Published: Miami Herald
Date: June 26, 2008
Abstract: Through the years, tens of thousands of property owners in Broward and Miami-Dade counties have made fraudulent homestead exemption claims.
As local governments slash budgets with the downturn in the real estate market, Broward and Miami-Dade counties are more aggressively pursuing and punishing people who make fraudulent claims when it comes to homestead exemptions. Steven Grundt was among those who got caught, and he’s not remorseful. Grundt recently rented out his Cooper City home without telling the Broward County Property Appraiser’s office to remove his homestead tax benefit, as required by law. ”I figured I would try to get away with it,” said Grundt, 54, who traded his Broward digs for Bloomfield, Conn., 18 months ago. Like tens of thousands of South Floridians who have filed fraudulent claims through the years, Grundt hoped to save a few hundred dollars. But his attempt to evade taxes will cost him $600 this year and potentially more in future years. The reason: losing his homestead exemption means he won’t be protected from future tax hikes. Grundt earns $42,000 making parts for a welding equipment company and lives with his wife in Connecticut. ”Quite frankly, they’re charging way too much for property taxes,” Grundt said. Florida property owners who live in their homes qualify for a $25,000 reduction from their assessed property value, known as a homestead exemption. The Depression-era policy helped people who couldn’t afford property taxes keep their homes. But the real savings comes from the voter-approved Save Our Homes law passed in 1992. It prevents assessed values in homesteaded properties from increasing by more than 3 percent a year. In 2007, 446,584 property owners in Miami-Dade claimed a homestead exemption, and 433,258 did so in Broward. And sifting for fraudulent ones requires footwork. Rhonda Bryant is one of nine investigators for the Broward County Property Appraiser’s Department of Professional Standards and Compliance. To verify that the person claiming the homestead exemption lives there, Bryant drives to flagged properties in a county vehicle — a four-door Chevrolet Trailblazer with fewer than 30,000 miles. On a recent afternoon, her first stop was at a home in the 1200 block of Northeast Fifth Avenue in Fort Lauderdale. The property’s homestead exemption was questioned after the appraiser’s office received several letters marked “Return to Sender.” The process usually begins when letters are returned or through anonymous tips. ”At least 50 percent comes from the public’s eyes,” Bryant said while inspecting the property. “They’re getting fed up with people getting away with it. They look up their property and they’re looking at all their neighbors.” As soon as she pulled up, Bryant knew the property owner, would not qualify for a future exemption. A “For Sale” sign was posted on the corner of the picket fence. Windows were covered with plywood. Bryant strolled past a discarded pink desk missing three drawers in the driveway and an open 16-ounce can of Schlitz Malt Liquor on a window ledge. The only homesteader appeared to be a black cat that ran away as soon as Bryant approached the front door. ”This homestead is definitely getting removed,” she said. Homeowner Jerry Olah faces no penalties because Bryant couldn’t prove that he had not lived there in 2007. But he will have to pay the full amount on his 2008 tax bill next year, estimated at $4,300. Olah, who has a post office box address in Warrensburg, Mo., could not be reached for comment. In Miami-Dade, fraudulent homestead claims reached their peak in 2007 with more than $2.7 million back taxes collected from 325 properties. The amount, however, reflects homes that may have had a lien placed on their properties previous years but only recently paid back what they owed, said Michael Postell, a senior property appraiser supervisor for the Miami-Dade office. RECORD COLLECTIONS That same year, Broward County collected its highest amount: $4.6 million in back taxes from 5,183 property owners who fraudulently claimed a tax benefit. Miami-Dade’s cases are lower because they have three fewer investigators than the Broward appraiser’s office, Postell said. As Bryant drove to the next property, she talked about those who have been caught through the years. They have included Michelle Ledgister, a former National Institutes of Health employee, who threatened to send them anthrax. On June 8, 2005, investigators at the Broward County Property Appraisers office discovered Ledgister lived in Maryland. She had been renting out her Parkland home so investigators removed her tax benefit. On July 28, 2005, Ledgister left a threatening voice mail message. ”I must commend your skillful sleuths in knowing where the main campus of NIH is located,” she said. “But what they didn’t tell you is that NIH is located where infectious agents are and you guys now have anthrax spores once again, so do be careful. Toodles.” Those 45 recorded words led to her serving 90 days of house arrest and reporting to a probation officer for two years. During her federal sentencing hearing, Ledgister expressed regret, according to The Associated Press. ”I’m terribly sorry for what I’ve done,” Ledgister told a judge. Ledgister’s case is extreme. Most property owners who are caught don’t end up before a judge. Typically, a tax lien is placed on an owner’s property. The owner also faces a fine: 50 percent of the unpaid taxes for each year and interest at 15 percent per year. TALL TALES But some who have gotten caught have included attorneys and elected officials. Consider a 2006 case involving two attorneys in Boca Raton. Diana Cuervo-Parks, 55, applied for a homestead exemption on her Highland Beach condominium as a single woman, property records show. Doing so saved her $6,040.20 in 2006. But it was a fraudulent claim, an investigation by the Broward County Property Appraiser’s Office concluded. Cuervo-Parks is married and already received a homestead exemption for a property she and her husband Steven Parks, 49, own in Cooper City. A typed, anonymous letter sent to the appraiser’s office turned the couple’s savings into penalties. They recently paid $10,483.21 in taxes and fees because they failed to report their Cooper City exemption. Parks, a real estate lawyer, said it was an error. ”I don’t want to try this in the court of public opinion,” Parks said. “Errors were made, and they were taken care of.” But the case with the largest owed in back taxes involved a former executive and his politician wife. William Lobeck, the former CEO of Vanguard Car Rental and his wife Kathryn Taylor, the mayor of Tulsa, Okla., recently paid about $133,000 in back taxes, said Ron Cacciatore, who leads the investigative arm of the Broward County property appraiser’s office. The couple tried to claim a homestead exemption on their $3.3 million Fort Lauderdale home in 2006. But an investigation found the couple already had a homestead exemption on their Tulsa property. The couple — who have since filed a lawsuit to recover their back taxes — could not be reached for comment. Cacciatore said going after fraudulent filers pays off. ”That kind of money going back to the city could help pay for an ambulance or a teacher’s salary,” he said.