DAYTONA BEACH -- The stakes are high in the competition when it comes to ever-shrinking advertising revenues for the Daytona Beach News-Journal, purchased off the scrap heap of a federal-court supervised sale four years by Halifax Media for just under $20 million.
And that includes competition from the widely-popular Port Orange-based Waverly Media, which provides bus bench advertising across the Volusia County landscape.
And Considering that the Daytona Beach-based Halifax Media Group headed by Michael Redding, a former classified ad sales manager for the News-Journal,has since purchased nearly three dozen newspapers in the Southeast -- about a third of them since then from the New York Times, money is tight.
And Halifax Media is currently in negotiations to buy one of the larger daily newspapers in New England -- the Worcester Telegram & Gazette for a reported $14 million.
The Central Massachusetts metro daily was put up for sale last year by John Henry, principal owner of the Boston Red Sox who bought it along with the Boston Globe from the New York Times two years earlier.
But much closer to homer, among the News-Journal's biggest competitors locally for advertising is the widely successful Waverly Media with its bus bench advertising that is owned by Ramara Garrett and James Sotolongo.
Garrett was acquitted in a federal trial a week ago today of participating in a Volusia County mortgage fraud scheme, while her longtime live-in boyfriend and father of their 1-year-old baby girl, James Sotolongo, was found guilty by the 12-member jury.
A third defendant, Stephanie Musselwhite, also was found guilty. A fourth defendant named in a grand jury indictment, Christopher Mencis, pleaded guilty before the trial and cooperated with the government in exchange for the promise of a lenient sentence.
And though the government presented evidence to the jurors based on the grand jury's allegations that Sotolongo headed up a conspiracy through a Shell company, American Signature Homes, to defraud four banks of seven luxury homes worth just under $13 million, the News-Journal has reported far larger numbers: 70 properties and $50 million for the better part of a year now.
Musselwhite was a title company executive, Garrett was an agent with the formerly Waverly Real Estate and Mencis was a mortgage loan broker.
Those higher figures regarding number of homes and values came from an FBI complaint affidavit, which the government discarded less than a month later in favor of allegations contained in a 14-count indictment handed up by the grand jury accusing Sotolongo, Garrett, Musselwhite and Mencis of conspiring to defraud four banks involving smaller number of homes and dollar amounts.
News-Journal continues reporting larger property allegations not introduced at trial
Regardless, the News-Journal continues its full court press on the Volusia County couple, using the larger number of properties as its case in point, even though it was never part of the government's case at trial.
Here is what the News-Journal wrote as part of its editorial published in Saturday's newspaper:
It would be nice to believe the jury’s decision has closed the book on the case. That’s not the reality. At least four banks lent millions in approximately 70 loans that likely never would have been approved without the trickery engineered by James 'Jimmy' Sotolongo and his accomplices.
But the News-Journal is purposely misleading its readers and the public, knowing full well that Sotolongo and Musselwhite are scheduled for sentencing on July 28. And while Garrett has been fully acquitted, she's an after-thought in the News-Journal; which she believes is fixated on demonizing Sotolongo. Why?
"They want to make him look as bad as they can," she said, "because they want to hurt our business."
Sotolongo and Garrett are principals Waverly Media, which also is the subject of two investigations in Volusia County, both seen as having political under currents.
So much so that now, based in part on the Headline Surfer® reporting that kicked in just a few weeks before the federal trial, the FBI is now looking into Volusia County's investigation of Waverly.
FBI now looking into Volusia County's investigation of Waverly
In fact, WFTV Channel 9, the Orlando TV station, sent a news crew to the County Council meeting Thursday, where its reporter confronted County Councilman Doug Daniels on the dais during a mid-afternoon break about the FBI inquest.
County Chair Jason Davis told Headline Surfer® he was informed by the FBI that based on the 24/7 internet newspaper's reporting on the county investigations, the FBI is now taking a serious look at the county itself.
Daniels in December pushed for the hiring of his former law partner, Jonathan Kaney, Jr., to lead an investigation of in-kind political contributions made by Waverly to certain candidates for county-wide offices in the last two election cycles.
First, Daniels convinced his colleagues to censor County Attorney Daniel Eckert for giving legal advice to Volusia County Supervisor of Elections Anne McFall who began fielding complaints that some candidates -- mostly Democrats -- had received in-kind contributions that were higher than allowed. Daniels contended Eckert should have come to the council first.
McFall contacted the State Attorney's Office, which launched an investigation early last year, resulting in the arrest of then-Waverly principal Jim Brown, who was subsequently fired from Waverly after pleading no contest to providing inflated in-kind contributions. He was sentenced to community service and five years of probation late last year.
Though the State Attorney's Office investigation remains open, no more arrests are expected and its case is expected to close once the feds finish sentencing hearings in the mortgage fraud case.
Daniels convinced a majority of his colleagues to hire his former law partner, Jonathan Kaney, Jr., to investigate Waverly. Kaney then convinced the council to include an attorney friend of his, Noah McKinnon.
So far, Kaney has billed the county more than $60,000.
The Waverly investigation has been seen by critics as nothing more than a means by which certain incumbent office holders can try to to keep challengers at bay or to embarrass them through name association with in-kind contributions even though criminal charges are highly unlikely as Kaney himself has already pointed out.
Among those seen as benefiting from Kaney's investigation are three incumbent office holders, Deb Denys of New Smyrna Beach, Pat Patterson of DeLand and Pat Northey of Deltona. These three, with Daniels, leading the way, have been the biggest proponents behind the Kaney investigation of Waverly.
At-large Councilwoman Joyce Cusack of DeLand has gone as far as describing Kaney's investigation as nothing more than a "witch hunt."
She is being challenged in the 2014 election cycle by three others: Deltona City Commissioner Webster Barnaby, Holly Hill Mayor Roy Johnson and Northey, who is term-limited in her Deltona district 5 seat.
Cusack, a registered Democrat in the non-partisan seat, took in-kind contributions from Waverly in 2010, when she handily defeated Margie Patchett, co-founder of Volusia Tax Reform and a Republican.
Patterson, so far, has two challengers in Voloria Manning and Ronnie Mills, both newcomers.
Denys so far has two challengers in John Calache and David Machuga. But it's 2012 challenger Justin Kennedy of Edgewater, a former city councilwoman, she most fears, entering the race.
Kennedy, too, accepted Waverly in-kind contributions and is scheduled to appear in court Thursday before County Judge Shirley Green to challenge the legality of a subpoena sought by Kaney.
Kennedy said he fully cooperated with the State Attorney's Office last year and was assured he wasn't facing any criminal charges then. And like Cusack, sees, Kaney's investigation as nothing more than a political weapon to keep him from challenging Denys for public office.
Kennedy said he's close to making a final decision whether he'll challenge Denys.
The News-Journal has not reported on the FBI interest in Daniels and its editorial over the weekend made sure to tie in Waverly Media with the federal trial and Sotolongo's upcoming sentencing, speculating he could even get consecutive sentences of up to 30 years for the 12 counts for which he was convicted.
Here is what the News-Journal wrote in its editorial:
After Monday’s convictions, Sotolongo and Musselwhite could face 30 years in prison on each count, the same penalty faced by co-conspirator Christopher Mencis, who had already pleaded guilty. Sotolongo, Musslewhite and Mencis are scheduled to be sentenced July 28, and the judge who decides their fate could hit them with maximum sentences on each count — sentences which could be served consecutively.
Following the News-Journal's logic, Sotolongo could get a prison sentence of up to 360 years, which would set a record for white collar punishment. In fact, such punishment would more than double the 150 years imprisonmrnt stockbroker Bernie Madeoff received for swindling the numerous victims out of their life savings in a Ponzi scheme.
Following the News-Journal's logic, Sotolongo would get a prison sentence of up to 360 years, which would set a record for white collar punishment. In fact, such punishment would more than double the 150 years imprisonmrnt stockbroker Bernie Madeoff received for swindling the numerous victims out of their life savings in a Ponzi scheme.
In Sotolongo's case as federal sentencing guidelines call for a range of 12 to 15 years, though it is feasible, even though unlikely he could get the maximum of 30 years, with each count running concurrent with each other, meaning they would be simultaneously served.
On the eve of the trial, the government offered Sotolongo five years capped, which Sotolongo was willing to accept but then-Judge Roy B. Dalton, Jr. rejected it since the same deal was not offered Mencis.
Again, the News-Journal was all too complimentary of Dalton without ever mentioning his own conflicts of interests that led to his recusal. Here is what the News-Journal editorial stated:
Make no mistake: The 12-count conviction of Sotolongo, along with title agent Stephanie Musselwhite, should be counted as a victory. That’s partly due to the tenacity of U.S. District Judge Roy B. Dalton Jr., who in February bluntly rebuffed a plea deal that would have slashed the jail time Sotolongo stood to serve to five years or less.
Headline Surfer® discovered through a review of public records that Dalton had a gross conflict of interest in the case ands the internet newspaper wrote to the judge asking him why he hadn't revealed this and whether he would voluntarily step down.
Musselwhite's attorney also questioned Dalton's conflict of interest, but Headliner Surfer® wasn't aware of it until after Dalton stepped down because it was delivered as a sealed request by the defense.
The internet newspaper told the judge in its letter said it would give him a few days before writing a story detailing his past association with a bank in Orlando as a trustee that did business with an unindicted co-conspirator in the Sotolongo case, Sidney Coton of Deltona, who was listed as a key witness for the government.
When Headline Surfer® did not hear back from the judge, it published its story, headlined, "Federal judge in Daytona mortgage fraud case has bank ties with key gov't witness/unindicted co-conspirator."
That same day, just before midnight, Dalton stepped down from the case and a visiting judge from Iowa was assigned to preside over the trial, which had to be delayed nearly a month.
The government made the offer to Sotolongo because its case was considerably weaker than what the FBI had alleged in its initial complaint. In fact, not a single FBI agent testified for the government at the trial.
The News-Journal editorial page is under the direction of Scott Kent recently hired from the Panama City paper that Halifax Media Group also owns.
Headline Surfer left a voice mail message with Kent over the weekend seeking an explanation for the factual errors in the editorial, but he has not returned the call.
Headline Surfer® has left repeated email messages and calls for comment with News-Journal Editor Pat Rice, Publisher Bill Offill and Halifax Media CEO Michael Redding over the past three months as well as with reporter Lyda Longa on the federal coverage and reporter Andrew Gant on the county Waverly coverage. But there has been no response from any of the above-mentioned senior managers or newsroom staffers as to the blatant misrepresentation of factual information.
The News-Journal has relied primarily on the the initial complaint affidavit filed with the U.S. District Court on March 29, 2013, by FBI Special Agent Robert P. Robichaud II, alleging Sotolongo, Garrett, Musselwhite and Mencis were the main players in defrauding banks in the transactions of 70 upscale single-family homes in five Central Florida counties to the tune of $50 million.
Robichaud dubbed the conspiracy the "Sotolongo Mortgage Fraud Ring" or "SMFR." It named several others as complicit in the ring.
But just over three three-weeks later, specifically that April 24, a federal grand jury in U.S,. District Court handed up an indictment accusing Sotolongo, Garrett, Musselwhite and Mencis with defrauding lending institutions of seven properties totaling less than $13 million.
The indictment, which was based on the FBI complaint affidavit, became the blueprint for the government's case against Sotolongo, Garrett, Musselwhite and Mencis.
But the very next day after the grand jury indictment was entered into the court record and accessible through the clerk's office and online through "Pacer," a federal search engine program that charges a nominal fee to access federal court records, the News-Journal cited the FBI allegations.
And with the News-Journal's editorial over the weekend, the newspaper was asserting as fact the 70 properties, when in reality, the jury was only told of seven homes.