Review of Lofty Commercial Loan Appraisal in Southwest Florida Raises Questions

Neil Mohamed Husani shook up the Southwest Florida real estate market when he got a $16.25 million loan from Fifth Third Bank — on property whose value apparently more than doubled in a day. It appears the appraisal that Husani and his partners used to get financing for the proposed site of a $125 million development contains “misleading information,” according to two experts who reviewed the document for the Sarasota Herald-Tribune.

A deed filed this month by Husani on another deal overstated the purchase price of some Manatee County property by 250 percent and was used by one of his partners to get a $4.06 million loan from First State Bank in Sarasota. It’s not clear who provided the erroneous information in either case.

Regardless, filing incorrect or misleading information in an appraisal and using it to obtain a commercial real estate loan could constitute fraud and subject both the appraiser and the borrower to civil lawsuits and criminal charges. Overstating the price of property is not a crime in and of itself, but if part of a scheme to defraud a bank, it is considered illegal.

One of Husani’s partners, Robert J. Martin, said he played no part in the appraisal process on the Sarasota condo project and has never seen the document prepared for Fifth Third Bank. He also said he had no idea that Husani had overstated the value of the Manatee County ranch land. Another of Husani’s partners, Michael Tringali, also said he did nothing wrong.

Since January 2005, Tringali has participated in five multi-million dollar deals with Husani, including the Sarasota condo project. In those five deals, Husani bought 1,864 acres of land for $34 million, then sold it to limited liability companies involving Tringali for $96 million. Those companies then accumulated nearly $71 million in bank loans.

Several of the deals were involved the same appraiser, Julian Stokes of Integra Realty Resources-Southwest Florida, who stands by the validity of his appraisals. If he was wrong, Stokes says, it was because he was deliberately deceived. In the meantime, questions about Stokes’s appraisal and the resulting loan have impacted Florida commercial real estate.

It will be interesting to see how this situation is resolved. Are the questions raised simply due to miscommunications, or is this yet another case of reckless development and fraud? Florida Home Loan has faith in the judicial system and believes that people are innocent until proven guilty, but it’s clear that the state and federal government both need stronger commercial loan regulations if they want instances like this to stop happening.