Prominent realtor Vito Simone faces fraud charges
Five creditors in the bankruptcy case of former Greater Baltimore Board of Realtors President Vito Simone filed lawsuits alleging Simone defrauded them of $1.1 million. One of the claims relies on a little-noticed state court ruling in favor of a Canton homeowner who claimed Simone engaged in unfair and deceptive trade practices.
The suits, filed as Simone's bankruptcy liquidation wound down in late May, extend the legal proceedings surrounding the prominent developer and realtor's finances and shine a harsh light on his business practices. Long a high-profile fixture on the local real-estate scene, Vito Simone (and his wife, Gail) quietly filed a Chapter 7 bankruptcy petition in February. Simone resigned his position as president of the Greater Baltimore Board of Realtors in March after City Paper publicized the bankruptcy ("Boom and Bust," Mobtown Beat, March 9).
The Simones had amassed more than $3.9 million in debt and claimed less than half a million dollars in assets. Reached by phone in March, Simone blamed his business partners for the trouble and declined to comment further after that.
Simone's aggressive marketing, multiple roles in his deals, and relationship to sometimes elderly or unsophisticated customers involved him and his businesses in multiple lawsuits over the past 20 years ("Vini Vidi Vito," Feature, April 8). Simone last went bankrupt in 1988.
In this year's filing, two of the couple's largest debts--for $414,000 and $584,000--were owed respectively to First Mariner Bank and Bradford Bank. Those, along with most of the others, were wiped out by the bankruptcy court on May 29. The banks did not allege fraud.
But five other creditors, who claim they are owed a total of more than $1.1 million, filed exceptions to the discharge of their debts, alleging that Simone defrauded them.
"It's a sad state of the bankruptcy law that creditors are allowed to make . . . allegations of fraud," thus extending the time and expense of the proceedings, says Simone's lawyer, Russell Karpook, who has filed answers to the complaints denying there was any fraud--with one curious exception--and asking the judge to dismiss the claims. Asked if he has extended credit to the Simones (who owed money to several lawyers when they filed their bankruptcy petition), Karpook replies, "that's a matter between me and my client."
One of the five fraud claimants, the state Injured Workers Insurance Fund, dropped its suit last month. The quasi-public company had won a state court judgment against Simone and his companies by claiming he fraudulently avoided more than $100,000 in insurance premiums. Its lawyer, Michael R. McCann says IWIF's decision to drop the suit had "nothing to do with the appropriateness of what was filed [by IWIF]; it was done for our own reasons." With interest, costs and penalties, the forfeited claim had grown to $173,442.
Two of the other four suits allege that Vito Simone made false promises and did not repay money lent privately. Debra Donahoo claims Simone never intended to pay back the $50,000 she lent him to help close his purchase of four dilapidated houses facing Druid Park Lake in Reservoir Hill. "Simone deceived several longtime friends, including the Plaintiff, by persuading them to loan him money under circumstances in which Debtor Vito Simone knew he could not repay the money lent," her suit says, adding that "[d]ebtors were already insolvent and were engaging in schemes to obtain new financing to pay past due obligations, by soliciting funds from other friends and investors under the same type of scheme."
Michael Dunn's suit claims he is owed $70,000 that he lent Simone (plus $13,952 in interest and costs), which was supposed to go toward rehabbing a building at 2101 St. Paul St. Land records indicate that Simone had increased his mortgage on that building from $300,000 to $560,000 about seven months before he got Dunn's money. Bradford Bank, which extended that loan, is close to being taken over by regulators.
"Upon information and belief, none of the proceeds of the Loan were used by Debtors for the stated purpose, i.e. renovating the Commercial Property," Dunn's complaint says. "Instead, Debtors used the proceeds of the Loan for unrelated personal or business purposes."
Asked to account for Dunn's $70,000 during a March 24 bankruptcy hearing, Simone replied, "I know some of the money was used for St. Paul."
The two other suits involve unhappy customers of Simone's construction company, Baltimore Rehab Services, LLC, which he operated with contractor David Zichos. In their legal complaint, Richard and Sasha Hazlett say they hired Simone to rehab four houses, paying him $631,600 for the work between 2005 and 2008. In all cases, they say, "the majority of the work was not completed" and one house, 914 Newington Ave., "remains uninhabitable" despite $170,000 poured into its renovation since 2006.
Dominic Marcuccio is suing the Simones for $225,400, alleging Vito Simone defrauded him.
Marcuccio's federal suit says that he paid Vito Simone to rebuild his three-story home at 2109 Essex St. in Canton. Marcuccio alleges Simone took his money but didn't do the job right, ripped out a historic tin ceiling Marcuccio wanted to keep, and then stiffed his subcontractor, Woodard & Sons Mechanical, Inc., setting up Marcuccio for a lawsuit and mechanic's lien. The key claim: "Vito Simone is indebted to Creditor for a money judgment obtained in the Circuit Court for Baltimore City for fraud and/or defalcation while acting in a fiduciary capacity."
In his answer to the complaint, Karpook, Simone's lawyer, does not deny the claim but writes that "Vito is without knowledge or information sufficient enough to form a belief as to the truth of the allegation."
Indeed, the judgment is easy to overlook, coming as it did in a case in which Simone was originally neither the defendant nor the plaintiff.
The judgment, recorded on Sept. 8, 2008, is filed in Baltimore City Circuit Court under the caption Woodard & Sons Mechanical, Inc. v. Dominic Marcuccio. It followed a four-day trial, according to the court record. At its conclusion, Judge Marcella A. Holland ordered Simone to pay Marcuccio $69,066, and for Baltimore Rehab to pay Marcuccio $19,066, even as she ordered Marcuccio to pay Woodard $5,169.
"The difference between my award and all the other judgments against Vito Simone is my judgment is for unjust enrichment," contends Amar S. Weisman, Marcuccio's lawyer in the state case. "My judgment is for fraud.
"Vito Simone proved on the [witness] stand that he was not believable, and the judge didn't believe him," Weisman continues, adding that this was his first trial. "We won this judgment. I literally cried. I thought I was going to go on vacation, and then there was no way to get the money. It was a tough lesson to learn as an attorney."
Weisman tried to garnish Simone's wages at Yerman, Witman, Gaines and Conklin Realty, where Simone had gone to work after years as an independent broker. The company replied that Simone is not an employee of the firm, "and therefore no wages are due the judgment Debtor from the Garnishee." The reply is signed by Russell D. Karpook, Yerman's lawyer. Simone owed William Yerman, the firm's principle, $250,000 from the failed Druid Park Lake project, according to Simone's bankruptcy filing. Yerman did not return a call seeking comment.
Marcuccio claimed breach of contract, unjust enrichment, and "unfair and Deceptive Trade Practices," but Karpook says Marcuccio's judgment is unclear as to which count or claim it resulted from. The word "fraud" appears nowhere in his state complaint or in the judgment.
Asked if he is still representing Yerman, Karpook replies, "I'm not going to answer that."
Shanty Town Showdown (4/14/2010)
Evicted trailer-park residents, property owner square off
HAFA Loaf (2/12/2010)
scammers beware: new rules to govern most short sales
Shells Hocked (1/13/2010)
Group of friends, brothers, lovers, and alleged step-relatives who sold each other homes appears to have fallen on hard times
Old Habits (7/28/2010)
Medicalization is the hot new thing in drug treatment. Just like in 1970.
Room for Improvement (7/14/2010)
Celebrated crime control measure actually a flop, former chief reveals
Shelling Out (7/7/2010)
Mortgage broker goes bankrupt, seeks mortgage modification as taxpayers face mounting bailout bills
812 Park Ave.
Baltimore, MD 21201