By Noreen Marcus, FloridaBulldog
On April 10, when Palm Beach County sheriff’s deputies arrived at a Lake Worth address to evict 63-year-old Deborah Megna, the ailing woman had to be helped onto a stretcher and taken to a nearby hospital.
Hours later Megna got herself discharged and made her way to a motel. The next morning her furniture and other big personal items stood outside the spacious house on Stonehurst Circle — except for her car, which had been towed away.
New owner First York Capital LLC of Boca Raton had achieved full possession. The morning after the eviction, Megna’s advocate Gail Waitkin said in an affidavit, the owner’s agents prevented her from retrieving jewelry and other valuables, including dental implants that cost $35,000.
What began for Megna with a $3,180 lien for unpaid homeowners association (HOA) fees has morphed into a full-on nightmare: She’s not only evicted from her mortgage-free house, she’s likely to lose $600,000 in equity.
Her story isn’t unique. Megna is one of countless Florida homeowners in foreclosure whose equity is threatened or snatched by impersonal corporate entities. The lien-holding sellers aren’t doing anything illegal; they’re simply exploiting a law that gives them all the cards, opponents say.
“What they are doing to these people is just not right,” said a lawyer who is familiar with the Megna matter. Fearing retaliation, the lawyer spoke on condition of anonymity.
The problem is traceable, in large part, to a Florida public-notice law that allows a lien holder to use “alternative” procedures for foreclosure auctions. With a judge’s blessing, the procedures turn a public auction into what is essentially a private sale. The upshot: A buyer with inside knowledge – and no competition – may acquire a pricey house for pennies on the dollar.
For the foreclosed homeowner, though, it’s goodbye equity. The punishment is grossly disproportionate to the homeowner’s financial misdeed; a shadowy buyer, possibly one connected furtively to the seller, reaps wildly excessive profits.
Claiming she was ambushed, Megna is fighting in court to unwind the sale of her home of 26 years. The 5-bed 3-bath lakeside house has been valued at up to $900,000. With no mortgage, $600,000 or more of the total is unencumbered equity, according to Margherita Downey, a Delray Beach lawyer who’s helping Megna with her case.
“I feel so bad for her,” Downey said. She said Megna is disabled and suffering from mycotoxin mold poisoning, which impairs her eyesight, hearing, digestion, and ability to think and communicate clearly.
ONE-BIDDER AUCTION BARGAINS
Megna’s six-year foreclosure saga didn’t begin with a typical mortgage default but with the $3,180 lien for unpaid fees to her homeowners’ association, Smith Farm, court records show. When Megna defaulted on the lien, Smith Farm sold it to Association Funding LLC, a St. Petersburg company that buys up HOA liens and forecloses on them.
Acting as Smith Farm’s assignee, Association Funding sued two years ago to foreclose on Megna’s lien. And the retired business owner fell into a black hole of secretive legal formalities, detailed below, that she’s still struggling to escape.
In some cases akin to Megna’s, the state public-notice law lets the seller avoid online disclosure of an upcoming foreclosure auction. So the sole insider who knows the date and location can bid, show up and secure an incredibly sweet deal: Expensive properties have sold for $100 at these “alternative” auctions, according to court records.
Megna’s house was set for an alternative auction in March 2025, but a whistleblowing lawyer named Anthony Arsali managed to stop the sale. In January First York Capital, which has no known connection to Smith Farm or Association Funding, followed standard procedures when the company bought the house for $520,400.
Who cashes in on the offline, dirt-cheap deals? That’s unclear, certainly, to former homeowners reduced to scrambling in the dark for a piece of the equity they left behind. A foreclosed homeowner is legally entitled to any surplus funds remaining after all related debts and costs are paid – that’s if they can be located.
In 2024 the Miami Herald reported that Hollywood lawyer Brad Schandler routinely conducted “alternative” foreclosure auctions in Miami-Dade and Broward counties. Five of the homes sold for $100 apiece, the report says.
A Florida Bar investigation led to Schandler, 69, asking the Florida Supreme Court to revoke his law license – effectively ending his practice. He admitted getting judges to sign off on alternative auction procedures and holding auctions at the foreclosed properties.
If the high bidder failed to pay, Schandler wouldn’t repeat the auction, he wrote in 2025. Maximizing sales transactions wasn’t his top priority.
BAR BLAMED FOR KILLING REFORM BILL
The lawyer who commented anonymously said it’s about time to reform the foreclosure sales process. Bad actors “are just doing this exact thing one year later and doing it throughout the state.”
State Sen. Ileana Garcia, R-Miami, sponsored Senate Bill 48 to overhaul foreclosure auction rules during the 2025 legislative session.
“SB 48 is a necessary reform to restore fairness, transparency and integrity to Florida’s judicial sales process,” Garcia told the Senate Judiciary Committee, the Florida Bar News reported in February 2025.
The bill died in the Rules Committee.
Asked who or what killed it, Garcia blamed the Florida Bar’s real estate practice section. She added the operative language to another bill “but the Florida Bar managed to bamboozle it!” she said in a statement last week to Florida Bulldog.
Garcia said she tried again this year and, once again, the reform language was stripped away. This time the crux of her bill was incorporated into another bill that reached the Senate floor, where her language was deleted.
“I will revisit next session,” Garcia said. She’s up for reelection in November.
SALE ‘SHOULD NOT’ HAPPEN
In early 2025 Delray Beach lawyer Arsali injected himself into Megna’s foreclosure case by attempting to bid on her house.
Association Funding refused to accept his $500,000 deposit and used alternative procedures that eliminated competitive bidding, Arsali wrote in a motion to presiding Palm Beach County Judge Ori Silver.
The auction process had devolved into a “highly unusual sale … in an attempt to suppress the bid,” he wrote. “Ms. Megna’s equity is effectively being stolen from her and this should not happen under the Court’s watch.”
On March 5, 2025, the day of the scheduled auction, Arsali filed a motion asking Silver to cancel and reset the sale.
Silver granted Arsali’s motion without endorsing his reasoning. She authorized a second auction in January, one that followed standard procedures, and First York Capital successfully bid $520,400 for Megna’s house.
But Megna’s problems were far from over. She’s still out her $600,000 in equity and that money is her only significant asset, said Downey, her pro bono consultant.
Arsali made no allegations of illegality against the Smith Farm HOA, its assignee and auction runner Association Funding, or the buyer, First York Capital.
None of the three answered questions in their emailed responses to Florida Bulldog. Boca Raton lawyer Cory Kravit, representing Smith Farm, wrote that he doesn’t speak to the media about client matters. Contact information for Association Funding wasn’t publicly available.
And First York Capital’s Orlando lawyer Olivia Garcia refused to explain why Megna wasn’t allowed to retrieve her personal property following her eviction. Garcia cited pending litigation.
NEXT STOP: APPELLATE COURT
Court documents and two lawyers who are sympathetic to Megna’s plight told her story to Florida Bulldog.
To date she hasn’t received a single cent from the January sale, according to Downey. Instead, First York Capital has demanded sanctions from Megna. Meanwhile the judgment against her has grown from $3,180 to almost $18,000 with late fees, interest and costs.
Downey argues that Megna was never legally served in the foreclosure case, violating her right of due process. Also, the mediation talks that generally resolve disputes like hers somehow didn’t happen in her case.
Had Megna been able to negotiate with the lien holder when the foreclosure judgment stood at about $12,000, she would have jumped at the chance to keep her home – like any reasonable person with a valuable property and no mortgage would do, Downey said.
Megna asked Judge Silver to recuse herself because of perceived bias. Silver refused. Recently she ruled that she lacks jurisdiction to keep the case open.
Next stop is the Fourth District Court of Appeal, Downey said, adding that Megna needs an appellate law specialist she can’t afford to hire.
Downey said last week that Megna, who once owned a Boca Raton furniture store with her ex-husband, was living alone in a motel.
Leave a Reply