The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A property owner at the controversy-torn Oceania Heights development is alleging that he has been unable to recover his late father’s $1.318 million investment, and wind-up his estate, because the developers have failed to release title documents/conveyances to him.

Derrick Nedzel, the Colorado-based son of Dr Gleb Nedzel, who had purchased a total of four lots at the Exuma-based project, told Tribune Business that his family faced potential financial ruin at any time unless he was able to sell the Oceania Heights properties.

This was due to the high medical expenses being incurred in looking after his disabled sister, and Mr Nedzel told Tribune Business: “We are one health crisis away from financial ruin.”

To add insult to injury, Mr Nedzel said he and his other, healthy sister had just received a real property tax bill for the Oceania Heights properties totalling more than $300,000 - some $259,582 of which is for alleged arrears dating back multiple years.

And he dislcosed to Tribune Business that he and his family had been billed for real property taxes on five lots - not just the four they owned. Mr Nedzel explained that his late father entered into a ‘lot swap’ deal with the Oceania Heights developers, where lot 65 was swapped for lot 92, yet he and his sister were still being charged real property tax on lot 65.

This newspaper has seen documents showing that the Oceania Heights developers, Bahamian attorney Anthony Thompson and Canadian citizen Howard Obront, who was in charge of sales and marketing, subsequently sold lot 65 to Chris and Jane Bain.

The Bains are also being billed for real property tax on lot 65, so in effect the Government’s Real Property Tax Office is charging taxes to two different ‘owners’ for the same piece of Exuma real estate.

In addition, Mr Nedzel also accused Mr Thompson of attempting to ‘double bill’ him for Stamp Tax that was due on the purchase of his late father’s lots. He produced the initial February 16, 2001, conveyance for lots 65, 66 and 67, which showed a Stamp Duty sum of $77,500.

Yet Tribune Business has also seen invoices issued by Mr Thompson, on December 15, 2010, and February 23, 2011, billing Mr Nedzel for Stamp Duty on lots 66 and 67 again.

The latter told this newspaper that the various Stamp Duties and legal fees being sought from him by Mr Thompson amounted to more than $165,000, with the February 2011 billings seeking higher amounts than the invoices sent three months earlier because Stamp Duty rates were changed from 10 per cent to 12 per cent.

Mr Nedzel also supplied Tribune Business with estimates of how much was owed to the Public Treasury in Stamp Duty on purchases by 17 lot owners at Oceania Heights. This sum totals $888,623, and all are questioning whether the payments - which they claim to have made to Mr Thompson - were passed on to the Government.

The failure to obtain title documents/conveyances to their properties, and questions over whether Stamp Duty payments have been remitted to the Treasury, have been among the most frequent complaints by Oceania Heights homeowners. Yet the developers have denied these and all other allegations made against them, and said conveyances/title documents are available to whoever wants them.

Tribune Business made numerous calls to Mr Thompson over a three-day period leading up to the New Year to get his response to Mr Nedzel’s claims, but despite leaving messages and contact details each time, the calls were not returned.

Detailing the dilemma faced by himself and his family, Mr Nedzel told Tribune Business that while he possessed the original 2001 conveyance for lots 65, 66 and 67, he was unsure whether a new document was required given that his late father no longer owned lot 65, having exchanged it in the ‘swap deal’.

Mr Nedzel added, though, that no title documents for lots 91 and 92 had been provided to his late father. And, despite “repeated requests” by both himself and his attorney, Andrew O’Brien at Glinton, Sweeting & O’Brien, he had been unable to obtain them from Mr Thompson.

“It’s my understanding that although we have a conveyance, it’s not been recorded with the Government [Registry],” Mr Nedzel told Tribune Business. “The estate [of my father] is in probate in the US, and that is waiting on the estate in probate in the Bahamas. That can’t be resolved until the property is sold......

“My sister has a seizure disorder; she has seizures. She has to be on medication and see the doctor regularly. Because we can’t access the money tied up in these lots, I’m paying for my sister’s health insurance and medicine out of my pocket. My dad left money for that, but it’s tied up in those lots. It’s been like that for the last four years.

“I’m paying for her living expenses, just to have a roof over her head and safe living situation for her. Fundamentally, we are one health crisis away from financial ruin, my sister, my wife and myself - hundreds of thousands of dollars. One major hospital visit and that’s it; we’re wiped out. We’re done. It’s unbelievable.”

Mr Nedzel indicated that his father had been looking to ‘flip’ the Oceania Heights properties for a profit at the peak of the real estate boom, having been seduced into purchasing them by promises of “tax free real estate” and quick investment returns.

Outlining the background to his family’s predicament in a letter to Sergeant Bowe of the Royal Bahamas Police Force, Mr Nedzel wrote: “Between 1999 and 2005, my father, Dr Gleb A. Nedzel, invested at least $1.318 million in four lots at Oceania Heights.

“This investment was sold to my father based on the promise of fast returns on investment due to all the improvements being put in at Oceania. In as little as a year, my father could resell the property and make a huge, taxfree profit.”

Mr Nedzel added: “Based on this explanation, my father cashed in his entire retirement, every penny he had, despite being 75 and still working at the time, and purchased the lots at Oceania Heights. In 2005 he tried to sell the property and found he didn’t have legal title, and so had no way of selling it.

“Oceania refused to provide the executed title documents, and he found that he had nothing for his investment – he paid for the property and could not sell it or get his money back. He spent the rest of his life trying to get his money back, in order to provide for his children, one of whom is medically disabled. He was unable to retrieve any money, and in September of 2008 he died. He spent the last years of his life broke, ashamed and defeated.”

Mr Nedzel provided Tribune Business with documents that suggest the Oceania Heights development may have had its roots in an alleged ‘gems scam’. He explained that his father had lost his entire $380,000 investment with a Canadian company, after the purported ‘gems’ the funds were invested in turned out to be industrial, rather than jewellery, grade.

But, when contacted by Mr Obront and Oceania Heights in the late 1990s, Dr Nedzel was told he could use his lost ‘gems’ investment to offset the price he paid for Exuma real estate. Oceania Heights’ marketing material, which has been supplied by more than one homeowner, is addressed to ‘Dear Collectables’ owner.

It goes on to state: “We will utilise or trade your present equity in collectables into a tax-free, and highly profitable, property participation in the Bahamas.” For further emphasis, it later adds that there are no “real estate taxes” in the Bahamas, neglecting to mention real property tax and Stamp Duty.

The upshot, Mr Nedzel told Sergeant Bowe, was that his father uiltimately acquired lots 65, 66 and 67 at Oceania Heights via a sales agreement on April 15, 1999. The purchase price was $975,000, or $325,000 per lot, but this was reduced by a $200,000 credit for the ‘gems’ investment.

Thus the final price paid by Dr Nedzel was $775,000, with Stamp Tax and legal fees taking the final cost to $917,846. The 2001 conveyance for the three properties showed Stamp Duty at $77,500.

Mr Nedzel added that his late father was encouraged by Mr Obront to use Mr Thompson as the attorney to handle the sale for him. The Bahamian attorney formed a company, Flamingo Haven, which was registered at his office, to purchase the property for Dr Nedzel, with the doctor as its beneficial owner.

Tribune Business has also obtained the January 2005 sales agreement that supports Mr Nedezl’s argument that his father swapped lot 65 for lot 92. The agreement lists the purchase price as $0, and refers to ‘credit for exchange of property’ and the ‘release’ of lot 65.

And his father also purchased lot 91, for $400,000, at the same time. This is backed by subsequent invoices sent to Mr Nedzel by Mr Thompson for Stamp Duty on the purchase and associated legal fees.

The first set of invoices, sent on December 15, 2010, were accompanied by a letter from Mr Thompson stating that the Government wanted “all outstanding fees relating to purchases in the Oceania Heights subdivision, Great Exuma, paid in full”.

Mr Thompson added: “To commence the compliance requirements, purchasers must have title deeds for their respective lots when they have completed paying the purchase prices.”

These deeds then needed to be registered with the Bahamas Investment Authority, stamped and recorded, exchange control approval obtained and a real property tax assessment declaration filed.

Mr Thompson, though, said “legal fees and disbursements” relating to Dr Nedzel’s lot purchases were still outstanding, which was why these requirements had not been met. Dr Nedzel’s family were thus billed for a collective $143,790 in Stamp Duty and legal fees for lots 66-67, and lots 91-92.

Stamp Duty alone totalled $107,500, despite the evidence from the 2001 conveyance suggesting that much of this - a $77,500 sum - had already been paid for lots 66 and lots 67 at least.

Mr Thompson then wrote to Mr Nedzel in March 2011, offering to send the conveyances to Mr O’Brien once he was paid $32,500 to cover his legal costs and a “reduced” annual registered office charge of $2,000.

This time, three invoices were sent - for lots 66, 67 and 91. The total sum amounted to $130,530, with the collective Stamp Duty at $102,000 - the rates were upped from 10 per cent to 12 per cent as per the 2010-2011 Budget.

Mr Nedzel told Sergeant Bowe he felt that Oceania Heights had effectively taken his late father’s properties “hostage”, declining to hand over title documents until Mr Thompson’s fees were paid.

Then, in November 2012, Mr Nedzel and his family were hit with a total $317,446 real property tax bill by the Government. Some $179,273 of this sum related to lots 65, 66 and 67, even though his late father had exchanged the former for lot 92. And, Mr Nedzel said, $259,582 of the total related to 10 years’ worth of arrears.

He complained to Sergeant Bowe that the ‘market value’ of the Oceania Heights properties had not been “calculated consistently”, as lots 65-67 were valued at the original purchase price, but lots 91-92 were priced higher by the Real Property Tax Office. And there was “no explanation” as to how the arrears amounts had been calculated.

Mr Nedzel told Tribune Business on the real property tax issue: “That’s the first bill I’ve seen. How can you send me a tax bill, the first I’ve ever seen, and have 10 years of arrears? Dad exchanged lot 65, which they’re also charging taxes on. They’re charging taxes to two different people on the same lot.

“The Government never replied to our e-mail about the valuation. The arrears amount is more than 10 times the annual rate. There’s no explanation as to how that was calculated; they just came up with some number. It’s kind of bizarre.”

Criticising what he described as the lack of protection for investors in the Bahamas, Mr Nedzel told Tribune Business: “From what I’m seeing over there [in the Bahamas], there are no laws and procedures, and no reasonable expectation of getting money out in a few years.

“I don’t think selling the property will get the money back that my dad invested. It was way overvalued, and Oceania Heights has not put money into the things they claimed they would - tennis courts, the hotel, the pathway to the beach. All of this means the value of the properties is less than dad paid for it 13 years ago.”

As for the meeting between homeowners and developers, which the Exuma Chamber of Commerce is attempting to organise, Mr Nedzel said: “Honestly, I don’t expect Mr Thompson or Mr Obront to ever be available. This is just an attempt to drag things out. I don’t hold out much expectation. Their position all along has been there’s one or two troublemakers who are creating mischief, and everyone else is completely happy with their investment.

“That’s just not true. As far as I understand, not a single investor has been able to sell their property and make money. We’re happy to have this meeting, we’re happy to talk about this in an adult manner, but I have no expectation it will happen.

“Unless other business owners or politicians put pressure on these guys, I don’t see it being resolved. It’s a very sad thing for the Bahamas. It’s such a beautiful country.”

Mr Nedzel said the ideal solution would be for himself and other Oceania Heights homeowners to be refunded all their money, but he did not “have a reasonable expectation of that happening” because the Bahamas did not “have a legal system that follows through with consequences”.

Fearing “the prospect of crushing legal fees to fight the case in civil court”, Mr Nedzel told Tribune Business: “My father spent the last years of his life trying to get his money back and working like a dog to try to replace some of it. Upon his death, his responsibilities fell to me, the executor of his estate.

“I am not a doctor, I make a modest salary as a software engineer. I am trying to meet the same commitments he was, and without recovering his investment I have the same fate to look forward to: Working the rest of my life trying to provide for my disabled sister. Will I be able to provide the medical services she needs? I am doing my best, while trying to get justice in the Bahamas.”