Top Boca Developer Pleads Guilty In Tax Case

TOP BOCA DEVELOPER PLEADS GUILTY IN TAX CASE
By Kevin Deutsch

Palm Beach Post
April 18 2008
FL

James Batmasian built his real estate empire while still in college
at Harvard, scooping up apartment buildings on the cheap and renting
them out. He reached another level of wealth, friends say, when he
found a real estate gold mine in South Florida.

Using long-term investment strategies while wheeling and dealing for
pricey real estate, Batmasian amassed significant wealth, became a
society figure in Boca Raton alongside his wife, Marta, and earned
a reputation as a shrewd businessman willing to push the limits to
make a profit.

One indicator of his massive fortune: In 2007, Batmasian was the
ninth-highest property taxpayer in Palm Beach County, dishing out
more than $3.3 million and breaking the top 10 of a list headed by
corporations including Florida Power & Light and BellSouth.

Federal authorities, who had been investigating Batmasian for more than
a year, found evidence he pushed the limits too far: They charged the
developer and philanthropist in federal court with avoiding paying
federal withholding income tax – a felony punishable by up to five
years in prison.

Batmasian pleaded guilty Thursday and is slated to be sentenced
July 11.

Prosecutors say Batmasian failed to collect and pay the federal
employment taxes for the first quarter of 2001 for his employees at
Investments Limited. As part of the plea, Batmasian admitted that he
failed to collect and pay more than $253,513 in FICA taxes from 2001
through 2003.

Batmasian agreed to pay back the outstanding taxes and to file amended
tax returns with the IRS for 2001 through 2003.

Batmasian’s attorney, Bruce Zimet, said prosecutors will ask
U.S. District Judge Kenneth Marra to sentence the developer to no
more than a year and one day in prison.

Zimet will ask for a lighter sentence: five months in prison and
another five of house arrest.

"He is human, he admits to his mistakes," Zimet said of his client, who
was released on bond and ordered not to leave the country. "His company
didn’t file things they should have, and that falls on his shoulders."

Major figures in South Florida’s Armenian-American community, the
Batmasians have made major donations to cultural, educational and
philanthropic organizations.

The largest owner of commercial property in downtown Boca Raton,
Batmasian became a major player in development almost immediately upon
moving here in 1983. He and his wife came to Boca for early retirement,
but nixed that plan to take advantage of South Florida’s fertile real
estate market.

At a time when many of the region’s coastline communities were
overlooked by serious investors as nothing more than spring break
retreats and retirement havens, the Batmasians invested in local
shopping centers, amassing more than 36 properties within their first
33 months, according to Investments Limited’s Web site.

Batmasian now owns more than 100 properties in downtown Boca Raton,
including the Royal Palm Place shopping center.

Charles Siemon, a land-use attorney and close friend of Batmasian’s,
called him an intelligent investor with a knack for predicting where
the market is headed.

"He’s a classic real estate investor," Siemon said. "He’s a really
good person who’s extraordinarily generous, and that’s why he’s been
a success."

But some who dealt with Siemon professionally say he was not always
fair in business.

Artist Clara Duque sued Batmasian on an allegation of civil theft
this month because he would not return three of her oil paintings
hanging in Tulio’s restaurant after he repossessed it.

She said she was "disrespected" in her dealings with the developer.

"He said he wouldn’t return the paintings to me because they want the
place to look nice, even though it’s closed," said Duque, who still
has not gotten her paintings.

In May 2004, seven former employees sued Batmasian on claims that
he forced them to work as independent contractors and did not pay
overtime and other benefits.

The lawsuit sought class-action status to cover other current and
former Batmasian employees.

The lawsuit named as defendants other Batmasian family members and
Batmasian’s corporation, Investments Limited.

An attorney for Batmasian called the claims "nonsense." The suit was
"voluntarily dismissed," according to court records.

In June 2006, during an undercover investigation by Boca Raton police,
Batmasian was charged with hiring a prostitute. He satisfied the
conditions of his plea agreement – which included staying away from
adult entertainment establishments for two months – and the state
withheld the charge.

No matter the outcome of his tax case, Batmasian figures to play
a major role in the future of downtown Boca Raton. His properties
are a key part of the city’s plan for a walkable downtown corridor,
known as the "spine," which has been in the works for decades and
which city leaders want completed by 2010.

The city wants to create the corridor between Northeast Second Street
and Palmetto Park Road to encourage people to stroll between Mizner
Park and Royal Palm Place. Siemon said he expects either Batmasian
or his wife to continue participating in negotiations involving
the project.

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