General Development Corporation
Real Estate Fraud Case
CLASSIFICATION: Financial Crime
LOCATION
Miami, Florida
TIME PERIOD
1982-1989
VICTIMS
100000 confirmed
General Development Corporation (GDC), a Florida-based land development company, faced significant legal troubles in the late 1980s due to allegations of fraudulent home sales. The incidents primarily occurred between 1980 and 1990, with the company accused of misleading customers regarding property availability and development timelines. Key figures involved included the company's executives and numerous affected homeowners, leading to a class-action lawsuit. In 1991, GDC was exonerated of fraud charges, but the company was ultimately dissolved, with restitution efforts established for the victims and operations succeeded by Atlantic Gulf Communities. Investigative findings revealed a pattern of financial mismanagement and deceptive marketing practices, contributing to the company's downfall.
There are theories that the General Development Corporation was involved in fraudulent home sales, leading to speculation about the extent of their deceptive practices. Some believe that the company’s rapid growth and eventual downfall were tied to unethical business strategies, while others suggest that the legal actions taken against them were politically motivated. Additionally, there is speculation about the company's connections to influential figures in Florida's real estate market, raising questions about systemic corruption within the industry.
General Development Corporation: A Tale of Ambition, Deception, and Redemption
The Birth of a Giant
In 1958, a formidable force in Florida's land development emerged from the ambitious merger of the Florida Canada Corporation and the Mackle Bros., forming what would become known as the General Development Corporation (GDC). Initially, the Florida Canada Corporation, founded in 1928 under the moniker Chemical Research Corporation, focused on technical processes and equipment for the mining and petroleum industries. By 1956, the company shifted its focus almost entirely to Florida real estate, consolidating four subsidiaries into a single entity: General Development Corporation.
The Mackle Company, founded by Frank E. Mackle, Sr. in 1908, was once the largest homebuilding firm in Florida. Following Mackle Sr.'s death, his sons, Elliott, Robert, and Frank Jr., assumed control, transitioning operations from Jacksonville to Miami in 1937. The merger in 1958 was a strategic move, but tensions soon arose. The Mackle brothers eventually parted ways with GDC after a clash with Chairman Gardner Cowles, founding the rival Deltona Corporation in 1962.
Rise and Expansion
The early 1960s saw Charles H. Kellstadt, formerly of Sears, take the helm of GDC as CEO and chairman. His tenure until 1973 marked a period of growth and expansion. The company focused on developing entire communities, complete with roads, sewer and water facilities, golf courses, marinas, and other amenities, effectively creating "company towns." Notably, GDC employees even comprised the first City Council of North Port, Florida.
However, the late 1970s brought financial strain. Liabilities mounted as the company struggled to fulfill construction promises on thousands of lots. In a bid to recover, GDC ramped up land sales to generate cash flow, aiming to develop previously sold lots.
Legal Troubles and the Fall
As the 1980s drew to a close, GDC found itself embroiled in controversy. Accusations of fraudulent home sales led to criminal indictments against the company and its leadership. On March 16, 1990, GDC pled guilty to federal mail fraud charges after a two-year federal investigation revealed inflated housing prices. A plea agreement saw the company agree to establish a restitution fund for homebuyers between January 1, 1982, and December 31, 1989. The financial strain forced GDC to file for Chapter 11 bankruptcy in April 1990.
The legal woes intensified as Chairman David F. Brown and President Robert F. Ehrling faced separate prosecutions. Both resigned just a week before GDC's guilty plea. In August 1992, Ehrling and Brown were convicted, with Ehrling receiving 40 fraud counts and a 10-year sentence, while Brown faced a maximum five-year term and a conspiracy charge. Two other executives, Torre DeBella and Richard Reizen, were also convicted and sentenced for their roles in the fraudulent activities.
The Exoneration and Aftermath
In a dramatic turn of events, the 11th Circuit Court of Appeals exonerated the convicted men in 1996, overturning their convictions and directing the dismissal of all charges. This legal vindication marked a pivotal moment for GDC and its former executives, as chronicled in the case US v. Brown, 79 F.3rd 1550 (1996).
Following the appeals, Atlantic Gulf Communities emerged from GDC's bankruptcy. Ehrling and Reizen, both released from prison, ventured back into real estate, purchasing over 3,000 vacant lots from Atlantic. Despite ambitious plans to generate $200 million through land sales, the strategy faltered, leading Atlantic to file for bankruptcy protection in 2001. The aftermath saw the creation of New Vista Properties and the continuation of real estate endeavors.
Communities Shaped by GDC
GDC's legacy lives on in the communities it developed, including Port Charlotte, North Port, Port Malabar (now part of Palm Bay), and Port St. Lucie, Florida. These areas, once mere visions, evolved into vibrant communities, reflecting the company's ambitious spirit.
A New Era
The saga of General Development Corporation is a cautionary tale of ambition, deception, and eventual redemption. From its origins to its dramatic rise and fall, GDC's story encapsulates the complexities of corporate America, leaving a lasting imprint on Florida's landscape.
Sources
- Wikipedia URL: General Development Corporation
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GDC Founded
General Development Corporation is formed from a merger of Florida Canada Corporation and the Mackle Bros.
GDC Pleads Guilty
General Development Corporation pleads guilty to federal mail fraud charges related to fraudulent home sales.
Bankruptcy Filed
General Development Corporation files for Chapter 11 bankruptcy following the fraud scandal.
Executives Convicted
Chairman David F. Brown and President Robert F. Ehrling are convicted of fraud and conspiracy.
Sentencing of Executives
Brown and Ehrling are sentenced for their roles in the fraudulent activities of GDC.
Executives Exonerated
The 11th Circuit Court of Appeals exonerates Brown and Ehrling, reversing their convictions.
GDC Dissolved
General Development Corporation is officially dissolved following bankruptcy and legal issues.
New Ventures Begin
Ehrling and Reizen reconnect and begin new real estate development ventures after their release.
General Development Corporation (GDC), a Florida-based land development company, faced significant legal troubles in the late 1980s due to allegations of fraudulent home sales. The incidents primarily occurred between 1980 and 1990, with the company accused of misleading customers regarding property availability and development timelines. Key figures involved included the company's executives and numerous affected homeowners, leading to a class-action lawsuit. In 1991, GDC was exonerated of fraud charges, but the company was ultimately dissolved, with restitution efforts established for the victims and operations succeeded by Atlantic Gulf Communities. Investigative findings revealed a pattern of financial mismanagement and deceptive marketing practices, contributing to the company's downfall.
There are theories that the General Development Corporation was involved in fraudulent home sales, leading to speculation about the extent of their deceptive practices. Some believe that the company’s rapid growth and eventual downfall were tied to unethical business strategies, while others suggest that the legal actions taken against them were politically motivated. Additionally, there is speculation about the company's connections to influential figures in Florida's real estate market, raising questions about systemic corruption within the industry.
General Development Corporation: A Tale of Ambition, Deception, and Redemption
The Birth of a Giant
In 1958, a formidable force in Florida's land development emerged from the ambitious merger of the Florida Canada Corporation and the Mackle Bros., forming what would become known as the General Development Corporation (GDC). Initially, the Florida Canada Corporation, founded in 1928 under the moniker Chemical Research Corporation, focused on technical processes and equipment for the mining and petroleum industries. By 1956, the company shifted its focus almost entirely to Florida real estate, consolidating four subsidiaries into a single entity: General Development Corporation.
The Mackle Company, founded by Frank E. Mackle, Sr. in 1908, was once the largest homebuilding firm in Florida. Following Mackle Sr.'s death, his sons, Elliott, Robert, and Frank Jr., assumed control, transitioning operations from Jacksonville to Miami in 1937. The merger in 1958 was a strategic move, but tensions soon arose. The Mackle brothers eventually parted ways with GDC after a clash with Chairman Gardner Cowles, founding the rival Deltona Corporation in 1962.
Rise and Expansion
The early 1960s saw Charles H. Kellstadt, formerly of Sears, take the helm of GDC as CEO and chairman. His tenure until 1973 marked a period of growth and expansion. The company focused on developing entire communities, complete with roads, sewer and water facilities, golf courses, marinas, and other amenities, effectively creating "company towns." Notably, GDC employees even comprised the first City Council of North Port, Florida.
However, the late 1970s brought financial strain. Liabilities mounted as the company struggled to fulfill construction promises on thousands of lots. In a bid to recover, GDC ramped up land sales to generate cash flow, aiming to develop previously sold lots.
Legal Troubles and the Fall
As the 1980s drew to a close, GDC found itself embroiled in controversy. Accusations of fraudulent home sales led to criminal indictments against the company and its leadership. On March 16, 1990, GDC pled guilty to federal mail fraud charges after a two-year federal investigation revealed inflated housing prices. A plea agreement saw the company agree to establish a restitution fund for homebuyers between January 1, 1982, and December 31, 1989. The financial strain forced GDC to file for Chapter 11 bankruptcy in April 1990.
The legal woes intensified as Chairman David F. Brown and President Robert F. Ehrling faced separate prosecutions. Both resigned just a week before GDC's guilty plea. In August 1992, Ehrling and Brown were convicted, with Ehrling receiving 40 fraud counts and a 10-year sentence, while Brown faced a maximum five-year term and a conspiracy charge. Two other executives, Torre DeBella and Richard Reizen, were also convicted and sentenced for their roles in the fraudulent activities.
The Exoneration and Aftermath
In a dramatic turn of events, the 11th Circuit Court of Appeals exonerated the convicted men in 1996, overturning their convictions and directing the dismissal of all charges. This legal vindication marked a pivotal moment for GDC and its former executives, as chronicled in the case US v. Brown, 79 F.3rd 1550 (1996).
Following the appeals, Atlantic Gulf Communities emerged from GDC's bankruptcy. Ehrling and Reizen, both released from prison, ventured back into real estate, purchasing over 3,000 vacant lots from Atlantic. Despite ambitious plans to generate $200 million through land sales, the strategy faltered, leading Atlantic to file for bankruptcy protection in 2001. The aftermath saw the creation of New Vista Properties and the continuation of real estate endeavors.
Communities Shaped by GDC
GDC's legacy lives on in the communities it developed, including Port Charlotte, North Port, Port Malabar (now part of Palm Bay), and Port St. Lucie, Florida. These areas, once mere visions, evolved into vibrant communities, reflecting the company's ambitious spirit.
A New Era
The saga of General Development Corporation is a cautionary tale of ambition, deception, and eventual redemption. From its origins to its dramatic rise and fall, GDC's story encapsulates the complexities of corporate America, leaving a lasting imprint on Florida's landscape.
Sources
- Wikipedia URL: General Development Corporation
No Recent News
No recent news articles found for this case. Check back later for updates.
No Evidence Submitted
No evidence found for this case. Be the first to submit evidence in the comments below.
Join the discussion
Loading comments...
GDC Founded
General Development Corporation is formed from a merger of Florida Canada Corporation and the Mackle Bros.
GDC Pleads Guilty
General Development Corporation pleads guilty to federal mail fraud charges related to fraudulent home sales.
Bankruptcy Filed
General Development Corporation files for Chapter 11 bankruptcy following the fraud scandal.
Executives Convicted
Chairman David F. Brown and President Robert F. Ehrling are convicted of fraud and conspiracy.
Sentencing of Executives
Brown and Ehrling are sentenced for their roles in the fraudulent activities of GDC.
Executives Exonerated
The 11th Circuit Court of Appeals exonerates Brown and Ehrling, reversing their convictions.
GDC Dissolved
General Development Corporation is officially dissolved following bankruptcy and legal issues.
New Ventures Begin
Ehrling and Reizen reconnect and begin new real estate development ventures after their release.