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STAFF PHOTO / MICHAEL BRAGA
A plaza owned by State Sen. Mike Bennett and longtime business partner Marvin Kaplan is one of the properties in default.
Mike Bennett is one of the most influential men in Southwest Florida, an electrical contractor who invested millions in real estate and whose political aspirations took him to a top perch in the state Senate.
But Bennett has not been immune to the effects of the Great Recession. Like so many of his constituents, he has been hit with multiple foreclosure actions and has suffered a steep decline in wealth.
Two companies owned in part by Bennett recently defaulted on loans totaling $4 million. According to reports Bennett filed with the Florida Commission on Ethics, his net worth has plummeted to $727,000 from the $15.9 million he reported four years earlier.
The defaults on a shopping plaza in Sarasota and an 11-acre ranchette near Lakewood Ranch come at time when the 67-year-old politician is leaving the Florida Legislature after more than a decade, and running for the Manatee County supervisor of elections job.
Bennett and companies that he has a stake in own 19 properties across Florida. His 2011 ethics filings shows that he owes more on eight of those properties than they are worth.
Some of his most troubled assets are those held with longtime business partner Marvin Kaplan. Records show their companies kept pouring money into real estate even after the market had peaked.
A review by the Herald-Tribune of property records, court filings and state financial disclosures shows how Bennett teamed up with Kaplan and initially benefitted from real estate purchases as the market appreciated, only to see them drop in the recession.
Companies controlled by the duo bought the Ellenton Ice & Sports Complex and the iconic Linger Lodge restaurant at the height of the boom in 2005. They formed other companies to later purchase vacant commercial land off State Road 64, the ranchette near Lakewood Ranch in 2006 and a 17,750-square-foot shopping plaza near the intersection of Beneva and Clark roads in Sarasota at the beginning of 2007.
All told, Bennett and Kaplan spent nearly $18 million on these acquisitions. Court records and ethics filings show all but the Ellenton rink are in foreclosure or deeply underwater.
The rink and sports complex are worth exactly what the partners owe, Bennett’s most recent financial statements show.
Meanwhile, Kaplan and companies that he manages have defaulted in the past three years on at least 18 separate loans totaling more than $25 million.
Kaplan also has been the subject of allegations that he engaged in an illegal property transaction with flipping fraud mastermind Craig Adams in March 2007 and that he participated in a multi-million-dollar check kiting scheme with a shuttered North Carolina advertising firm.
Reached in May, Bennett initially said that he was unaware the Beneva Road plaza or the Lakewood Ranch property were in default, and that he had not been served with court papers. He declined to talk about his relationship with Kaplan or his financial issues.
“First of all, it’s not any of your business,” Bennett said in May. “There is no story. You don’t know a thing.”
Reached again on Friday, Bennett said he had turned the foreclosure documents over to an attorney.
Kaplan, meanwhile, would not comment.
He has not responded to the allegations made by Adams, a former Sarasota Realtor, during the federal flipping fraud trial in the spring.
In court testimony, Adams asserted that Kaplan’s attorney illegally manipulated closing documents so that Kaplan could buy a house on Bird Key. Kaplan was supposed to bring $2.2 million to the closing but only brought $970,000, Adams said.
Kaplan has vigorously denied accusations made by Regions Bank in a March lawsuit that he was somehow involved in a scheme with the North Carolina firm Smith Advertising to sell bogus accounts receivable and move money rapidly between accounts at the expense of a federally insured bank.
In a counterclaim filed in late May, Kaplan said he was as much a victim of the fraud as Regions Bank itself.
He said he lost $22 million as a result of the scheme and is cooperating with an ongoing investigation by the U.S. Secret Service and a Tampa grand jury.
Though Kaplan’s legal troubles have nothing to do with Bennett, the financial consequences are likely making it more difficult for the two men to hold on to their properties.
Bennett and Kaplan share humble beginnings.
Bennett’s family was homeless during part of his youth, but he worked his way up as an electrical contractor. He ultimately bought Aladdin Ward Electric, the Bradenton company where his father worked after moving the family from the Midwest in 1955.
By the time Bennett sold Aladdin in 1998, it had a payroll of 200 people and generated about $15 million in annual revenues.
Kaplan, the son of a New York City taxi driver, made his fortune in the used car business in New York’s Westchester County.
Court records show that Kaplan and Bennett did their first deal together in 2000.
In an interview with the Herald-Tribune in 2005, Bennett said he liked working with Kaplan because “he’s got the snuff to pull the trigger” on big-dollar deals.
“He’s not one of those people who looks to be 100 percent sure about something before he does it,” Bennett said. “But he’s got the best mind for detail I’ve ever seen.”
In October 2000, the businessmen teamed up to buy land near the intersection of State Road 64 and Lorraine Road in East Manatee County that they still own.
Since then, they have been partners in at least eight ventures, including the $6.5 million acquisition of the Ellenton Ice & Sports Complex and the $3.4 million purchase of the Linger Lodge Restaurant and RV Park in 2005.
Those two acquisitions marked the peak of their investments together. Kaplan and Bennett’s first failure came just three years later.
In November 2008, Flagship Bank filed to foreclose on the $1.6 million loan one of their companies borrowed to buy a six-acre property at State Road 64 and Rye Road in Manatee County.
The plan was to build a 38,600-square-foot office park on the site. But the swiftness of the economic downturn halted any progress.
In February 2007, a company formed by Kaplan and Bennett had bought the Beneva Clark shopping center, paying $3.3 million for the 15,750-square-foot complex.
The plaza belonged to Daniel Prewett, a Sarasota businessman and real estate investor who later was sentenced to 18 years in prison on drug and money laundering convictions.
Prewett, who was under investigation at the time of the sale, was in a hurry to conclude the deal. As soon as the deal was completed, Bennett and Kaplan were sued.
Michael Zuppardo, who ran a hair salon in the complex, said in his lawsuit that he owned one of the units and Bennett and Kaplan had no right to buy it. Though it turned out Prewett had never filed Zuppardo’s deed and the satisfaction of a private mortgage with the Sarasota County Clerk of Court, Zuppardo claimed in his suit that he informed Kaplan and Kaplan’s attorney of his ownership in time to stop the deal from going through.
“I begged them to stop the closing,” Zuppardo said in a 2008 interview. “That unit was all my money. I bought it so one day I could retire or give it to my kids so they could run a business out of it.”
Bennett and Kaplan blamed Prewett for Zuppardo’s problems, saying the hair dresser was just one of Prewett’s many victims. As a result, they declined to stop the closing and Zuppardo’s suit against them is still pending.
In the meantime, the economy spiraled down into the Great Recession and the Beneva Clark plaza now has a number of empty storefronts. A pizzeria, bar, nail salon, erotic video store and several other small businesses continue to operate there.
Unable to meet interest payments from the rents generated from these businesses, Bennett and Kaplan’s company defaulted on their $3.14 million in loans from Cadence Bank in late April.
At the same time it was foreclosing on the shopping center loan, Cadence also moved on another one of the partner’s deals: a house and 11 acres of land at 1010 117th St. E. — near Lakewood Ranch — that Bennett and Kaplan companies bought in March 2006 for $1.525 million. Their businesses financed the purchase with $930,000 in loans from Cadence.
Of the remaining assets owned by Kaplan’s and Bennett’s companies, Bennett’s financial filings show that Linger Lodge is the most underwater.
The property consists of a unique restaurant with a wide and deep screened porch that overlooks a bend in the Braden River. The inside is decorated with stuffed bobcats, raccoons, rabbits, otters, peacock, pheasant, deer antlers, cow skulls, bee hives and even a giant alligator.
A manager there would not comment on specifics of the restaurant’s finances but said “business is good.”
At the time of the purchase, local residents feared Bennett and Kaplan would tear down the eatery and cover the dusty RV park with roads and houses.
But the only thing that has changed at Linger Lodge since Bennett and Kaplan took over is the financial fortunes of its owners.
Bennett’s filings with the Florida Elections Commission estimate Linger Lodge was worth $1.5 million in December 2010, or a little more than half what the partners paid for it at the height of the boom.
With their $3.3 million in debt, the iconic property is now worth about $1.8 million less than what Bennett and Kaplan owe on their mortgage.