An old tale in Florida: Development, land use and fraud

It’s not always easy to sort out the alleged black hats from the presumptive white hats, so let’s go easy on Delray Beach.

Let’s think of what happened at 301 S.E. First Ave. not as having the wool pulled completely over naïve and unseeing eyes, but yet another cautionary tale of shady South Florida real estate.

When New Jersey’s National Realty Investment Advisors rode into town back in 2018, they brought with them a bushel full of bright, shiny promises.

Chief among them: the 301 Project, a luxury five-story, 100-apartment complex complete with business center, virtual golf course, rooftop pool, golf cart parking, EV charging and a dog grooming station.

Luckily for certain homes and businesses that might have been thrown into semi-permanent shadow by the nearby complex, the deal quietly imploded late last year.

The New Jersey men with the blueprints and the plan are facing off with the Securities and Exchange Commission, the U.S. Department of Justice and New Jersey Securities regulators.

When they can take time away from bankruptcy court.

Criminal and civil complaints charge the crew bilked hundreds of millions from investors, including pensioners, by selling interests in real estate projects in Florida and other states.

Investors believed they were reaping double-digit returns. In fact, they were being paid with money from new investors, a la Charles Ponzi and Bernie Madoff.

By the time the SEC and DOJ cracked down, NRIA had hoovered up more than half a billion dollars.

Those bucks stopped everywhere, say prosecutors: Millions went to the wife, ex-wife and “romantic interest” of one principal. Tens of thousands were blown on a week-long birthday party and general good times on the Jersey shore.

Florida has always drawn people with a talent for sweet-talking the cash right out of your hand. After his Ponzi scheme collapsed, Charles Ponzi sold Florida swampland. Members of Palm Beach architect Addision Mizner’s land company were apparently embezzling their little hearts out; when the company went belly up, it took a bank with it. And while Boca Raton is all upstanding-citizens-brigade now, in the mid-1990s, it was fondly dubbed the Bermuda Triangle of securities transactions.

So what could Delray Beach have known and how soon could city officials have known it?

NRIA spent more than $300,000 to “whitewash” the web of links to a previous fraud. An executive even changed the spelling of his name.

On the other hand, the same week the town voted to approve zoning in 2021, Thomas Salzano, identified by the feds as the NRIA scheme’s mastermind, was arrested for wire fraud.

A not-too-intensive Google search would have revealed Salzano had pleaded guilty to criminal fraud in Louisiana in 2013 for a nationwide phone scam targeting churches and nonprofits, among others.

The Federal Trade Commission fined him $50 million.

NRIA told anyone who would listen that they were shocked — shocked! — by the 2021 Salvano arrest. And that he was fired.

But footnotes to NRIA’s splashy marketing materials also revealed that the company was raising money for the 301 Project from individuals, even as the rest of the ad campaign indicated the project was on firm financial footing.

And a reporter from the Philadelphia Inquirer wrote as early as 2021 of the “curious subplot” in NRIA federal investigations — Delray’s 301 Project.

Delray continued to work with NRIA for a year after the exposé and the arrest.

It sent comments on project plans to the company’s local attorney for review in March 2022. And that was the last anyone heard of the 301 Project.

It’s considered inactive, a city spokeswoman said.

Salzano has pleaded not guilty to 18 counts of fraud. NRIA’s

CEO hasn’t pleaded anything. He appears to have disappeared into the Philippines.

Today, the 301 Project is an overgrown lot fronted by a slightly rusty fence and a slightly tilted port-apotty; a reminder that skepticism may get a bad rap, but it has its uses. And naivete can cost.

Delray Beach won’t be paying that bill, though.

The hundreds of pages of criminal and civil court filings don’t make clear how much of the estimated $650 million collected by NRIA came from investors plunking down money for the 301 Project.

But in its glossy online marketing, the same marketing luring individual investors, NRIA enthused over both Delray Beach’s zoning approval and the possibility of a $1 million city grant, evidence that the 301 Project was blessed by city officials.

With that kind of backing, what could possibly go wrong?