General Development Corporation

Last updated
General Development Corporation
Type Public company
PredecessorFlorida Canada Corporation, Mackle Co.
Founded1958
FounderElliot, Robert and Frank Mackle
Defunct1991
FateExonerated in 1991 for fraudulent home sales. Restitution was set up and succeeded by Atlantic Gulf Communities.
SuccessorAtlantic Gulf Communities
Headquarters
Miami, Florida
Number of employees
 (5,000 (1970))

General Development Corporation, also known as GDC, was the largest land development company in Florida.[ citation needed ] General Development Corporation would be created in 1958 after a merger between Florida Canada Corporation and the Mackle Bros. [1]

Contents

Origins and history

Florida Canada Corporation would be incorporated in 1928 in Canada originally under the name of Chemical Research Corporation. Chemical Research devoted its activities towards developing "technical process" along with equipment for the mining and petroleum industry. Both the Mackle Company and Chemical Research would create 4 subsidiaries for developing property on both coasts of Florida during October 1954. [2]

The Mackle Co. would be founded by Frank E. Mackle Sr. in 1908 in Jacksonville and was the largest homebuilding company in Florida at one point. It would end up moving its operations to Miami in 1937. When Frank died his three sons: Elliott, Robert and Frank Jr. would end up taking over the company. [3]

Over time the company became more diversified and by 1956 most of the company's operations had been concentrated in Floridian real estate and ended up changing there name to Florida Canada Corporation. Also that year, the 4 subsidiaries which were jointly owned by each other would be merged into one subsidiary: General Development Corporation. [2]

Both Florida Canada and the Mackle firm would be merged into one entity in 1958. [1] The Mackle brothers would end up leaving GDC after getting into a dispute with the company's chairman, Gardner Cowles and ended up forming the Deltona Corporation in 1962 which would be a competitor to GDC. [4]

Communities developed by GDC

Overview

As each community began to be developed the developer built the roads, sewer and water plants, golf courses, marinas, other basic amenities and even operated landfills. These new communities had the feel of "company towns." When North Port was incorporated GDC employees even made up the first City Council. [6]

Kellstadt, it was said, implemented a money back guarantee on homes and lots, similar to what Sears offered. This was a powerful sales tool, and combined with the ability to swap remote lots, or undeveloped lots, for lots in the developed areas, allowed GDC to achieve tremendous sales success, selling several thousand lots each month and several hundred homes. The lot swap program also allowed the company to manage construction schedules and defer construction of new lots. Customers who owned a lot in an as yet undeveloped section, could swap for a lot in a developed area.[ citation needed ]

Port Charlotte/North Port Over several decades many general managers came and went, but locals would say, "Woody Hogan sold it, and John Stanton built it."[ citation needed ]

Corporate management

In the 1960s GDC's board of directors hired Charles H. Kellstadt, retired Chairman of Sears as President and Chairman. This was just after the GDC board voted to split with the founding Mackle Brothers. The Mackles went on to develop Marco Island and other prominent communities.[ citation needed ] A succession of presidents after Charles Kellstadt were Louis Fisher, Bill Avella and Robert Ehrling and after the bankruptcy, discussed below, the courts appointed Thomas J Hutchinson.[ citation needed ]

By the 1970s the company boasted 5,000 employees and a global sales force. In 1974, GDC was a publicly traded company. It was purchased and taken private by City Investing, George T. Scharffenberger, Chairman.[ citation needed ] Then, in the mid 1980s City Investing took the company public again.[ citation needed ]

In the late 1980s GDC's management team was accused of fraudulent home sales which led to criminal indictments of the company leadership and the company itself. [7] The company itself would plead guilty to federal mail fraud charges on March 16, 1990. Prior to this it had been being investigated by the federal government for two years for falsely inflating the prices of houses. In a plea agreement, GDC "agreed in principle" to make a restitution fund for those who bought homes between January 1, 1982 and December 31, 1989. [8] It would later file for Chapter 11 bankruptcy in April. [9]

Chairman David F. Brown and President Robert F. Ehrling were decided to be prosecuted separately from the company. Both had resigned a week prior to the company pleading guilty to mail fraud. [8] Both Ehrling and Brown would be convicted in August 1992 and sentenced on January 6, 1993. Ehrling would receive 40 counts of fraud and a 10 year prison sentence while Brown got a maximum five year sentence along with a conspiracy charge. Their conviction and sentencing would come along with two other corporate executives: Torre DeBella, senior vice president of marketing and Richard Reizen the marketing vice president. DeBella was sentenced to 8 years in prison and 40 counts of fraud while Reizen got a maximum 5 year sentence and a charge of conspiracy. [10] Functional assets held by GDC in various cities were turned over to their respective governments thereafter. [7]

Subsequent to the indictments and convictions of senior management, the 11th Circuit Court of Appeals exonerated the men, reversing their convictions and directing that all charges against them be dismissed (see US v. Brown, 79 F.3rd 1550 (1996), for a complete discussion of the case and a general exoneration of General Development Corporation. [11]

Succession

Atlantic Gulf Communities would end up being created with GDC's bankruptcy. Ehrling would end up getting released from prison in 1996 after his convictions were overturned via appeal. Once leaving prison he would connect with Reizen who had also been released and let out of prison after an appeals court ruling. The two would get into real estate development once again and bought over 3,000 vacant lots from Atlantic. It was part of a plan by Atlantic to get $200 millions to sell off half of the 87,000 acres and 9 water processing plants it had but this idea "never fully materialized" with Atlantic filing for bankruptcy protection in 2001. New Vista Properties would end up being created after these purchases from Atlantic. [12]

Errata

The company had a court-appointed CEO, Thomas J. Hutchison III, from 1990 to 1991. [13]

See also

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References

  1. 1 2 Interstate Mail Order Land Sales: Hearings Before the Subcommittee on Frauds and Misrepresentations Affecting the Elderly of the Special Committee on Aging, United States Senate, Eighty-eighth Congress, Session. U.S. Government Printing Office. 1964. p. 222 – via Google Books.
  2. 1 2 Aged and the Aging in the U.S. Hearings Before the United States Senate Committee on Labor and Public Welfare, Subcommittee on Problems of the Aged and Aging, Eighty-Sixth Congress, First Session · Parts 1-8. U.S. Government Printing Office. 1959. pp. 1954 & 1955 – via Google Books.
  3. ↑ Aged and the Aging in the U.S. Hearings Before the United States Senate Committee on Labor and Public Welfare, Subcommittee on Problems of the Aged and Aging, Eighty-Sixth Congress, First Session · Parts 1-8. U.S. Government Printing Office. 1959. p. 1954 – via Google Books.
  4. ↑ Basse, Craig (July 31, 1993). "Mackle, prolific home builder, dies". Tampa Bay Times .
  5. 1 2 3 4 Vuic, Jason (2021). The Swamp Peddlers: How Lot Sellers, Land Scammers, and Retirees Built Modern Florida and Transformed the American Dream. University of North Carolina Press. p. 6. ISBN   9781469663166 – via Google Books.
  6. ↑ Grove, Marshall W. (2009). North Port : the first 50 years. North Port, Fla.: City of North Port. p. 13. ISBN   978-0976759461.
  7. 1 2 "In re GENERAL DEVELOPMENT CORPORATION, et al., Debtors". Court Listener. 20 December 1991. Retrieved 10 April 2020.
  8. 1 2 Kolody, Tracy (March 17, 1990). "GDC PLEADS GUILTY TO FRAUD MIAMI DEVELOPER FACES RESTITUTION OF UP TO $100 MILLION". Sun-Sentinel (Digital). Retrieved July 2, 2022.
  9. ↑ Sewell, Dan (July 29, 1990). "Thousands Face Uncertain Futures Since Fraud Uncovered". Associated Press. Retrieved July 2, 2022.
  10. ↑ Cole, Richard (January 6, 1993). "Federal Judge Sentences General Development Execs". Associated Press. Retrieved July 2, 2022.
  11. ↑ U.S. v. Brown, 79 F.3d 1550 (11th Cir. 1996) from casetext
  12. ↑ Salman, Josh (June 8, 2013). "Once jailed in real estate fraud case, executive defends tactics". Sarasota Herald-Tribune (Digital).
  13. ↑ "Thomas J. Hutchison". Hutchinson Advisors Inc. 2007. Retrieved 10 April 2020.
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