Suspended Attorney Target of Mortgage Lender's Lawsuit

A former candidate for Miami-Dade public defender is accused of misdealings in a complex foreclosure lawsuit spearheaded by JPMorgan Chase Bank based on more than $10 million in alleged serial mortgage fraud on a single Miami Beach property.

Washington Mutual Bank, which was acquired by JPMorgan last September, alleges Gabriel Martin, whose law license has been suspended since 2006, prepared loan documents as its closing agent but failed to properly carry out his duties.

The WaMu lawsuit states it was one of four lenders on the same luxury bayfront property at 4424 N. Bay Road, a 5,768-square-foot mansion once owned by Eddie Irvine, a Formula One race car driver from Northern Ireland, and two doors down from a property owned by Calvin Klein. Martin served as the closing agent on a $4.5 million WaMu mortgage when the house ostensibly was bought by co-defendant Jose Marsicobetre Mejia in January 2006, according to the Miami-Dade Circuit Court complaint. JPMorgan claims WaMu hired Martin to ensure it had a priority interest in the property and record the transfer.

The suit filed in 2007 is set for trial in January before Judge Gill Freeman to determine which lender has priority to recover its losses on the property. The latest sale reflected in Miami-Dade property records is an October 2005 sale for $5.6 million to self-employed businessman Jason Zabaleta. The WaMu lawsuit claims Zabaleta conspired with others to victimize the bank twice, once on a $3.9 million loan in October 2005 and a second time on a $4.5 million loan in June 2006.

The deed and mortgage were never recorded on the $4.5 million loan and were reportedly lost. JPMorgan contends Martin’s alleged negligence coupled with a complex series of frauds by Zabaleta, Marsicobetre and Chicago chiropractor Daniel Jacobazzi caused it to lose its priority spot to recover money from a foreclosure on the property.

In Martin’s answer, he blamed negligence alleged by JPMorgan on George Garcia, a suspended attorney who worked as a paralegal in Martin’s law office. A cross-complaint filed by Martin against Garcia identified him as an independent contractor hired to work on the loan.

Garcia denied fault and said Martin made a crucial mistake by handing loan documents to Zabaleta before the deed and mortgage were recorded.

"The thing that caused the whole problem here was giving the deed and the mortgage to Jason," Garcia said in an interview Monday. "Gabe did that, and he was maybe confused. He knows very little about real estate."

Martin’s attorney, Alan Landsberg of Keller Landsberg in Fort Lauderdale, said his client denied liability. The phone number listed under Martin’s Bar entry is no longer in use, and his e-mail address kicks back an "undeliverable" message. In his Bar settlement, Martin claimed he was a victim of fraud, denied profiting from Garcia’s work and denied involvement in any criminal conspiracy.

JPMorgan attorney David Garbett with Garbett Stiphany Allen & Roza in Miami declined to comment.

Martin, who was a Miami-Dade assistant public defender for several years before becoming a criminal defense attorney, ran unsuccessfully for the office’s top job in 2004 and was endorsed by then-Gov. Jeb Bush. His law license was suspended three years ago after the FBI informed the Bar that it was investigating Garcia. Bar documents on Martin’s law license suspension include a transaction mentioned in the WaMu complaint. Martin allegedly wrote Garcia 116 checks from two accounts -- one a trust account, one a law firm account -- totaling $2 million in 2005 and 2006.

Martin reached a settlement on the Bar charges in 2007 calling for a three-year suspension starting in October 2006.

U.S. Attorney’s Office spokeswoman Alicia Valle declined to comment on the status of the investigation. No charges have been filed. 

PRIORITY INTEREST

The bench trial set for January will determine whether WaMu has the best claim on the property.

The legal challenge facing WaMu is convincing Freeman that it should be first in line to recover its money and trump other lenders, said Peter Berlowe, a partner with Berlowe & Assouline in Miami, who represents Akbar Nikooie. He was dismissed as a defendant and filed his own complaint against WaMu, Martin, Garcia and Zabaleta, alleging fraud against Martin, Garcia and Zabaleta.

But WaMu alleges its mortgage interests were recorded late because it was duped on a quitclaim deed fraud, and that it should have a priority interest on the house using the $3.9 million mortgage from October 2005 as the start date.

WaMu wants Freeman to rule its interest should be moved to the front of the line. But other plaintiffs, such as Nikooie, who claims he lent Zabaleta $1.16 million that was erroneously recorded as $116,000, is pressing his own claim that he was fleeced. Nikooie claims Zabaleta coaxed him into making a construction loan on the property when in reality the money was used as a down payment on the home purchase, Berlowe said.

"He totally misrepresented to Nikooie what this money was for," he said.

Zabaleta is represented by Jacob Armpriester, a Boca Raton, Fla., solo practitioner.

Zabaleta "feels he was 100 percent forthright with all the parties," Armpriester said.

"It’s not Mr. Zabaleta who failed to record these mortgages. It’s the individuals retained by these entities. You have to ask yourself how could the legal professionals that were retained not do what they were supposed to do?" he asked. "Mortgages were done, professionals were paid to carry out their duties, and they didn’t do so."

Zabaleta lives at the house, Armpriester said.

Delray Beach, Fla.-based General Mortgage Associates claims a higher priority than WaMu based on a $3.5 million loan to Zabaleta in January 2007.

"We don’t know what led WaMu to make these crazy loans and never record them," General Mortgage attorney Michael Perse said Tuesday. He is a Kluger Kaplan Silverman Katzen & Levine partner in Miami. The lender argued in its pleadings that WaMu should not benefit from its own mistake.

"In substance, WaMu would receive a tremendous windfall by virtue of its own negligence in failing to record its mortgage," Richard Bales, another General Mortgage lawyer, wrote in a court filing. He is a partner with Bales Sommers & Klein in Miami and declined to comment for this article.

Jacobazzi and Marsicobetre are representing themselves since their lawyers withdrew from the WaMu case. Jacobazzi did not return calls to his office. Marsicobetre’s office telephone number at FuelNation in West Palm Beach, a fuel marketing company, has been disconnected.

"It’s a question of whose mortgage is recorded first, whose mortgage is valid and whose mortgage has priority," said Dyanne Feinberg, a partner for Gilbride Heller & Brown in Miami who represents Coral Gables, Fla., law firm Adorno & Yoss. The firm is a party in the case because it won an unrelated $300,000 judgment against Zabaleta.

"WaMu, GMAI and Nikooie are all fighting for priority. But we don’t really have an active interest in that case. We just hope there’s enough equity in the property to pay our judgment," Feinberg said.

Perse said the WaMu lawsuit paints a picture of the lending frenzy during South Florida’s housing boom.

"What the case is really about is the way big institutional lenders were lending money willy-nilly," he said. "If they look at the record of how these properties were moving back and forth, it’s part of why the loan industry collapsed."

CHRONOLOGY

Jan. 25, 2005: Jason Zabaleta purchases house at 4424 N. Bay Road, Miami Beach

Oct. 18, 2005: Daniel Jacobazzi buys the house from Zabaleta and transfers the deed to himself

Oct. 20, 2005: Jacobazzi transfers the title back to Zabaleta with a quitclaim deed

Oct. 31, 2005: Washington Mutual records a mortgage lien for $3.9 million

Jan. 21, 2006: Zabaleta borrows $1.16 million from Akbar Nikooie and later records a $116,000 mortgage on the Miami Beach house

June 2006: WaMu approves a $4.5 million mortgage for Jose Marsicobetre Mejia on the Miami Beach house. No deed or mortgage is recorded.

Jan. 5, 2007: Zabaleta obtains a $3.5 million mortgage from General Mortgage Associates, which confirms the first WaMu loan is fully paid Jan. 12, 2007: WaMu files a lis pendens on the property

Jan. 19, 2007: General Mortgage’s mortgage is recorded

Source: Joint pretrial statement