Records show that in 2006 and 2007 he bought over 40 homes
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SARASOTA - Arthur Seaborne, a Sarasota property flipper whose real estate investment ventures led to millions in mortgage defaults, has filed for bankruptcy for the third time in his turbulent investment career.
The 66-year-old former mortgage broker listed $2.15 million in assets and $2.55 million in debts on his Chapter 7 filing. But angry former clients say he owes much more.
They say Seaborne convinced them to buy houses on the promise that he would help find renters and make tax, mortgage and insurance payments. They say he then reneged on his agreements, leading at least 16 investors to default on their mortgage loans.
"He said he was going to be my broker and my investment coach," said Jessica Leis, who bought three houses in Venice and Ellenton from Seaborne in 2006 and 2007. "He said he would pay the expenses and we would split the profits when it came time to sell.
"He told me we were partners," said Leis, the widow of a police officer who died from injuries sustained during a 1990 rescue. "But we were never partners. He took advantage of me."
In July, the Herald-Tribune identified Seaborne in a six-part investigative series that uncovered $10 billion in potential property flipping fraud across the state. Seaborne was among the Sarasota area's most prolific flippers. The Manatee County Sheriff's Office and several federal agencies began investigating Seaborne in April, shortly after the Herald-Tribune contacted various agencies about his activities.
In 2006 and 2007, Seaborne bought 41 houses. Even though the real estate market was slumping at the time, Seaborne was able to sell each house at a profit within weeks or months of his purchase. In many cases, he sold the houses to investors he recruited at real estate seminars.
Leis and seven other investors contacted by the Herald-Tribune said they were attracted to Seaborne because he promised them riches with little risk and no money down.
Seaborne did not return a message left on his company's answering machine. In an interview early this year, he said his partnerships were all legitimate and his financial problems were the result of the real estate downturn.
"We certainly would not have done some of the buying we did if we knew we'd be where we are today," he said.
Tainted by controversy
Trouble has followed Seaborne throughout his career.
He relinquished his Florida real estate license in 1993 after complaints were filed with the Florida Department of Business and Professional Regulation that he falsified leases on a 32,000-square-foot Tampa office building in order to get a larger loan than would have otherwise been possible.
In 2008, he gave up his mortgage broker's license after being accused of selling mortgage securities to investors without a license and of lying on mortgage applications so clients could get loans.
In its complaint against Seaborne, the state Office of Financial Regulation said Seaborne failed to tell World Savings Bank he had loaned the required down payment to seven clients who applied for mortgages.
In addition, four former clients told the Herald-Tribune he directed them to lie on mortgage applications so they would qualify for loans on properties he was selling them.
"He falsified my income and the amount of money I had in the bank," said Bart Borriello, who invested in two houses with Seaborne. "He said he was doing that to keep the payments down."
Seaborne has filed for bankruptcy twice before, in 1988 and in 2001. His current bankruptcy, filed Aug. 7, shows that his home is a 2,300-square-foot house on Palmetto Lane in Sarasota that he bought for $510,000 in March 2004.
In addition, Seaborne states in court documents that he owns eight more houses valued at $1.65 million.
Those numbers do not include 10 houses he bought through his own limited liability companies or four homes he bought and then resold to his wife, Patricia. Court records show that banks have foreclosed on five of those 14 properties.
Though Seaborne has listed $2.55 million in debts on his bankruptcy filing, Anthony Lefco, a Sarasota attorney who sued Seaborne on behalf of Leis, believes Seaborne's debt total will increase after he provides an accurate accounting of what he owes more than 70 investors who participated in house-buying partnerships.
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