Lawsuits are piling up
By RENE RODRIGUEZ, Miami Herald | April 27, 2021
Jennifer Hernandez did almost everything right.
The single mother of three spent four years paying off her bills after her divorce to improve her credit score. She also squirreled away enough money for a down payment on a house.
But according to a lawsuit and police report filed by Hernandez, she made one mistake: She trusted Alfonso Santiago, who is the vice president of the Doral-based firm KMTG Property Management & Investments.
“I went to see them in May 2020,” Hernandez said. “They showed me a four-bedroom, three-bath home in Miramar in a private community with a good school. [Santiago] told me they would put a bid on the house and then remodel it. I just had to wire him $10,000 and the whole thing would cost me $408,500. It was a no-brainer.”
She said that Santiago went as far as to help her pick out tiles and kitchen cabinets for the Miramar home. He also convinced her to invest another $37,250 in a project for another buyer for a home in Homestead with a promised return of $34,000 in earnings, she said in an interview.
“He told me that the Homestead house would close in August, which was the time frame I wanted to move,” Hernandez said. In June 2020, she also wired Santiago an additional $12,000 to be used for a down payment on the Miramar home.
But the deal went south in September. According to Hernandez, Santiago informed her the Miramar home was off the table because the investor didn’t want to sell, but he promised to find her another one, which he was unable to do.
After two bounced checks — and an angry call to Santiago in front of a teller at a Wells Fargo bank demanding to know why his checks were bad — Hernandez finally got her $22,000 deposit back. But she still hasn’t gotten a refund on her $37,000 investment on the Homestead home and is suing Santiago for the funds.
“He hasn’t even had the decency to show up for an appointment with me,” she said. “This guy is a waste of time. I can’t move forward to buy a home. All those people are crooked and liars. I want justice and I want them to be exposed because that company should not be open.”
‘GROUND ZERO FOR FRAUD’
Santiago tells a different story, blaming Hernandez’s situation — and those in a dozen other lawsuits against KMTG — on a former backer, Miami-based Cipriani Investments.
Cipriani vehemently disagrees, saying that KMTG — not they — are responsible for customers’ losses.
The argument has devolved into a barrage of cross-fire accusations, with each accusing the other of defrauding clients and stealing money from the company, leaving their customers to foot the bill.
In June of 2020, Cipriani filed a civil suit against KTMG, alleging fraud. KTMG has filed for dismissal; a hearing is set for June. Santiago said he is considering filing a countersuit but has not yet done so.
The Cipriani case has created a divide between KMTG’s clients: Those who blame the current management and those who support it.
To those familiar with local small-scale real estate deals, the argument between KMTG and plaintiffs is sadly familiar. According to Jeffrey C. Schneider, a founding partner at the Levine Kellogg Lehman Schneider Grossman law firm, which is not involved in any of the lawsuits, South Florida is “ground zero” for fraud.
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“In South Florida, people are too fast and too loose. Everyone’s got some kind of thing or hustle going on. South Florida has more people who don’t work and are still making more money than I’ve ever seen in my life. They somehow earn a living with their wits, whether it’s legal and illegal.”
A contributing factor is the lack of government oversight. Josh Migdal, a partner at the Miami-based Mark Migdal & Hayden law firm, said real estate investment firms are regulated by the Securities and Exchange Commission (SEC), which usually tends to watchdog giant firms instead of smaller independent operators.
“KMTG is not Morgan Stanley that makes public filings,” said Migdal, who is not involved in any of the cases against KMTG or the Ciprianis. “It’s not a Fortune 1000 company. A lot of these outfits committing fraud go undetected — sometimes forever — or their house of cards fall apart, people have losses, they go to their lawyers and report things to the police. Then there’s an investigation.”
