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Former Riverlife developer accused in $3 million Florida fraud

in Breaking News/News

By Shereen Siewert

WAUSAU — The former principal developer in the stalled Riverlife Villages development is accused of defrauding a childhood friend of more than $3 million in a Ponzi-style financial scheme in Florida, according to federal court documents.

A lawsuit filed May 8, 2018 in U.S. District Court for the Middle District of Florida, accuses Michael Frantz and his former corporation, Frantz Community Investors, of using millions of dollars pegged for a real estate development to pay off bad debts from other projects. A copy of the complaint and associated documents is embedded below.

Court filings show Frantz and James Raders of Melbourne, Fla. were childhood friends who remained close into adulthood. In the fall of 2015, Frantz approached Raders about “high return” real estate investment opportunities. Frantz allegedly claimed to have a net worth of around $27 million, even going so far as to delivering a “misleading financial statement” to prove it, Raders alleges. Frantz also claimed Raders’ proposed investment would see about a 12 percent return.

After several meetings, Raders says he agreed to liquidate his investments and life insurance policies totaling more than $3 million and wire the money to Frantz for investment purposes. Frantz received the money — Raders’ life savings — in March 2016 by wire. But Frantz did not invest his friend’s money as promised and instead “stole Raders’ money,” the complaint reads. In the months that followed, Frantz refused to identify how the funds were used and refused to pay Raders back despite repeated promises to do so, according to court documents.

After Frantz repeatedly dodged demands for payment, Raders hired Wolz Corporate USA to perform a litigation search that revealed that Frantz was already being sued by numerous companies and individuals.

The resulting 69-page search document, which is included in federal court filings, shows that Frantz in 2015 and 2016 “deceived Raders by failing to inform Raders that Frantz was in financial trouble in his real estate investments and that Frantz could not possibly have complied with the promises he was making to Raders,” the complaint reads. Instead, Raders now believes that his funds were used to pay off other creditors from “troubled real estate projects,” court documents state.

The total investment Raders allegedly provided was $3,103,306.80. The case is currently in mediation.

Wausau Mayor Rob Mielke has repeatedly insisted that Frantz was properly vetted before the city entered into an agreement with him and his company. But the lien search outlines a long list of legal and financial troubles, several of which date back well before Frantz’s relationship with Wausau began.

To settle a 2014 Illinois lawsuit, for example, Frantz agreed to pay one plaintiff, Paul Anthony Baxter, $250,000 by Oct. 14, 2015. When Frantz failed to meet that deadline, the court ordered a $257,536.40 judgement against him on Feb. 10, 2016 — just 13 days before members of the Wausau City Council approved Frantz’s company as developer for the multi-phase, $100 million Riverlife Villages project. Each lawsuit cited in the latest case is public record and can be accessed through a basic court or lien search.

The city’s commitment to the project included about $2.75 million in grants and loans for the first phase alone. A pre-development loan of $372,462 was backed by a “personal guarantee” from Mike Frantz and his wife, according to a May email from City Attorney Anne Jacobson.

On a broader scale, the city has so far committed to about $3.3 million in borrowed funds for riverbank improvements and a pedestrian bridge in the riverfront development area, along with an additional $6.4 million in borrowed funding for infrastructure, Third Street housing and park improvements, according to city documents.

Despite Mielke’s insistence that no missteps were taken by the city in the Riverlife Villages situation, city leaders have already improved the vetting process for future public-private partnerships. Economic Development Director Chris Schock in May unveiled an updated application for potential city partners which now asks crucial questions of both developers and shareholders with at least a 20 percent stake in any proposed project that would require taxpayer investment. The new application poses questions about current and former bankruptcies, lawsuits, criminal charges and outstanding tax liens and requires applicants to explain those situations in detail before a partnership is approved.

Those changes were adopted in the wake of a March Wausau Pilot and Review investigation that revealed a second key partner in the city’s Riverlife project, Jason Sharkey, had been embroiled in a multi-million dollar fraud scheme in Colorado. Sharkey is a former partner of Frantz in Quantum Ventures, LLC, though he voluntarily withdrew from the project after news of his criminal history surfaced. The Sharkey investigation was prompted by a Google search and verified through a number of paid background check services, court documents, and interviews.

Members of the Wausau City Council on Tuesday officially ended the city’s relationship with Frantz, who until then had spearheaded the highly anticipated $100 million dollar project on the east side of the Wisconsin River. Two new interested parties have come forward with potential plans to take over the development but are only likely if the roughly $3 million in liens filed against the project are satisfied, city officials say.

Amended Frantz Complaint

litigation search

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