An entrepreneur files for bankruptcy protection
Posted on September 12th, 2010
The 62-year-old Hungarian immigrant, who grew up under Communism, bought a piece of land off Lockwood Ridge Road in 1990 and ran a Montessori school there with his wife for 15 years before fate forced him in a different direction.
A tangential link to Joseph P. Smith, the ex-con who raped and killed Sarasota teenager Carly Brucia in 2004, upset Bokros’ already wobbly marriage. His wife, Doris Bokros, could not get past the idea that Smith’s three children attended the school and there was no alternative but break-up and divorce, Bokros said.
Bokros tried renting the school to other educators, but a change in zoning made him realize the land had a better use. So he tore down the old schoolhouse and built a 12,000-square-foot office and retail center in its place.
But no tenants have ever occupied the building. Bokros fell $200,000 short of completing the work necessary to get a certificate of occupancy, and Community Bank of Manatee foreclosed on his loan in June.
As a last-gasp effort to save the building, Bokros filed for Chapter 11 bankruptcy protection in July and is hoping to come up with enough money to pay off the bank, finish the building and avoid losing his life’s savings.
“I’m not a big investor,” Bokros said. “I don’t have anything else to fall back on. If I lose here, that’s it. I put everything into this.”
In many ways, Bokros’ saga is like that of thousands of entrepreneurs across the country. They gambled on the upward climbing real estate market with the hope of improving their prospects for retirement and are now faced with financial uncertainty.
An experienced electrical contractor, Bokros can still earn an income. But he is not happy about his situation and is frustrated about how his tightly financed project slipped out of his control.
Bokros said he tried to be careful and monitor every penny spent on the building. But he said the banker in charge of his loan, Mike McCoy, and the general contractor hired to complete the job, Donald L. Weiler, were not as careful.
McCoy, who no longer works for Community Bank, did not return two calls seeking comment. But Weiler and his attorney, Robert Turffs, vigorously denied the accusations.
“Mistakes were made by everybody,” Turffs said. “My client made a mistake by agreeing to go forward with the contract when he should have backed out. But he wanted the work so badly that he went ahead.”
There simply was not enough money to complete the job, Turffs said.
“I understand that was Mr. Bokros’ identity — that piece of property,” Turffs said. “I’m sorry for him, but it was my client who was wronged.”
An education in change
After leaving Hungary in 1971, Bokros lived in Chicago for 13 years before arriving in Sarasota in 1984 with his American-born wife.
For six years, he made a living as an electrical contractor. He then bought the land off Lockwood Ridge Road from one of his clients for $38,000 and built a Teddy Bear Montessori School on the site.
“My wife taught at the Countryside Montessori School,” Bokros said. “She was an excellent teacher. I dropped my contractor business and took classes to become a teacher myself, and we ran the school for 15 years.”
But in 2004, Smith killed Brucia and everything changed. Because three of Smith’s children attended the school, the connection to the killing was hard to take.
“It shook me up, too,” Bokros said. “But I have a totally different personality.”
Bokros said Smith’s children showed no signs of being abused, and because of Smith’s criminal history, Bokros did not allow him to come to the school to pick them up.
“But it was still scary,” Bokros said.
Bokros tried to sell the school after Brucia’s death and began raising money for an office retail project with help from Sarasota real estate agent and commercial developer Tim Mapp.
“Tim knows everyone,” Bokros said. “He said he had a friend at BB&T, and that guy could get me a construction loan as soon as I got a building permit.”
But when Bokros got the permit, the loan officer had left BB&T and Bokros had to start over again at a time when lenders were starting to worry about making commercial loans.
Finally, in December 2007, Community Bank agreed to provide $1.9 million on the condition that Bokros bring on partners to guarantee the loan and that $600,000 be set aside to pay interest over a 12-month construction period.
That left only $1.3 million to build a 12,000-square-foot building, and Bokros’ partners — Mapp and Sidney William King — wanted $100,000 up front for agreeing to co-sign the loan.
“I’m back in a corner. What am I going to do? The bank didn’t provide enough to pay $100,000 up front, so I paid some of the money and signed a promissory note for the rest,” Bokros said. “Everything started rocky, but at least it started.”
Following the money
Bokros wanted a contractor friend to construct the building, but the bank rejected the idea.
The bank also rejected Mapp’s first choice, when it found out the man did not have a contractor’s license.
The third choice was Weiler, a Port Charlotte contractor who built the Boaters Warehouse in that community, and Weiler agreed to take on the project for $1.3 million.
But before he signed, Bokros demanded that he be hired as the building supervisor with a $47,000 salary and that he approve all draw requests.
“I felt funny about it,” Bokros said. “I wanted to be on the site. I wanted to be the super and see everything all the time.”
Five months into the project, Weiler began circumventing Bokros and going directly to McCoy for the draws, Bokros said.
The first was a $71,900 request to fund an efficient wall system that Bokros had already priced at $61,500.
“When I saw that, I went berserk,” Bokros said.
“I went to McCoy and told him that the general contractor had increased the cost without my permission. I asked the bank to audit him.
“But the bank said, ‘No.’ McCoy said it was still a $1.3 million project, and the general contractor would find a away to get other items cheaper.”
In September, it happened again, and just like the first time, McCoy took Weiler’s side, Bokros said.
Then in October, Bokros discovered that Weiler received $53,500 to pay for steel trusses, fire-proof plywood and other building materials from Kimal Lumber. But Kimal Lumber never got the money and filed a lien against the property.
“At that point, McCoy knew he was in trouble,” Bokros said. “He came to the project, met privately with the general contractor and then told me everything would be all right. He would clear up everything.”
Bokros said McCoy acknowledged mistakes had been made. The bank had double-paid for certain items and agreed to put $63,500 back in the project’s account. But Bokros was unwilling to go forward with Weiler. He fired the Port Charlotte contractor and brought in his friend, John Shantel, to help.
“It was mess,” Bokros said. “The framing for the walls had been installed improperly and had to be torn out and bathrooms had to be redone.”
The result was that more money had to be spent, and there was not enough to finish the job.
In financial trouble themselves, Bokros’ partners had nothing to offer.
For Weiler, the relationship between Bokros and his partners was the real problem.
“Bokros had to pay bills his partners had agreed to pay,” Weiler said.
“You could see it going bad from the beginning,” he said. “They were short on money and the partners weren’t about to make anything up.”
Weiler said he promised Bokros that everything would work out in the end and bristled at the suggestion that that his workmanship was shoddy.
“He was the supervisor,” Weiler said. “He was physically involved with the framing. If he had to redo the work, he is as guilty as we were.”
Community Bank went further in its foreclosure suit, accusing Bokros of failing to properly supervise the general contractor and failing to disclose fraudulent activities on the part of the general contractor.
Bokros said he was simply amazed the bank could make those assertions.
The failure of the project, Bokros said in his answer to Community Bank’s foreclosure suit, was because of the bank’s “negligent disbursement of loan proceeds.”
In the end, however, the court sided with the bank and awarded it a $2.4 million judgment.
“Unfortunately, this sort of thing has happened to a lot of well-intentioned people,” said Turffs, Weiler’s attorney. “It’s the story if the first decade of this century.
“It’s the story of our times.”
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