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Entrepreneur and developer Marvin Kaplan has been sued by Regions Bank for allegedly kiting millions of dollars in checks.
At issue are at least 260 checks — totaling $15 million — written by Smith Advertising & Associates and deposited by Kaplan in a corporate account at Regions in the weeks since it was opened just before Christmas.
Regions, in a lawsuit it filed Monday, also alleges Kaplan shipped millions of dollars back to Smith, of Fayettville, N.C., but also moved $2.8 million to a separate account at another bank.
Regions discovered the issue Jan. 25, after the Smith checks began bouncing for lack of funds.
Based on checks Kaplan deposited and transfers he made, Regions says its known losses are at least $9.8 million.
In response to the Sarasota Circuit Court lawsuit, Judge Becky Titus on Tuesday froze the $2.8 million Kaplan deposited elsewhere.
“Upon information and belief, the Kaplan Defendants are involved in what appears to be a scheme of check kiting,” the Alabama-based bank stated in its lawsuit.
Kaplan declined to comment. But his attorney, Jon Parrish, of Naples, said he expects the lawsuit to be “resolved amicably.”
“I think Regions has taken steps that, at the time, it thought were necessary to protect its interests,” Parrish said. “I think it is all going to amount to a misunderstanding.”
Regions’ counsel did not respond to a call for comment. Smith Advertising executives said they would respond but failed to by deadline.
It is unclear why a large number of Smith Advertising checks would be made available to Kaplan or his companies.
Smith Advertising has had a long association with Southwest Florida, with county tourism bureaus and the Sarasota-Bradenton International Airport. The firm was the ad “agency of record” for the Sarasota Convention and Visitors Bureau from 1989 through 2003, and currently is Charlotte Harbor Visitor and Convention Bureau’s primary agency.
Todd Smith, the company’s operational leader, could not be reached for comment Thursday. Lauren Bourgoing, who is in charge of Smith’s Florida operations, also could not be reached.
Kaplan came to prominence in Sarasota in 2007, when he became a Florida franchisee for the Dunkin’ Donuts chain. Eventually, a Kaplan corporation owned 17 of the shops, from Bradenton to Punta Gorda, before selling the group.
He has also been heavily involved in Southwest Florida real estate. In Sarasota’s Laurel Park neighborhood, Kaplan assembled 26 lots for a development he called Devonshire Park.
But the development — valued at $9 million in 2006 — became a victim of the real estate crash, and was eventually foreclosed on. The Federal Deposit Insurance Corp. took control in July 2011. Last month, it was purchased for $995,000 by an entity controlled by Nokomis developer Henry Rodriguez.
Kaplan also is a board member at Dolphin Tower, a 15-story downtown condominium building evacuated in July 2010 after large concrete cracks were discovered. Kaplan is among a group of investors who have been purchasing units in the vacant building at deep discounts for the past year.
The Regions’ lawsuit alleges Kaplan established an account there Dec. 21 in the name of a corporation called R1A Palms LLC.
The $2.8 million in question was deposited into Wells Fargo in the account of Lighthouse Pointe LLC, another Kaplan-controlled company. The Smith Advertising checks were drawn on an account at Bridgeview Bank Group in Bridgeview, Ill.
“At the same time deposits were being made to the R1A account via the Smith checks, multiple transfers totaling millions of dollars were being made from the R1A 0211 account back to Smith,” the lawsuit states.
In late January, Bridgeview Bank began returning the bounced Smith checks to Regions.
Within two days, beginning Jan. 25, a total of $14.8 million in Smith checks written on the Bridgeview account had bounced, records show. By that time, Kaplan’s R1A account had become overdrawn by $9.8 million.
“Before Regions knew that the dishonored checks were worthless, Kaplan caused $2,775,000 to be transferred from the R1A account to an account he owns or controls at Wells Fargo in the name of Lighthouse Pointe LLC,” the lawsuit contends.