of the popular Las Olas Boulevard restaurant Le Café de Paris. As collateral for that loan, the company pledged various properties it owns in and around Las Olas Boulevard, as well as the profits they generate.
What happened to the $6 million that was originally borrowed is not known.
Public records document the various property transactions. But the charging documents filed against Rothstein on Tuesday raise questions about the purpose of the Riverside Hotel mortgage.
Prosecutors allege Rothstein victimized investors in two ways. To date, public attention has focused on allegations that Rothstein lured them with attractive offers to invest in deals involving anticipated pay-outs from bogus legal settlements.
But the federal “information” filed against Rothstein says he also duped investors into loaning money “to purported borrowers based upon fraudulent promissory notes and fictitious bridge loans.”
Rothstein allegedly sold investors by telling them he had clients looking for short-term financing for private business deals and that they “were willing to pay high rates of return” to get it.
“In fact, defendant Rothstein was aware that no such clients or requests for business financing actually existed,” the information says.
Was the high-rate, short-term mortgage taken out on the Riverside Hotel an exception? Was it overlooked by authorities as they waded through piles of paperwork? Or are those mortgage transactions, including the October loan payoff, not what they appear to be?
Prosecutors aren’t saying.
Robert Van Fleet, Barbara Wells’ ex-husband and Bowen’s successor as president of The Las Olas Company, did not return phone messages left at his office over several days.
Wells, a local philanthropist, hired Bowen to run The Las Olas Company in 2003 after the death of her father, Preston A. Wells Jr. She also named Bowen trustee to oversee a series of family trusts of which she is the beneficiary.
According to Wells’ lawsuit, Bowen betrayed her and has refused her demands that he resign as trustee. The trusts own The Las Olas Company, and he has used his control of the trusts to “thwart” company operations since his dismissal, the suit says.
While the lawsuit puts Wells’ losses at “tens of millions of dollars,” sources familiar with the situation have said her losses total about $100 million. That includes $20 million Bowen allegedly wasted on planning and development costs for a proposed $130 million hotel expansion the suit now dismisses as an “unrealistic” failure.
Lawyers representing Wells and Bowen in the lawsuit did not respond to requests for comment.