Failed DeKalb ‘Grand Empire’ backers pay $4.6 million for alleged fraud


The developers of a long-stalled resort project in south DeKalb County have agreed to pay almost $4.6 million to settle accusations that they spent investors’ money on shopping sprees and night club carousing.

Last year the U.S. District Court in Atlanta ordered an emergency asset freeze after federal investigators alleged that the trio of developers were trying to raise money through a fraudulent $1 billion bond issue.

In a settlement filed this week in the the court, two Atlanta men, Matthew E. White and Rodney A. Zehner, and a third in Miami, Daniel J. Merandi, agreed to pay back $4,447,675 in profits and interest from the scheme, according the the U.S. Securities and Exchange Commission.

Merandi also agreed to pay a $150,000 civil penalty, and a company also accused by the SEC, M&M Financial, agreed to turn over a brokerage account containing about $124,000 to the agency.

The three men and six companies accused by the SEC of running a fraudulent investment scheme did not admit or deny guilt. In court documents, the men denied the accusations.

However, federal investigators said in court filings that the trio of developers had a long history of trying to develop a $675 million resort project near Lithonia that stalled a decade ago, most recently called the Grand Empire Palace and Resort.

In the most recent attempt, they pocketed $5.6 million from out-of-state investors that they diverted to personal use, according to the SEC.

“The defendants used investor money to fund lavish shopping sprees at Saks Fifth Avenue, Gucci, Louis Vuitton, Prada, Versace, and Republic of Couture. The defendants also used investor funds to pay numerous personal expenses and provide gifts to family and friends,” the SEC said in court filings.

In the settlement, the developers agreed not to engage in fraudulent investment or securities schemes.

This is not the first time investors and lenders have lost a lot of money on the project, which was initially called Fun World Palace and Resort.

White, Zehner and their Atlanta development company, Top Flight Development Group, landed in bankruptcy court in 2006, barely a year after announcing grand plans for a 6,500-seat arena, an indoor amusement park, water park, hotel, retail shops and other construction on more than 100 acres near I-20.

After emerging from bankruptcy, the developers created a new company and refinanced the property with new backing, but landed in bankruptcy again in 2008. The developers never got beyond clearing the land.

Fallout from the failed project helped push former NFL star Jamal Lewis into bankruptcy in 2012. Lewis, who is from Atlanta, retired in 2009 after nine seasons with the Baltimore Ravens and Cleveland Browns.

He was not named in the SEC complaint, which concerns the developers’ actions after the project’s second failure.

Along with White, Lewis had personally guaranteed a loan for the project from a New York investment fund.

In 2013 the developers tried to raise $1 billion through a bond issue but raised only the $5.6 million, according to the SEC, from investors in Canada, California and the United Kingdom.

In other DeKalb County news:



Reader Comments ...


Next Up in Business

Atlanta airport official on leave after conflict of interest concerns
Atlanta airport official on leave after conflict of interest concerns

Atlanta Mayor Kasim Reed has placed a high-ranking official at Hartsfield-Jackson International Airport on leave for possible conflict of interest – news that was immediately turned into political ammunition in the campaign to pick his successor. The action was taken against Cortez Carter, deputy general manager at the airport, whose wife owns...
Growth in tech jobs contributing to rise in Atlanta office rents
Growth in tech jobs contributing to rise in Atlanta office rents

The Atlanta area saw some of the largest increases in office rents on a percentage basis in North America over the past two years, and one report said the region’s boom in high-tech jobs has played a role in that. Metro Atlanta ranked third among the Top 30 tech markets in overall office rent growth, with rates increasing nearly 18 percent from...
This app could reduce the dangers of concussions in young athletes
This app could reduce the dangers of concussions in young athletes

Startup of the week: Who they are: PRIVIT What they do: Their app seeks to keep young athletes safer by helping coaches and trainers report and properly treat concussions and other injuries and medical conditions. Why it’s cool: There’s been plenty of buzz recently about the dangers of concussions in impact sports — including the...
The future is here: Augmented reality apps to use on iPhone or iPad

With the release of an updated mobile operating system in October, Apple’s new augmented reality platform is ready for take-off. The first generation of AR apps is available in Apple’s App Store, allowing millions of iPhone and iPad users to view three-dimensional computer-generated graphics on top of a user’s real-world view. With...
Why I’m skipping wireless charging on my iPhone 8 Plus

I’ve had the iPhone 8 Plus for about a month now, and while on launch day I thought I’d be most excited about wireless charging, I’ve found I’ve abandoned my wireless charger in favor of fast charging. I’ve come to like wireless charging when I’ve used Samsung’s phones, as it’s quite speedy, but Apple...
More Stories