Author Topic: TriLegacy cleared in Shipyards inquiry  (Read 2103 times)


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TriLegacy cleared in Shipyards inquiry
« on: September 12, 2007, 06:05:24 AM »
FEDS WON'T PROSECUTE: A grand jury found only a contract dispute with city.
SAME DECISION AS COUNTY: A Duval County grand jury decided not to indict in 2005.

By Paul Pinkham, The Times-Union

Federal authorities have cleared a Jacksonville company of criminal wrongdoing in the failed Shipyards development, closing their file on what the U.S. attorney called a "contractual disagreement" with city officials.

The decision not to prosecute ends a long federal grand jury probe into the use of $36.5 million disbursed by the city to TriLegacy Group for The Shipyards downtown. A Duval County grand jury also decided two years ago not to bring criminal charges and found the city's contract with TriLegacy was ambiguous over how bond money could be spent.

In a rare public letter of explanation, Acting U.S. Attorney Jim Klindt said evidence showed TriLegacy lent funds from other accounts and entities to the project and that some public money was used to repay those loans.

"While we recognize that there was a contractual disagreement between the city and TriLegacy ... we found no evidence of a violation of federal criminal law," Klindt wrote Monday to Jacksonville General Counsel Rick Mullaney. "Accordingly, our file is closed."

Klindt said he wrote the letter because of the case was of great "public importance." City officials referred the case to the U.S. attorney before the county grand jury concluded, and both the FBI and Internal Revenue Service investigated.

TriLegacy founders Carlton and Jeff Spence and project manager Hamilton Traylor were grateful to be exonerated again.

"We have been confident from the outset of all The Shipyards investigations that the truth and our innocence would prevail over the malicious and painful allegations made against the TriLegacy Group and Spence family," Carlton Spence said Tuesday. "We have always been innocent. "

He was referring to previous accusations by Mullaney and former Mayor John Delaney that TriLegacy defrauded the city. The Spences' attorney, Hank Coxe, said he found those public accusations reprehensible and unprecedented.

The condo, retail and office project was halted in 2004 after the city determined TriLegacy had spent $22 million of city money on development other than public improvements, Mullaney said. But both grand juries found there was a difference of interpretation over the contract.

Carlton Spence said he purchased the Shipyards property on the Northbank to build warehouses but was convinced by Delaney to build the condo-business complex with financial assistance from the city. It was to have included a 17-acre public park and riverwalk.

TriLegacy was making progress, and Spence said there would be condos, businesses and stores on that location today if the city hadn't shut it down. In addition to enduring false allegations, he said he and his family lost about $14 million on the project.

"My No. 1 goal is to recoup my family's reputation," Spence said.

Delaney, now the president of the University of North Florida, said Tuesday the city eventually was made whole and didn't lose any money. He said he wasn't surprised no federal charges were filed, even though he said there were federal tax implications.

"Some of the actions simply violated state laws, but the state attorney chose not to look at those," Delaney said. "He didn't even interview a lot of key people."

But State Attorney Harry Shorstein said Tuesday if there was any criminal activity in the project, it could have been prosecuted by the U.S. attorney. He and Mullaney have publicly feuded over The Shipyards and other controversies, beginning after the county grand jury said the city failed to protect the public in the TriLegacy case.

"Not only do you have an obligation to safeguard the public's money, you also have an obligation not to wrongly criticize those you've elected to do business with," Shorstein said.

While the county grand jury focused on the contract between the city and TriLegacy, Klindt said the federal grand jury looked in-depth at the money and how it was spent. Federal prosecutors rarely even confirm grand jury investigations, but Klindt said he wrote Mullaney because of public interest and the allegations that were made.

"We very seldom comment on cases, but when there is an issue or case of public importance, that's when it's right to comment," Klindt said. "It was in the public's interest for us to discuss our findings."

City Council President Daniel Davis said the city has learned from the Shipyards project.

"We have seen a shift in the JEDC [Jacksonville Economic Development Commission] and the projects brought to the council are much better for the city and for the taxpayers," Davis said.

Times-Union writer Beth Kormanik contributed to this report., (904) 359-4107

The Jacksonville Shipyards was a vessel-making facility until it closed in 1992. Since then, development ideas have come and gone for the 44-acre site, and in the process, city officials have given millions of dollars to a developer. The land still sits vacant.


1992: The Jacksonville Shipyards closes as a vessel-making operation.

1995: Jay Hanan buys the property (with an IOU of $3.8 million due in a year) and announces plans to turn the land into a marine park, hotels, and restaurants.

1997: Hanan is unable to find investors and files for bankruptcy.

1999: TriLegacy Group LLC buys the property and later unveils an $860 million project to include condos, town homes, a park, a hotel, boat slips and office space.

2001: City officials approve about $40 million in incentives for public improvements, including a park, Riverwalk expansion and widening of Bay Street.

December 2003: TriLegacy informs the city that only $15.4 million of the money was spent on public improvements, upsetting city officials who felt that they were required to spend all of it on the improvements.

April 2004: The city releases the inquiries, fueling controversy and heavy criticism of the city's practice of awarding financial incentives for development. The case prompted an inquiry by a Duval County grand jury, which said the city's contract was unclear about how the money should have been spent.

May 2005: The City Council approves a deal with LandMar to develop the property.

Monday: Acting U.S. Attorney Jim Klindt informs officials that a federal grand jury probe found no violation of federal laws by TriLegacy. Klindt refers to the matter as a "contractual disagreement between the city and TriLegacy."

"A man who views the world the same at 50 as he did at 20 has wasted 30 years of his life.” - Muhammad Ali


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Re: TriLegacy cleared in Shipyards inquiry
« Reply #1 on: September 12, 2007, 07:03:42 AM »
Good, now, let's keep on truckin with this incredible development that will be the nechmark and catalyst for riverfront development projects on a grand scale. Now, if only we can get a project THAT WON'T FAIL! on the old JEA site on the Southbank, and demolish that ugly area between the Chart House and Duval Co. Schools Building.
Jacksonville: We're not vertically challenged, just horizontally gifted!