With its head office cobbled out of a series of trailers, a single branch and only $6 million worth of assets on its books, Miami’s Orange State Bank is a far cry from the $1.5-billion corporate empire Canadian financier Leonard Rosenberg attempted to build in Canada in 1982. But for Rosenberg the tiny southern U.S. bank could mean much more. Maclean’s has learned that Rosenberg is among a group of nine investors attempting to buy Orange State. If they succeed, the deal will mark the first concrete evidence that Rosenberg—who would become chairman of the bank’s board—is building again after his bid to create a financial empire, by buying up Canadian trust companies, failed last year when the Ontario government seized his holdings following a controversial multimillion-dollar real estate flip.
Rosenberg says that his proposed stake in the bank will be only a modest five per cent, worth about $150,000, but the future of the plan may hinge on his past dealings. Since Ontario took over Rosenberg’s two major holdings, Greymac Trust Co. and the Crown Trust Co., Canadian officials have been embroiled in a complex investigation of his dealings, particularly the apartment affair.
The Orange State deal pales in comparison to the massive 1982 real estate flip, in which Rosenberg bought and immediately resold 10,931 Toronto apartment units for a $42-million profit to William Player of Elmvale, Ont. Player then turned around and resold the buildings, this time to a series of numbered companies said to be owned by Arab investors. The resulting public outcry over the deal sparked the Canadian probe into the affairs of Rosenberg and his associates.
Florida state officials, who must approve the transaction, plan to contact the various Ontario officials involved in the investigation. The Ontario government, trust company officials and lawyers for I fl * Rosenberg are all in* *
volved in more than a dozen slow-moving civil court suits and countersuits. In its suits the government charges that the property transaction was a sham, while legal actions by Rosenberg and | his associates claim that their property rights have been violated by the seizures.
Rosenberg has often complained that the Ontario government put
him out of business without ever having proved any wrongdoing on his part. But he says that he has sufficient funds to take part in the Orange State deal. The $150,000 for the bank, he says, came from three sources over the past year: a consulting job with a renovation firm in his new hometown of Miami; stock market dabblings; and finder’s fees he has received for matching prospective borrowers with sources of financing. But despite his proposed appointment as the bank’s chairman of the board, Rosenberg denies that the Orange State proposal marks a return to his old ways. Said Rosenberg: “It means that somebody asked me if I wanted to invest with a group of people and I said, ‘Why not?’ ”
As required by Florida law, Rosenberg has filed detailed information on his past dealings and future intentions with the state’s Bureau of Licensing and Chartering. Rick
1 Marlin, an administrator o in Florida’s licensing buo reau, said that the final
2 decision on Rosenberg’s [5 proposed purchase will § not be made until 90 days £ after his office receives
additional information requested from the group of investors, including Rosenberg. Once that arrives, a number of factors will come into play. Said Marlin: “Our statutes require us to review the financial strength of the individuals as well as their character and business history.” As part of its search, Marlin’s office also plans to contact Rosenberg’s archrival: the Ontario government. If that happens, George McIntyre, the assistant deputy minister for financial institutions in Ontario’s ministry of consumer and commercial relations, said, “We would tell them what we perceive are the facts.”
The Crown/Greymac Trust seizure is not the only area that the Florida officials will likely look at. In September, 1981, Rosenberg made an attempt to buy into another Miami-based bank: the federally chartered Dixie National Bank. But his $9.6-million takeover offer was ultimately stalled by lack of funding and U.S. federal officials’ concerns about Rosenberg’s financial stability and hjß past business dealings. While Orange State has a Florida charter, federal officials will have a say in approving the current proposed deal as well because the tiny bank is a member of the U.S. Federal Reserve System.
Rosenberg’s pugnacious personality has at times made the so-called trust company affair seem like a personal vendetta between the financier and Robert Elgie, Ontario’s consumer and commercial relations minister. The reverberations from the Montreal-born financier’s business dealings are still being felt. The government has either sold most of the assets of his trust companies or placed them in the hands of receivers, but the tenants in the Toronto apartments remain in limbo. For the moment, the buildings’ properties are being managed by receivers, and a conflict could erupt between the Ontario and federal governments over the disposal of the real estate. The federal government’s Canada Deposit Insurance Corp., which lent the seized trust companies money to pay back depositers, wants to get as much as it can out of a sale. For Ontario’s Progressive Conservative government that poses many political problems. A dramatically low price would depress real estate markets. An excessively high one would anger tenants whose rents would likely rise.
Whatever the outcome of the Florida bank bid, an ongoing Ontario Provincial Police investigation in Canada may still continue without conclusion for some time. And while Rosenberg insists from his new Florida office that there is no legitimate reason for criminal charges, Ronald Carr, the financier’s principal lawyer, adds warily: “We anticipate charges. We would be very unrealistic if we did
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