- Jane Musgrave Palm Beach Post Staff Writer
A 74-year-old developer who operated from offices in Palm Beach faces a possible five-year prison sentence after admitting to a federal judge on Thursday that he submitted phony documents to banks to keep an oceanfront condominium project in Vero Beach afloat.
Once facing eight counts of bank fraud, George Heaton pleaded guilty to a single charge of conspiracy to commit the offense of making false statements to a federally insured institution. The plea deal allowed him to escape the more serious charges, each of which was punishable by a maximum 30-year sentence.
Heaton, who has developed dozens of hotels, restaurants, condominiums and office buildings throughout the country, admitted that during the height of the housing crisis — from November 2006 to September 2009 — he lied to banks as part of a complex scheme to keep money flowing for the construction of the luxury Vero Beach Hotel and Spa.
As part of the plea agreement, Heaton agreed to repay $263,000 and will likely be forced to reimburse the banks an estimated $3.3 million that federal prosecutors said the institutions lost in what they described as a $20 million scheme.
The president of Heaton Cos., with offices on Royal Poinciana Way, admitted he secretly paid down payments and offered cash rebates and other incentives to buyers of condominium units in the popular development. His undisclosed actions made it difficult for lenders to judge the financial ability of buyers to repay mortgages on units that sold for as much as $1 million. Some of the units went into foreclosure, costing the banks the estimated $3.3 million, prosecutors said.
The incentives allowed Heaton to convince his lender that the project would be a success, prosecutors said. Under the terms of his agreement with Orion Bank, now Iberia Bank, Heaton had to have a certain number of units sold before it would release a $23 million construction loan, according to court documents. Court records show that according to the terms of that loan, the purchase contracts had to be “bona fide third-party transactions.”
Heaton didn’t act alone, prosecutors said. Deborah Dentry Baggett, 55, an accountant who worked for Heaton and now lives in Tennessee, last week pleaded guilty to the same charge for her role.
Like Heaton, she agreed to testify against Vero Beach attorney Eric Granitur, who is fighting two charges of bank fraud and one count of conspiracy to commit bank fraud. Granitur, 60, served as the title and escrow agent and handled the closings on the condominium units where lucrative incentives were offered to buyers, prosecutors said.
Attorney David Oscar Markus, who represents Heaton, told U.S. District Judge Robin Rosenberg he is hopeful Heaton will be rewarded for his cooperation with a reduced sentence. Granitur’s trial, scheduled for next month, could be delayed until summer. Heaton will be sentenced when the trial is over.
“We’re working with the prosecution and Mr. Heaton is committed to doing the right thing,” Markus said outside the courtroom. “George is a good guy. The prosecutor is a good guy. Hopefully, we’ll be able to work it out.”