ST. PETERSBURG - When some novice real estate investors decided to buy in south St. Petersburg, they thought they had found the key to their financial independence.

For many, the dream consumed them. They believed so deeply that they looked beyond prostitutes standing on corners and boarded-up properties to buy several homes at a time in crime-ridden neighborhoods.

They turned the other way when settlement documents appeared peculiar. They didn't object to paying tens of thousands more for homes so other people could collect the money at closing. Altogether, 65 buyers made 303 property transactions over the past five years.

Of those transactions, 160, or 53 percent, resulted in foreclosure. Some homes went into foreclosure multiple times as the investors bought and sold among themselves. Several buyers lost everything: their homes, their credit, their marriages.

Many of the buyers have something else in common: They purchased their investments from four companies run by Tampa businessman Joseph F. Daniele.

'These are adults that wanted to get into the real estate market and now that things don't work out, they want to blame someone,' Daniele said in a recent telephone interview. 'But in hindsight, I probably wouldn't tell anyone to buy 10 to 15 homes at once.'

Documents Show Discrepancies

The Tampa Tribune interviewed more than two dozen buyers, real estate agents and others involved in the sales. The paper reviewed public property documents on hundreds of homes and obtained settlement documents on 20 transactions. A three-month investigation of Daniele and his companies found:

•Settlement documents indicate buyers consistently made $15,000 to $25,000 down payments. However, buyers say they did not bring any money to the table. Misrepresenting funds to lenders is against federal law.

Daniele said he doesn't prepare settlement documents.

•In 11 cases, settlement documents show prices included a total of $272,716 paid to companies Daniele operates. Daniele said the money was to pay for repairs, but a seller and some buyers dispute this.

•Most buyers interviewed said promised repairs weren't always made and work was shoddy, even though documents show Daniele's companies received thousands of dollars, as much as $35,010, for example, at one closing. Daniele said the money was for work done before the sale.

•The Tribune reviewed public permit records on a sampling of 36 homes. On 17, documents show no permits were issued at the time of purchase. Permits for new roofs were issued on four homes. Permits were issued for electrical and plumbing work, and minor building alterations on the rest. An attorney for Daniele said thousands of dollars' worth of work that does not require permits - such as adding flooring or new cabinets - was done to the homes.

•One lender confirmed to the Tribune that it received a sales contract with a higher sales price than the one turned in to a real estate broker. It is against federal law to withhold or misrepresent information that could influence a lender's decision to fund a loan.

Daniele's deals shine a spotlight on what can happen when investor enthusiasm and the lure of opportunity are mixed with the torrid real estate market Florida experienced in recent years. When the market turned sour, foreclosures skyrocketed statewide. As a result, lenders were on the hook for millions of dollars in loans, and buyers were left with ruined credit.

What happened in south St. Petersburg had even more far-reaching effects. The inflated sales prices may have helped artificially drive up prices on other homes, putting them out of reach for some buyers. And all the values in the neighborhood could be pushed down by the abundant foreclosures.

'When public records show much higher sales prices than what actually occurred, legitimate purchasers are then stuck with homes that aren't worth what they've paid for them,' said Joan Ferenczy, director of institutional investigations for Freddie Mac, the nation's second-largest buyer and guarantor of home mortgages.

An Alluring Sales Pitch

Daniele, 36, is owner and managing member of Titan Development Group LLC, a company he runs out of his waterfront home in a gated community overlooking Old Tampa Bay. He runs several companies that rehab houses and bring new, affordable modular homes into south St. Petersburg.

He also heads an investment program. Buyers said the sales pitch was alluring: Purchase homes with no money down, and walk away from closing with $1,500 cash. Daniele and his associates promised to help find tenants and fix up the homes so they would be eligible for federal rent subsidies that would cover the mortgage.

Some buyers said they were given cash to deposit into their checking accounts to show lenders they could afford the homes.

Daniele's companies didn't always follow through with promised repairs, or they did work that had to be redone later, said the majority of buyers interviewed. Buyers said they were encouraged by Daniele or representatives of his company to buy as many homes as they qualified for.

The Tribune attempted to contact the 65 buyers, but in many cases, they had moved and phone numbers could not be found. Records show 34 buyers had properties in foreclosure.

Complaints about Daniele and his investment program aren't new. ABN Amro Mortgage Group sued him in Ohio in 2005, calling him 'the primary architect of the scheme' involving hundreds of homes that went into foreclosure, leaving the lender with millions of dollars in loan losses. The case is in court.

Daniele denies those allegations and said there's nothing wrong with his business practices.

'I know people are going into foreclosure, but it's not because of me,' Daniele said. 'We've done a lot of good. We've taken total crack neighborhoods and made them better.'

The buyers in foreclosure bought too many homes or took out loans they couldn't afford, he told the Tribune recently. The money his companies received at closing included a profit but was mostly used to repay them for repairs. Sure, his companies recommended mortgage brokers, lenders and appraisers to clients, but buyers were free to use whomever they wanted, he said.

He said buyers' foreclosures are a result of the decline in the housing market and may have happened whether he was involved or not.

The foreclosure rate in Florida - one foreclosure filing for every 347 households - is more than double what it was last year and is more than twice the national average. However, 55 of the 303 homes in the investment program went into foreclosure from 2002 to 2005, during the real estate boom years.

'I Was Stupid,' Buyer Says

It was 2005, at the peak of Florida's hot real estate market, and Eddie Holt wanted desperately to dip his toes in home investing before it was too late. When he saw an ad in a local newspaper for 'no money down' investment homes, it reminded him of the tempting testimonials on late-night, get-rich-quick infomercials. He quickly responded.

Holt bought the first home in March. In all, Daniele and his companies arranged for Holt to buy seven homes in four months, totaling $866,000. He said he didn't bring a dime to the closing, even though he has settlement documents showing he paid a total of $123,978 in down payments on six of the homes.

Holt, who works for a waste management company in Tampa, signed all the settlement documents at a Dunkin Donuts and a diner. The real estate forms were blank.

'I was stupid,' Holt said recently. 'I realize that now. I was blinded by a dream. Chasing that dream, I lost everything. I didn't know when to say no.'

Shortly before one of the deals closed, Holt said, an employee from the title agency asked him to meet at AmSouth Bank. The employee handed him $60,000 in cash to deposit, Holt said. They collected the deposit ticket - the proof a lender needed to fund the loan - then immediately received a cashier's check for the amount, which was turned over to the title company employee. A similar scenario was echoed by another buyer.

Daniele told the Tribune he isn't aware of this happening on any of his transactions and said he would not put money into anyone's account or provide them with money for a down payment.

Daniele didn't find tenants or make all the promised repairs, Holt said, and there were problems with the work that was done. He tried to rent the homes but couldn't collect enough rent to cover the payments.

In a written statement from his attorney, Daniele said he knows nothing about the financial part of Holt's transactions and that Holt was happy with his purchases until Titan declined his request for a job. Daniele said Holt was in an 'investment group with two other disgruntled investors' and that all three are 'coordinating an effort to disparage Titan's reputation.'

Holt disputed this, saying he never wanted to work for Daniele and he has never heard of the people Daniele said he invested with.

'I was on my own, trusting' Daniele, Holt said, noting he used the mortgage brokers and appraisers that Daniele's companies recommended. 'That's how I got into this mess.'

Holt lost three of his homes to lenders in foreclosure, and he said he sold the rest to other real estate investors to avoid foreclosure. The ordeal ruined his marriage and his credit. Now, he rents a home.

Holt called Daniele to complain, but he said Daniele laughed and refused to meet him. Daniele didn't respond to Holt's claim.

Manager Blames Buyers

Few of Daniele's buyers met him, dealing instead with a real estate agent, company employees and Robert J. Rufo Jr., the project manager for all four of Daniele's companies.

Rufo was a mortgage broker in Ohio and arranged loans for several of Daniele's buyers there, he said. When Daniele moved to Florida in 2002 to expand his investment program, Rufo said, Daniele hired him to come along and serve as the project manager.

He said the companies do quality work, and the buyers in foreclosure must have done a poor job managing their homes.

'I'm proud of the work I do and think our company has been instrumental in changing south St. Petersburg for the better,' Rufo said. 'I think we should be given a medal.'

Persistent buyers were able to speak with Daniele on the phone or contact him by e-mail. They said he had a gift for putting them at ease and seemed to genuinely care about them - until, that is, they said they didn't want to buy any more homes.

Clevan and Tonya Smart of St. Petersburg said Daniele was savvy and seemed to live the kind of life they wanted. They were impressed when he called while vacationing in Hawaii.

'He always had a solution to every problem,' Clevan Smart said. The Smarts bought five houses over five months in 2005. They lost every one in foreclosure. They received money at each closing, and when they were reluctant to close on some homes, they said, Daniele sent them an extra $500. Daniele told them they needed to close on several homes quickly, and if they faltered, their other pending purchases would be in jeopardy.

When they complained about repair work and decided to stop buying, they said, Daniele stopped returning their calls. Daniele did not respond to the Smarts' claim.

Daniele seemed knowledgeable about real estate, buyers said. One received a seven-page pamphlet entitled 'Our Goal is to Help Investors Reach Financial Independence.' The brochure paints Daniele as the picture of success: a college dropout from Akron, Ohio, who purchased his first home in 1994 using credit cards. Within three years, the pamphlet says, he had 160 rental properties in Ohio.

The brochure goes on to say Daniele developed the Titan company to rehab homes in Ohio, the Tampa Bay area, Jacksonville and North Carolina, then sell them to other investors.

In 2004, he built a 12,000-square-foot home in Odessa's upscale Stillwater neighborhood. He sold the home for $2.7 million in 2005 and built a home at 4118 Causeway Vista, his primary residence and the address of his four companies. That home is valued at $1.5 million, according to property tax records.

How The Deals Worked

Settlement documents and contracts obtained by the Tribune show how some of Daniele's deals worked.

One home, at 5027 Fourth Ave. S., was listed for sale at $99,000. The sales contract shows Gator Real Estate Investments LTD, one of Daniele's companies, agreed to purchase it for $95,000, the amount the seller said he received.

But shortly before the sale closed, the buyer changed from Gator to a private investor who bought multiple homes through Daniele's companies. The final sales price was $153,000, and Daniele's Titan company received $30,768. Premiere Financial LLC, which was managed by a business partner of Daniele's, received $14,800.

The lender on the home, Orlando-based Pinnacle Financial Funding Corp., reviewed the settlement document and contract obtained by the Tribune. Carrie Gilbert, quality review specialist, said Pinnacle received a different sales contract that showed the $153,000 sales price, and the appraisal backed up the price. The lender is now reviewing the transaction, Gilbert said, because the loan wasn't made with complete information.

The seller, Bert Serra, sold nine homes to buyers in the real estate program. The Tribune obtained settlement documents on eight purchases that show each one was structured the same way as the Fourth Avenue transaction, with Daniele's companies receiving a combined $214,961 at closing.

When asked why his companies received so much cash, Daniele said it was to repay him for work he had done to the homes before closing. 'Would you do work on a home and then just sell it for what you put into it, without making a profit?' he asked.

The only permit issued for the Fourth Avenue home was for minor electrical work and a service upgrade, work that would typically cost $1,200 to $1,500, said Rick Dunn, building official for St. Petersburg.

An attorney representing Daniele and Titan, Ryan Griffin of Johnson, Pope, Boker, Ruppel & Burns in Clearwater, said Daniele's companies did thousands of dollars of work, such as installing new windows, countertops and carpet. Some of the work didn't require permits, Griffin said.

Daniele and Rufo said they had an arrangement with Serra to buy his houses for the asking prices but fix up the homes before closing. If they could sell the homes for a higher amount, their companies would receive the difference in price. Rufo supplied the Tribune with a contract outlining the agreement. The contract wasn't signed, and Serra and his real estate agent, Wendy Nash, said they never saw such a document.

Nash said Daniele's companies arranged to get into the houses to do some repairs before the closings but said no major work was done. 'They could build a whole new house in south St. Pete for that kind money,' Nash said of the money Daniele's companies received at each closing.

Daniele's attorney recently invited the Tribune to inspect several homes with Rufo, including homes Daniele's companies are renovating and others that buyers have complained about. Several homes had recent additions, such as tile, new countertops and carpet. Structural work was being done on one home.

One of the homes Serra sold, at 1766 27th St. S., had a newer roof and siding. Rufo said the work was done before closing, but Nash disputes that.

Another one of Serra's homes, at 3455 15th Ave. S., sold to a Daniele buyer in February 2006 for $130,000. Serra said he received just $72,500. Gator received $35,010, and Premiere Financial received $21,000 at closing. The home went into foreclosure in September, and the lender is trying to sell it now for $74,900.

Serra said the deals were odd, but he went along because he was paid what he thought the homes were worth. The higher recorded price has caused him problems, though. The Internal Revenue Service called last year wanting to know why he hadn't paid taxes on the full amount.

'Try explaining that you didn't make all that money,' Serra said.

He said he provided the IRS documents on all his transactions with Daniele's companies but hasn't heard back.

Disgruntled Ohio Buyers

Before anyone in Florida had heard of Daniele, he had made a name for himself in Ohio, selling hundreds of homes in Akron, Cleveland, Columbus and other cities.

Many of those buyers were among Daniele's first investors in St. Petersburg.

Tim Damiano and his wife, Emily Estrada, were among them. Daniele kept his promises in the beginning, Damiano said. They told friends, and soon 'everyone started buying, sight unseen.'

By the time Daniele's companies stopped doing work on the houses, they owned 11 homes in St. Petersburg, Damiano said. He said they tried to sell but were told by an appraiser that the homes weren't worth what they paid. Five went into foreclosure, and he said they sold others to avoid losing them to a bank.

'I can't believe he's still doing this,' Damiano said recently. 'It's amazing no one has stopped him.'

In another case, one Ohio man's name was used to buy homes in south St. Petersburg in 2002, but he said he knew nothing about it.

Steven Yaffe of Bexley, Ohio, said he considered Daniele's program. He said he never bought a home, but deeds show he purchased seven. When the homes were sold a month later, Yaffe's or his wife's signature was on the documents. Yaffe said they never signed.

'I can't believe this,' Yaffe told the Tribune. 'How can people just put property in your name?'

In five cases, the homes were deeded to Yaffe for about $20,000 more than Daniele's company paid for them. No mortgages were taken out. The homes were then deeded at the higher price to another investor who sold again.

Daniele said he doesn't remember Yaffe or recall the sales, although Daniele's signature appears on warranty deeds. Damiano also said several homes were put in his name and that Daniele asked him to refinance the homes.

Real estate experts say these types of transactions can be used to increase the sales price or conceal involvement in a later transaction.

'The bank would end up lending on the higher amount and could take a loss,' said Doug Pollock, president of Sanford-based Information Data Services, which investigates problem mortgages for lenders.

The lender suing Daniele and others in Ohio claims in the suit that loans were presented as refinances when they were really purchases; appraisals were inflated and sometimes weren't performed; and false information regarding the borrower's credit was provided.

The mortgage company was 'under the direction or control of Daniele' and processed as many as 10 loans a week for Daniele's buyers, according to the suit.

The attorney representing Daniele in the case said that's not true.

'He was simply a seller of properties,' said Frank J. Witschey, an attorney with Witschey, Witschey & Firestine Co. in Akron. 'There were numerous transactions that were fine and everyone was happy.'

Satisfied Customers

There have been some satisfied buyers. Daniele's attorney provided Jay Pasqualichio, who said he has 14 properties and that Daniele made the requested improvements. He said the prices he paid for properties were fair.

Pasqualichio said his deals were similar to those described by buyers interviewed by the Tribune. He said he didn't make a down payment at closing, even though he said settlement documents show he did.

'There's ways you do real estate. Sometimes you have to have money down to get loans,' he said.

Seminole buyer Dan Mondello also said he is happy with the financial outcome of his investment properties, although he's now curious about the way the deals were structured.

Mondello said he has purchased 30 homes through Daniele and has had success as a landlord. He has even sold a few for a profit.

'It's not easy, but I've worked really hard at this,' Mondello said. 'I think some of the other buyers thought they would get rich quick and got in over their heads.'

Just like other buyers interviewed by the Tribune, Mondello did not put money down at closing, even though his settlement documents show he did.

Daniele 'told me it was legal and that the money was coming from his proceeds,' Mondello said. 'He said the title company was insured and liable if it wasn't OK.'

Daniele said he has nothing to do with the financing arrangements.

'Now I'm starting to think I should have asked more questions,' Mondello said.

Meanwhile, the Ohio lawsuit involving Daniele is unresolved. He contends he had no part in any fraud and that the lender is blaming the wrong person. He said he expects to be dropped from the suit soon.

He has also made some changes to his investment program, now focusing on selling modular homes. He said he has sold 50 and thinks real estate investors will have better luck with the new homes because they can charge more rent.

He's also expanding his program to Texas.

Back in south St. Petersburg, more of Daniele's buyers are struggling to hold on to their homes.

This month, six homes have gone into foreclosure.

Researcher Michael Messano contributed to this report. Reporter Shannon Behnken can be reached at sbehnken@tampatrib.com or (813) 259-7804.