Real Estate Week in Review for June 17, 2023

All roads led to South Florida — or at least its courthouses — this week.

While not every major story came out of legal wranglings in the Sunshine State, it sort of felt that way.

The real estate developer who also happened to be president, Donald Trump, was arraigned in Miami on Tuesday on 37 felony counts related to alleged mishandling of classified documents. He pleaded not guilty.

As stated after he was indicted earlier this year in New York on charges related to hush money paid to a former porn star prior to the 2016 election, Trump’s legal woes could affect the Trump Organization’s real estate dealings. That includes bank financing (the indictment could put Trump in violation of a loan); as well as posing problems for government contracts, licensing agreements or LLC partnerships.

“Depending upon the structure of the loan, the loan documents may contain certain covenants and provisions that pertain to felonies and federal crimes,” Romer Debbas’ Pierre Debbas told The Real Deal. “Say, for instance, he’s a guarantor on these loans. … There could very well be provisions stating that if he takes part in any federal crime activity, [the lender] can call the loan.”

Trump, the current frontrunner for the 2024 presidential GOP nomination, isn’t the only Republican politician from Florida making a bid for the White House who is at the heart of legal entanglements.

Miami Mayor Francis Suarez, who charged into the already-crowded field of Republican presidential contenders last week, is facing state and federal investigations into private payments he received from developer Rishi Kapoor. 

Last week, the FBI and SEC confirmed parallel investigations into Kapoor and his business. The FBI’s criminal investigation centers on the $10,000 monthly payments to Miami Mayor Francis Suarez from a subsidiary of Kapoor’s company, Location Ventures. Agents are looking into whether the payments constitute bribes in exchange for permits or other favors from the mayor for Location Ventures’ mixed-use project in Coconut Grove.

The SEC is also investigating Location Ventures, focusing on whether Kapoor and his company sold investment contracts without registering them as securities, misrepresented potential profits to investors, or misused funds for personal expenses. The agency’s probe began earlier this year and is examining potential violations related to securities regulations.

Meanwhile, Patrick Carroll — the volatile founder of Carroll Organization, an Atlanta-based real estate investment firm with $7.4 billion worth of multifamily properties across the U.S. — was hit with a defamation lawsuit by ​​a restaurant manager in Miami’s Wynwood who Carroll allegedly spat on.

In his complaint filed in Miami-Dade Circuit Court, Miguel Angel Weill highlights a pair of Carroll’s alleged incidents at other South Florida dining establishments frequented by wealthy and famous people. Carroll was banned from all restaurants owned by New York-based Major Food Group and New York restauranter Simon Kim, according to the complaint. 

Among other things, the lawsuit alleges Carroll, while intoxicated, called a service manager a “street N-word” after being asked to leave the Italian restaurant after he harassed a waiter.

Finally, while not directly related to litigation, an investigation revealed that Flaws in the design and construction of Champlain Towers South’s pool deck exposed that portion of the building to “critically low margins against failure.”

Designs fell short of building codes, and slab columns and fixtures had “severe” strength deficiencies in several places at the pool deck, according to the National Institute of Standards and Technology’s findings. 

The investigation came on the heels of an announcement that the Dubai developer that bought the Surfside collapse site last summer submitted plans to build an oceanfront luxury condo building on the property, designed by Zaha Hadid Architects.

Damac Properties, led by Hussain Sajwani, wants to build a 12-story boutique building with 57 units on the 1.8-acre property at 8777 Collins Avenue, according to a company news release.