Palm Coast Predicament 1

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Palm Coast Predicament 1

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The 'Palm Coast Predicament' 1 :

The Palm Coast Predicament 1

The Palm Coast Predicament 1

Palm Coast Predicament

Boyles Mum, But Rumors of State Probe Persist

Last in a series of eight

By Stephen Doig

And Ronald Williamson News-Journal Staff Writer

Palm Coast: Quiet and almost unnoticed behind the barrage of claims and allegation of corporate corruption at Palm Coast and depositions being taken from two dozen persons involved with the development at all levels, a State Attorney's investigation into possible criminal charges is going on.

Atate Atty. Stephen Boyles, as usual reticent about discussing investigation, has given polite 'No comments" for the last three weeks to reporters asking about possible criminal charges arising out of the probe. Boyles has not even admitted his office is involved.

However, deposition testimony and sources in Flagler County have hinted at the scope of the monthslong probe, reportedly involving several of Boyles' assistants and investigators. And, in several press releases to the News-Journal, Community Development Corp. claims it initiated and is giving 'close cooperation' to Boyles and will press for criminal charges against anyone involved in the alleged kickback scheme.

Illegal acts are openly alleged in several of the suits, hinted at in others and claims of other illegal acts are going on the record at the deposition takings where five attorneys are questioning witnesses. But no known criminal charges have been filed regarding the actions at Palm Coast.

One area covered in the civil suits filed by CDC-apparently with no criminal overtones-is the 'inadequate, improper and substandard' work allegedly done by the three contractors with the approval of the former chief engineer at Palm Coast, John Carton. Outside independent engineering firms are reinspecting the contractor's work at Palm Coast and CDC has said it would remedy any deficient work discovered by the reinspection. Defense attorneys have subpoenaed the unfinished report.

One CDC exception to the alleged substandard work done by contractors is 'individually build homes' even though Joseph Mange Inc., Jacksonville, one of the two conractors being sues ( a third, Lowery Brothers, Inc., is named only as a coconspirator in $3 million suits again Halifax Paving Inc., and Mange) carried on extensive work in home construction.

Contractors, in deposition, have made no such distinction for homes, but charge that CDC's specfications for virtually all Palm Caost work were minimal and the work they did was up to those specifications.

There may be no illegal acts involved in the 'Substandard' work, but it is a matter of paramount importance to the 1,200 residents of the developoment. Answering a question from a Palm Coast resident at the last meeting of the Palm Coast Civic Ass., Gordon Kipp, a CDC spokesman, said: "The homes are not included in the suits because they are covered under separate individual warranties."

Kipp told the resident: "If you bought your home from the company, then it is covered for structural defects for one year: - if the defents are reported within that time.

Notwithstanding the seven civil suits, current despositions and gathering of documents relating to charges and allegations, the CDC internal investigation and the low profile State Attorney's investigation, thos involved keep repeating that the surface has only been scratched in this affair.

Indeed, only a little of the contractors' and Barton's side of the story has been recorded. Althought their depositions have begun, none of the four hearings thus far have been completed in one day and most of the long questioning periods have been taken up by Stanley Bartel, CDC attorney on direct examination. Crossexamination of the men and their wives will be by each of the four defense attorneys. That could take days.

And what of the story of Norman Young, former CDC president, who ws deposed in New York last Wweek? And what will be the testimon of former CDC Vice Pres. Dan Cooper who faces a deposition here Sept. 3? And Eli Pritchard, a CDC vice president fired last week, who reportedly refused to testify, other than his name and address, at a deposition by defense attorneys in New York last week?

As the charges and countercharges continue to grow, and as many of the pioneers who live in the young Palm Coast development nervously wonder what the result will be , one investigator gave his private assessment of the situation: "You could safely say it's the biggest thing ever to hit this part of the state".

CDC Probe Figure Fired

CDC Probe Figure Fired
Daytona Beach Morning Journal Thursday, August 21, 1975
From our Flagler County Bureau
Palm Coast - An ITT-Community Development Corporation vice president who has emerged as a figure in the current Palm Coast investigation was fired last week for 'Conduct prejudical to the company," a corporate spokesman disclosed Wednesday.
Although Gordon Kipp, Florida public relations director at Palm Coast, wouldn't comment on Eli Pritchard's firing, he did confirm that the New York based official had refused to testify at a deposition in New York last week. Kipp said Pritchard was fired after the deposition hearing.
A defense attorney who attended the Pritchard deposition hearing, scheduled the same day as one for former CDC Pres. Norman Young, said Pritchard took the Fifth Ammendment and would only testify only to his name and his address.
John Barton, former chief engineer on the Palm Coast Project being sued by CDC for alleged kickbacks, charges in a countersuit that Pritchard and another CDC vice president pressured him to sign illegal documents so the company could register 80,000 lots before a state imposed deadline requiring extensive study on large developments.
Barton named Dan Cooper as the second vice president who pressured him to sign the illegal documents. Cooper was fired by CDC last month, shortly after Young was 'kicked upstairs' from his post as president to chairman of the CDC Board.

The Palm Coast Predicament

From: The Daytona Beach News Journal, Section B, FLAGLER, Bunnell, Flagler Beach, Palm Coast, Daytona Beach, Florida, August 20, 1975, pp. 1B-2B.

**'Palm Coast Predicament'

ITT Performance Bonds Received Routine OK

Palm Coast - Since December, 1969 when the ITT Community Development Corp. (CDC) recorded the first plats for this giant development, the Flagler County Commission routinely has approved a total of 112 performance bonds pledging more than $83 Million in roads and drains for some 110,000 lots according to courthouse records examined by New-Journal reporters.

In addition, the commission routinely has approved 117 performance bonds from the Atlantis Development Corp. a CDC subsidiary, pledging better than $95 million to render adequate potable water supply service and sewers to all those lots.

These bonds, required of developers everywhere to guarantee completion of promised projects, recently have come under critical scrutiny of investigators probing alleged corruption of contractors and company officials here.

The criticism centers on two areas: The utter lack of surety backing all but one of the bonds, and the timing of their approval shortly before a July 1973 state deadline requiring that new developoments undergo an elaborate and expersive environmental screening process.

The first problem area concerns the basic purpose ostensibly served by requiring performance bonds: To ensure that a developer will actually make promised improvements.

Each of the 229 bonds, stapled to a blue cover sheets and carefully embossed with a corporate seal, state that the CDC or Atantis are 'held and firmly bound' for sums ranging up to $3.4 million for completion of each of the 89 Palm Coast subdivision units.

However, virtually none of the nearly $180 million promised in the bonds is in fact being held in escrow or backed by a surety bonding.company, an examination of the bonds by News-Journal reporters has shown.

"Legally, thse bonds are only as good as the company," said Flagler County Atty. XXXX XXXXXXXX when reporters asked about the bonds, he declined to speculate on what would happen if Palm Coast runs into financial trouble.

In fact, only one of the smallest bonds for $61,152 is now backed by surety, a guarantee from a neutral third party that the money would be available, in this case for six streets in Palm Coast section 3B.

"A Surety is someone or something to fall back on if the principal fails to meet the obligation', explained XXXXXXXX. "if the principal fails and there is no surety, well, you follow your own line of reasoning."

XXXXXXXX was approinted County Attorney in May shortly after X.X.XXXX , who had been county attorney during most of the period the bonds were being approved, resigned for health reasons April 30.

The one bond backed by surety is a result of XXXXXXXX'X skepticism about the earlier bonds. When CDC officials sought to modify an April, 1970 bond he insisted on a surety. On July 17, the Flagler County Commission approved the modification, backed by surety from Fireman's Insurance Co. of Newark, N.J.

"I wanted to get more security for my client than heretofore existed," XXXXXXXXX explained simply.

XXXX , XXXXXXXX'X predecessor, apparently had tried in the beginning at least, to get similar surety on the CDC bonds. A new story in September, 1971 of the commission's acceptance of three bonds totaling $711,645 noted that XXXX "repeated his position that any performance bonds should be backed by a surety company." The commission , however, overfuled him.

When asked if he ever changed his mind during the three and one half years when CDC and Atlantis continued to bring bonds without surety to the commission for approval, XXXX firmly stated: "I never changed my mind.".

"I pointed out to the commission that the bonds were't backed by and surety and I made no further comments. It was none of my business, I don't approve bonds," said XXXXXX . :"I pointed it out to my clients and my job was done."

XXXXXX said the commission already had set a precedent of approving such bonds before he became County Attorney in mid-1971. "I didn't push my point of view," he said.

The County Attorney in 1969 when County Commissioners first were faced with and accepted performance bonds without surety was XXXXXXXX XXXXXXX, now in private practice in Bunnell.

Although in a position to shed some light on the precedent referred to by XXXXXX, of accepting performance bonds without surety, XXXXXX declined to comment when asked about the first bonds by a New-Journal reporter.

"I dont' think I want to become insolved," XXXXXX said Monday, adding he would not comment unless requested to by an official body, perhaps the County Commission.

XXXXX XXXXXXX , now chairman of the Flagler County Commission, recalled last week he objected to the nonsurety performance bonds all along, 'but I just never got anywhere."

"I questioned it when we were working up the subdivision regulations, might have been in Devember, '71'," XXXXXX said, "And I had a runin with XXXX XXXXXXXr (CDC) Project Director. XXXXX XXXXX and I guess I raised enough hell by myself that they finally came down here with a confidential financial statement proving what the company's net worth was at the time. They had enough money then, but, they also didn't have very many bonds posted then."

In Devember, 1971, CDC had issued less than $12 million in promises, about seven per cent of what was to come, according to courthouse records.

The concern of XXXXXX and XXXXXX about surety for performance bonds is shared by other governemental bodies, the City of Daytona Beach included.

Daytona Beach subdivision regulations insist that performance bonds be executed by surety companies approved by the U.S. Treasury Dept. for writing bonds on federal project. The city will also accept a cashier's check or cash for 100 per cent of the construction cost, to be held in excrow until completion.

XXXXXX XXXX, the Palm Coast public relations director, declined to answer questions from News-Journal reporters last week as to why CDC and Atlantis didn't offer surety for the promises.

Meanwhile, reacting to earlier stories in this series, XXXXXX XXXXXXXX, attorney for contractor X.X.XXXXX, pointed out Tuesday that his client is not a defendant in any suit by CDC. XXXXXXis named, XXXXXXXX affirmed, as a coconspirator in three civil suits filed against XXXX XXXXXX, former CDC chief engineer; XXXXXXX XXXXXX Co.; and XXXXXX XXXXX, Inc. which allege kickbacks and pricefixing

**Part seven of this series will appear in Today's Evening News. The Concluding part will appear in Thursday's Morning Journal.

Sixth in a series of eight articles

By Stephen Doig and Ronald Williamson, , New-Jorrnal Staff Writers.

FROM: The Daytona Beach News Journal, Morning Journal, FLAGLER Bunnell, Flagler Beach, Palm Coast B, Daytona Beach, Florida , Wednesday, August 20, 1975 pp. 1B-2B.

We will remain Stewards of these Resources hoping for a Certified Local Government like so many other Florida Cities already are; hoping for a Museum like Flagler Beach already has.