Who committed theft and fraud at Doral real estate firm? Lawsuits are piling up
The Doral-based KMTG Property Management and Investments is being pelted by lawsuits for fraud and grand theft. But its owner says he is not the one to blame.
Jennifer Hernandez did almost everything right.
The single mother of three spent four years paying off her bills after her divorce to improve her credit score. She also squirreled away enough money for a down payment on a house.
But according to a lawsuit and police report filed by Hernandez, she made one mistake: She trusted Alfonso Santiago, who is the vice president of the Doralbased firm KMTG Property Management & Investments.
“I went to see them in May 2020,” Hernandez said. “They showed me a four-bedroom, three-bath home in Miramar in a private community with a good school. [Santiago] told me they would put a bid on the house and then remodel it. I just had to wire him $10,000 and
the whole thing would cost me $408,500. It was a no-brainer.”
She said that Santiago went as far as to help her pick out tiles and kitchen cabinets for the Miramar home. He also convinced her to invest another $37,250 in a project for another buyer for a home in Homestead with a promised return of $34,000 in earnings, she said in an interview.
“He told me that the Homestead house would close in August, which was the time frame I wanted to move,” Hernandez said. In June 2020, she also wired Santiago an additional $12,000 to be used for a down payment on the Miramar home.
But the deal went south in September. According to Hernandez, Santiago informed her the Miramar home was off the table because the investor didn’t want to sell, but he promised to find her another one, which he was unable to do.
After two bounced checks — and an angry call to Santiago in front of a teller at a Wells Fargo bank demanding to know why his checks were bad — Hernandez finally got her $22,000 deposit back. But she still hasn’t gotten a refund on her $37,000 investment on the Homestead home and is suing Santiago for the funds.
“He hasn’t even had the decency to show up for an appointment with me,” she said. “This guy is a waste of time. I can’t move forward to buy a home. All those people are crooked and liars. I want justice and I want them to be exposed because that company should not be open.”
‘GROUND ZERO FOR FRAUD’
Santiago tells a different story, blaming Hernandez’s situation — and those in a dozen other lawsuits against KMTG — on a former backer, Miami-based Cipriani Investments.
Cipriani vehemently disagrees, saying that KMTG — not they — are responsible for customers’ losses.
The argument has devolved into a barrage of cross-fire accusations, with each accusing the other of defrauding clients and stealing money from the company, leaving their customers to foot the bill.
In June 2020, Cipriani filed a civil suit against KTMG, alleging fraud. KTMG has filed for dismissal; a hearing is set for June. Santiago said he is considering filing a countersuit but has not yet done so.
The Cipriani case has created a divide between KMTG’s clients: Those who blame the current management and those who support it.
To those familiar with local small-scale real estate deals, the argument between KMTG and plaintiffs is sadly familiar. According to Jeffrey C. Schneider, a founding partner at the Levine Kellogg Lehman Schneider
Grossman law firm, which is not involved in any of the lawsuits, South Florida is “ground zero” for fraud.
According to the CoreLogic Mortgage
Fraud Brief for the first quarter of 2021, which measures fraud committed against banks by mortgage applicants, the Miami-Fort Lauderdale-Pompano Beach metro area ranked third in the nation out of the top 15 cities with the highest fraud risk. Seven other Florida cities appeared on the list, including Tampa, Orlando, Fort Myers, Sarasota, Daytona Beach, Lakeland and Palm Bay.
But fraud by investment companies often goes unreported. Cinthya Lavin, vice president of communications for the Better Business Bureau of South Florida, said there have been only 34 complaints in the last 12 months about real estate investment companies — none of them related to KMTG or the Ciprianis.
Regardless, the KMTG case is playing out against a furious backdrop of lawsuits brought by individuals, banks and mortgage companies against the firm, Santiago and his wife, Mayerlin Tirado, who serves as president of the company. While each suit is different, most accuse the couple of breach of agreement, fraud, unjust enrichment and civil theft, among other charges. The claims run into the millions of dollars.
Court documents point to a pattern of behavior by Santiago and Tirado. Investors are promised a fat return on houses — often in foreclosure — that will be bought, refurbished and flipped for a higher price. But according to the suits, the returns don’t materialize — and neither do the original investments. Some suits claim KMTG puts a down payment on a distressed property and then fails to keep up with the mortgage or HOA fees; others maintain the monies invested simply evaporate.
On its website, KMTG presents itself as a savvy real estate player with a deep conscience. Santiago’s bio on the site reads “My mission is to coordinate and humanize our company. Since I have the responsibility for love and help others. That’s how I describe myself as a person.”
FOUNDED IN ORLANDO
Founded in 2016 in Orlando by Santiago and Tirado, KMTG expanded to Miami in 2018. Santiago has homes in Doral and Orlando and a white Mercedes-Benz for the road between. He was a co-host of the YouTube series “Mi Casa Es Tu Casa,” a Spanish-language real estate show offering tips for residents and investors. The show is on hiatus while Santiago works out KMTG’s financial problems.
Not revealed on the KMTG website — but clearly shown on that of the Florida Department of Law Enforcement’s Criminal History Information pages — are his 16 arrests in Miami-Dade since 1991 for a variety of financial offenses, including fraud. Santiago said those charges stemmed from his father’s travel agency business, where he worked before launching KMTG.
During a recent twohour interview with the Herald in his Doral office, Santiago, 59, said Hernandez’s own financial history led to her problems.
“In the case of Jennifer, we weren’t able to secure financing on the Miramar home because her income was not sufficient and she was not able to prove the income she originally said she had,” Santiago said. “The whole deal was subject to her getting approved by the bank. She stalled us for a period of three months.”
Hernandez refutes this story. “[Santiago] stalled me for two months because he couldn’t come up with a contract,” she said.
Santiago said he has spoken to Hernandez and promised her she would get her outstanding $37,000 back on April 30, after he closes on some pending properties. Hernandez said Santiago “is lying” and has never told her that.
As for the raft of other lawsuits, Santiago — who goes by the name of Al — attributes the company’s inability to repay investors in full to brothers Antonio, Domenico and Mossimo Cipriani, the operators of a family-owned construction company in Venezuela who wanted to expand into the U.S.
After building successful auto supply and car dealership businesses based in Miami, the brothers launched Cipriani Investments LLC in 2018 and began investing in KMTG by taking out mortgages on their two warehouses in Doral for $817,000. Part of the money was used to bring KMTG to Miami. The Ciprianis signed a lease on an office in Doral and purchased desks, chairs and furniture for the space.
“Al told us we would have our money back in six months,” Domenico Cipriani said during a recent interview at one of the Doral warehouses where his company makes auto repairs. “I wouldn’t have invested a dime if I had known about his arrest record. But he’s a very convincing guy. He’s very astute, and I was too trusting.”
Over the following year, court records claim, the Ciprianis put more than $2 million into KMTG, with no return on their money.
“Al retained control over investments on properties and never let us near them,” Cipriani said. “I started noticing a lot of properties that he said were going to be purchased were not purchased. He would tell me we are going to recover our money with another investment. One time I told him ‘We aren’t selling anything. Everything is invest, invest. Where’s my money?’ He told me ‘This is my business. I know what I’m doing.’ ”
Finally, under the advice of legal counsel, Cipriani said he pulled out of KMTG unannounced in December 2019. Cipriani and his wife, Maria Alejandro Ribon, who oversaw the accounting department, took their per-
I STARTED NOTICING A LOT OF PROPERTIES THAT HE SAID WERE GOING TO BE PURCHASED WERE NOT PURCHASED.
Domenico Cipriani
sonal belongings from the KMTG office they shared with Santiago — and left.
Five months later, on June 15, 2020, Cipriani Investments filed a civil lawsuit against KMTG, Santiago and his wife, asking for $6 million in reparations and damages. The lawsuit claims the couple funneled company funds into their own accounts for personal use. (The two warehouses initially used for the initial investment have since gone into foreclosure.)
Armando Alfonso, the Miami attorney representing the Ciprianis in their lawsuit, claims that in the normal course of these business transactions, any funds earmarked for investment would normally be placed into an escrow account, where they would be protected. If the investment falls through — there would be no problem returning the money to the investor.
“I want justice for the people who go to KMTG looking to invest,” Cipriani said. “Al is ripping people off and walking around a free man.”
MAKING INVESTORS WHOLE
But Santiago tells a different story, claiming that the Ciprianis took all of the company’s funds and files when they made their sudden exit.
“There is no doubt this company owes a lot of money to a lot of people,” Santiago said in an interview. “As of Dec. 13, 2019, the Ciprianis took $4 million of people’s money. They mismanaged and deviated funds of the company. We have been making most of those people whole, to the tune of $2.7 million thus far, after they left. I have stayed here without any remuneration to me. We have been paying people back for money we never took.
“The only reason I haven’t started my countersuit against the Ciprianis is that I’ve been in conversation with lawyers and they said I should concentrate on making my investors whole again before I proceed,” Santiago said.
Some of Santiago’s current clients confirm that he is, indeed, trying to make good on his promises.
Gerardo Casas, 52, said he originally invested with the company because he was old friends with the Ciprianis.
“They were handling the administrative and accounting and construction sides of the business,” Casas said. “They reached out to me to invest. They offered me a 10% return in six months if the property sold.” Casas declined to specify the amount of the investment.
“Suddenly they said they were leaving the company because they were having problems with Santiago,” Casas said in an interview. “Since then, Santiago has dealt with me directly instead of the Ciprianis — I haven’t heard from them — and I’ve maintained a stable relationship with him. I expect to recover my capital from him, without profits or interest. My lawyer and his lawyer have been under negotiations. In 30 days from now, I should be recouping my investment. Al is the one who has been handling the company.”
Other investors — including Aisbeth Katiusca Valdivieso and Katy Gomes — support Santiago’s account.
“This whole disaster is the Ciprianis’ fault,” said Valdivieso, who said she invested $300,000 with KMTG in 2019 with the promise of a 37 percent return in six months.
“They were the ones who invited me to invest two years ago, and when I went by the office on Dec. 30 [2019] to pick up my check, they called me and said ‘We’re not there. We are suing.’ But Al is the one who has been paying me little by little. He has already paid me $128,000 and is due to pay me another $248,000 in one month. He’s trying to comply with his debts little by little, because he has a criminal record, so he can’t let us down because he will go to jail. What good does it do us to have Al in prison?”
Domenico Cipriani denies her account, saying he has never done business with Valdivieso or even talked with her.
Gomes, who began making small investments with KMTG in 2018, tells a similar story, saying the Ciprianis cut off all communication with her after they left the company.
“They told me to work it out with Al and then blocked my cellphone and never responded again,” Gomes said during a recent visit to the KMTG office, when Santiago paid her a check of $56,842. “Al told me, ‘Let’s solve your case,’ even though I had never done any business with him directly. He recouped my investment and I’ve continued to invest with him.”
The Ciprianis disagree, noting that Massimo spoke with Gomes in recent weeks.
According to Santiago, the Ciprianis own 50% of KMTG, starting with their July 2018 investment. The Ciprianis say they were never owners but simply investors. They are not listed as agents or members of the firm in current Florida corporate documents.
“Although they abandoned the company and disappeared by deleting their names from the company’s annual reports, they still own half of KMTG based on the operating agreement which they have not relinquished,” Santiago said.
Cipriani, however, disagrees.
“We never had an operating agreement or 50 percent ownership with KMTG,” he said. “I am only an investor. I joined the company because I wanted to protect my assets. “
But the Ciprianis aren’t the only ones suing KMTG. The other dozen ongoing cases include:
Coral Springs-based Reputable Investments is claiming breach of seven contracts from KMTG. The company entered into several agreements with KMTG in which Reputable would invest money into the rehabilitation of homes and condos in Miami, Orlando, Doral and Boca Raton, then split the proceeds of the resale of the properties 50-50.
The complaint claims KMTG misappropriated the funds and either did not split the sale proceeds or did not refund the investments in accordance with the contract.
U.S. Bank Trust National Association has filed for foreclosure on two properties, one with a $225,000 mortgage and another for $326,250. KMTG is juggling several other foreclosures and has lost a number of properties in the past.
James Aryeetey, a private investor in Palm Beach County, sued Santiago for $130,000 for breach of promissory note. He invested the money in KMTG on Feb. 12, 2020, and was expected to be paid back in full by March 12.
“Al told my client, ‘We’re rocking and rolling. Right now I just need a bridge loan,’” said Stephen J. Padula, a partner at the Boca Raton-based Padula Bennardo Levine law firm, who is representing Aryeetey. The note was backed by an apartment in Orange County. Padula said Santiago, “defaulted immediately, and the Orlando property is so under water, it’s got negative equity.”
Since that lawsuit was filed, Santiago has made a payment of $100,000 and has promised to pay the remaining $30,000 on the debt.
A CRIMINAL PAST
Santiago’s critics argue that where there’s smoke there’s fire.
According to the Florida Department of Law Enforcement’s Criminal History Information website, Santiago has been arrested 16 times in Miami-Dade since 1991 for writing bad checks, forging documents and organized fraud, among other charges.
Santiago said that the reason for those earlier arrests was not his fault, but the result of doing the books for his father’s former travel agency, Abracadabra Travel, based in Pembroke Pines.
“I had a real jewel of a father,” Santiago explains. “I didn’t know he was writing bad checks and I was signing them. But we made full restitution on all the checks and I was placed on probation.”
Records from the State Attorney’s office show
Santiago is also a convicted felon. He was arrested on Dec. 8, 2018, and charged with organized fraud and grand theft first degree. He faced a potential 30-year sentence for being a habitual felony offender. He later pleaded his sentence down by making reparations of $408,925.19 to seven plaintiffs.
“I had a partner who was laundering money and I was not aware of it and I ended up getting charged,” Santiago explains. “I am never going to put myself in the same situation again. That’s why I’m repaying all of the company’s outstanding debt. I am working my ass off.”
Santiago is currently serving a five-year probation in that case; it requires him to report to MiamiDade County jail periodically (including weekends) to complete his current sentence of 364 days.
According to Cipriani, Santiago called him on Dec. 18, 2018, from jail and asked him to wire $150,000 out of his personal account so Santiago could post bail. Cipriani agreed, and he was later repaid a balance of $125,000. Santiago was released two months later on a plea agreement.
“The reason why they bailed me out is because while I had been in jail, the company was falling apart,” Santiago said. “They needed me.”
A HOME-BUYING NIGHTMARE
Regardless of who is telling the truth, ordinary people continue to get caught in the crossfire.
Frank Burke, 52, works as an account manager at a technology firm in Plantation. He had just launched a company, ARB Investments LLC, in May 2019 with the intent of entering the real estate market. A friend who had shared office space with KMTG recommended he meet with them.
“Al showed me plans on investments and all the properties he owned,” said Burke. He agreed to invest $71,000 in a home renovation being performed by KMTG at a property on Crystal View Court in Coconut Grove that Santiago had bought for $650,000. LeBron James previously lived in the same tony enclave.
The plan was to spend $200,000 in renovations, then resell the house and split the profit 50-50. Burke visited the property repeatedly and saw the renovation work was continuing as planned, so he felt comfortable doing more business with KMTG.
He invested another $200,000 with Santiago for a house in Doral and a group of 11 properties. When the house sold, Santiago gave Burke a check for his share of the profit, which was $61,000. But the check bounced, Burke said.
“Al gave me an excuse about a lending company not having put the money into his account and he cut me another check, this one for $250,000, which included my share of profits for the sale of the grouped properties,” Burke said.
The new check, too, was refused by Wells Fargo Bank for insufficient funds, according to Burke’s lawsuit.
Meanwhile, the COVID pandemic halted the Crystal View renovation. The house went into foreclosure and sold on March 3, 2021, for $605,000 — leaving Burke out of his total $271,000 investment, his suit claims.
In February, Burke said Santiago called a meeting of all his investors to reassure them that all was well.
“He said he was going to work with us to make sure he was allocating our money,” Burke said. “He wanted us to feel comfortable and explained he was stuck in court with a bunch of legal cases. Everyone was getting the same garbage story I was getting. He is one of the best con men. Everything he says makes sense until it doesn’t.”
In his defense, Santiago said Burke’s investment funds are tied up in current litigation with the Ciprianis.
LACK OF OVERSIGHT
Whether the Santiagos or the Ciprianis prevail, South Florida will likely continue to suffer real estate fraud targeting small real estate investors, say experts.
“Here in South Florida, it’s not uncommon for people to be taking money from other people for a host of reasons and then keeping that money,” said Frank A. Rubio, a Miami attorney who specializes in white-collar crime. “Someone could say he’s going to use the money to buy a house or five limos or an airplane. It’s all fraud to begin with.
“People in the Midwest have more conservative values and are more careful with their money,” said Rubio, who is not a part of the KMTG cases. “In
South Florida, people are too fast and too loose. Everyone’s got some kind of thing or hustle going on. South Florida has more people who don’t work and are still making money than I’ve ever seen in my life. They somehow earn a living with their wits, whether it’s legal or illegal.”
A contributing factor is the lack of government oversight. Josh Migdal, a partner at the Miamibased Mark Migdal & Hayden law firm, said real estate investment firms are regulated by the Securities and Exchange Commission, which usually tends to watch giant firms instead of smaller independent operators.
“KMTG is not Morgan Stanley that makes public filings,” said Migdal, who is not involved in any of the cases against KMTG or the Ciprianis. “It’s not a Fortune 1000 company. A lot of these outfits committing fraud go undetected — sometimes forever — or their house of cards fall apart, people have losses, they go to their lawyers and report things to the police. Then there’s an investigation.”
Many of the plaintiffs suing KMTG — including Hernandez — filed complaints with the Doral Police Department. Rey Valdes, spokesman for the department, said there is “an ongoing criminal investigation” into Santiago but declined to provide any details.
A spokesperson for the State Attorney’s Office said they don’t get involved in any case until police have made an arrest.
“The State Attorney’s Office assists law enforcement agencies by writing search warrants and subpoenas,” the spokesperson said. “But we only have jurisdiction in cases where a criminal statute is violated, and that’s determined by the investigative authorities. There has to be a criminal charge. We are not involved in civil cases.”
According to Schneider, of the Levine Kellogg Lehman Schneider Grossman law firm, the amount of money involved in these cases usually is too small to catch the attention of federal agencies. His firm is not involved in any of the suits involving the Ciprianis or KMTG.
“I’ve seen hundredmillion-dollar Ponzi schemes and the feds don’t prosecute,” Schneider said. “The tragedy in this case is that no one has shut them down. And if KMTG has spent all the money, these poor people are only going to get pennies on the dollar back. I can’t tell you how many cases I’ve seen where the bad guys had money when they were sued and by the time of the judgment there is no money left.”
A CONTRIBUTING FACTOR TO SOUTH FLORIDA’S WIDESPREAD REAL ESTATE FRAUD PROBLEM IS THE LACK OF GOVERNMENT OVERSIGHT.