“When did the till stop ringing?” Fort Myers Beach Mayor Dan Allers asked at a recent Town Council meeting while considering the case of Jesse Schmid and violations on the property at 80 Avenue E.

Schmid, a real estate developer who owns White Sand Properties of Fort Myers Beach, LLC, is embroiled in a heated dispute that came to a head at last week’s Council Meeting. Schmid faces over $1.25 million in fines and violations. The developer accuses the Town of malfeasance under both the former and current administrations and of targeting and misconduct by former Town Manager Roger Hernstadt and others. He calls the levy a “Fort Myers Beach Exit Tax.”

Schmid says he owes nothing, and the Town Council is mishandling facts to create a baseless “EXIT TAX” because they are cash-strapped.

“I’ve dealt with this for years. I am tired of dealing with it. All right, I’m tired. I’ve now got two young boys in wheelchairs at home. I don’t have time for this anymore. I’m done, but I’m serious. Well, I mean, I’ve had it with the last administration. I’m done with this administration,” Jesse Schmid told the FMB Town Council.

Jesse Schmid is ready to sue for millions. He claims to have evidence that will destroy FMB and the current Town Council.

“If they want to try me, they will run smack into a wrecking ball,” Schmid says. When the dust settles, he says, “Lee County will be running [FMB] because too many people will have left in bracelets.”

The Song Remains the Same

Some FMB denizens say that we’ve heard the Schmid story before. Certain real estate developers and the Town Council were locking horns over millions of dollars in fines and allegations of “targeting.” Violation tickets were foisted upon properties, some blowing away in the wind, to the tune of $150, $250, or $1,000 a day.

A case in point is Terry Persaud. Since purchasing a Times Square property for $3.5 million in 2014, regulatory issues quickly hampered his plans for additional improvements. The matter devolved into litigation when Persaud contested the Town’s decision to revoke his liquor license when they labeled his Times Square property “abandoned.”

“My property was not abandoned but ‘Under Construction,’” the developer said. He went to court in Lee County and won.

Persaud had accused the Town of favoritism, asserting, “Our location on the beach is the best. The Town can’t play favorites. There is a divided loyalty to Tom Torgeson and TPI.” A full-scale war was brewing.

That all ended on September 28, 2022. Hurricane Ian made landfall. The material edifices that marked the locality were destroyed. Buildings were wiped away – and with them, the continued predicate for Town violations enforcement.

However, the bonds that make a community were strengthened. FMB saw an unprecedented outpouring of fellowship and camaraderie. Neighbors helped neighbors, and mutual support formed deeper, lasting relationships.

“Turn the Page” was the new mantra. Developer Terry Persaud met with the Town Council and struck a deal to end the pre-Ian acrimony.

By January, it was all water under the bridge. The Town Council reduced Persaud’s fines from $2.7 million to $250,000 and a $500,000 “good faith” bond. No one was “happy.” Persaud expressed dissatisfaction, saying, “This has been going on too long. I have gone above and beyond to create an agreement I don’t agree with.”

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FL NEWS: Beachfront Bargain or Town Turmoil? The “Sweetheart Deal” That Is Rocking Fort Myers Beach

RICHARD LUTHMANN

JAN 3

An alleged “Sweetheart Deal” involving FMB property developer Terry Persaud and the Town Council ignited widespread interest and debate. The deal was pivotal in resolving Persaud’s longstanding alleged violations.

Read full story

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But they managed to Turn the Page. And in many ways, it was the perfect bargain. Neither side was right. Neither side was wrong. And neither side left happy.

Persaud’s struggle raised questions about potential disparities in regulatory enforcement, particularly when comparing smaller entities like his to larger ones such as TPI/Margaritaville. For many with vision and savvy, the Persaud case also signaled an opportunity for FMB to engage in a broader dialogue about development, the role of small businesses, and equitable treatment, which is particularly important in the Hurricane rebuild and economic growth.

According to a Beach Talk Radio report, Persaud now seeks to include 24 hotel rooms for a full-scale Times Square redevelopment project.

Persaud’s Case Mentioned Related to the Schmid Matter

At last week’s Town Council hearing, Vice Mayor Jim Atterholt was quick to ask the right questions about the Schmid matter – whether it was a Persaud “re-run”:

Madam Attorney in an unrelated case, I don’t want to put words in your mouth, you’ve had some concerns about how fines have been, for lack of a better term adjudicated. Have you had a chance to analyze the $1 million of accrued fines in this particular instance?

Town Attorney Becky Vose from Vose Law Firm, LLP, was quick to respond:

Yes. These weren’t they were two separate violations. And they were and I don’t remember if it was $250 a day or $150…It was $250, which is perfectly legal under Florida law, and you can have two separate violations. And it’s just it’s a matter of time. $250 a day adds up over a substantial period of time.

In times past, that was how business was done. The Town needed revenues, so specific properties received fines. The till kept ringing. When the developers finally needed something or foreclosure proceedings were instituted, they would sit down with the former Town Manager, and everyone would strike a deal – or litigation would ensue. Properties would be brought into compliance, and the FMB Town treasury would be satisfied immediately or after years in the courts and payments to lawyers and other contractors.

For many, this is the “Hernstadt Method,” named after former Town Manager Roger Hernstadt. At least three Council Members, Jim Atterholt, John King, and Karen Woodson, ran on campaign platforms critical of Hernstadt and were subsequently elected. Woodson, supported by King, called for Hernstadt’s removal the instant she was elected in November 2022, weeks after Ian struck.

Particularly after Ian and in direct response to the popular mandate, the Town Council moved to a new, more “user-friendly” approach to promoting economic development and balancing quality-of-life regulations.

Ghosts of the Hernstadt Era

The current drama centered on the property at 80 Avenue E began in December 2019. Under Schmid’s leadership, White Sand Properties negotiated with Hernstadt to resolve outstanding property liens as part of a broader agreement to purchase several properties from FMB real estate maven Joe Orlandini.

Schmid says he settled all fines linked to previous violations, but Hernstadt never removed the liens.

“For years, Roger [Hernstadt] operated like a thug. I bought the 80 Avenue E property from [Joe] Orlandini and paid the town the agreed-upon amounts. They denied I paid until I showed them the cashed check – and then went about locating the money,” Schmid said. “I wouldn’t be surprised if Roger intended to charge me twice for the same payment.”

At the Council meeting, White Sand Properties argued for a dismissal of all fines based on its non-offender status in the violations at 80 Avenue E. Standing next to his attorney Steven Ramunni of LaBelle, Schmid highlighted White Sand’s full compliance and the settlement agreement from 2019, evidenced by a cashed $50,000 check and subsequent communications from the town confirming the resolution of the liens.

These documents were filed with the Town Council before the meeting and are publicly available.

Vice Mayor Jim Atterholt acknowledged his prior work with Schmid to resolve the matter but indicated that other Town staff later handled it.

“To the Mayor’s point, I don’t know why we’re now just handling this. But to Mr. Schmidt’s point, he did try to resolve this two and a half years ago because I was trying to act as a liaison to that, and that was challenging. So, why we’re still here today, I don’t know. But I did try to resolve it two and a half years ago. I can attest to that. I don’t know who was right or who was wrong. But I do know he certainly presented his case and why he didn’t come before the full Council, I don’t know,” Vice Mayor Atterholt said.

Bad Records, Willful Ignorance, or Sheer Incompetence?

The Council’s lack of clear communication and ignorance of the documented resolution of the property’s issues in 2019 and 2020 have fueled Schmid’s frustration and his claims of wrongdoing.

“[The Town] has no grasp on its own facts. Either they don’t have their own records, are being told to ignore them, or they don’t know what they are looking at,” Schmid said. “Either way, it’s not right, and they’ve got this one all wrong,” he said.

Schmid had his lawyer press for an immediate resolution by the Town Council. The developer had offered $15,000 to end the situation. Mayor Dan Allers expressed skepticism.

Attorney Steve Ramunni: We want to put a finality to it today, if we could.

Mayor Dan Allers: I certainly understand and I’ve talked with Jesse before, about, you know, after the storm, the issues that he was facing. So I completely understand. But you have to also understand, although we understand there, at least I understand that it never did get brought into compliance until the storm took it away. It’s been well over two years that this could have been resolved understand the previous, but it still could have been resolved. And it didn’t. So I mean, as much as there’s it’s not your fault. Some of it is your fault. And I think you’ve admitted that. So. Personally, I don’t think 15,000 is the right number. And I don’t necessarily agree with the top number either. But it there’s a lot of things in there that could have been handled differently to get us to a different point. But what that magic number is, Becky, if you can make recommendations or not. You’ve seen these cases, what is something like this? That’s because the $50,000 was paid, but it was paid for? What we claim has been my if I’m understanding this correctly, is gone for the magistrate and she feels that this was for a different violation for different property.

Jesse Schmidt: No, no, no, no, no, no. That’s not at all. Correct.

Attorney Steve Ramunni: We’re not getting credit for the $50,000 to begin with?

Town Attorney Becky Vose: You you will be getting credit for it. That’s part of the amended complaint that we’ve already we’ve already drafted the amended complaint.

Mayor Dan Allers: So the $50,000 has been credited again. Okay.

Attorney Steve Ramunni: Credit on the compliance affidavit but, but the whole intent was paid on that lien, so let’s be done.

Crediting the $50,000 payment, led by Mayor Dan Allers and advised by Town Attorney Becky Vose, the Town Council levied an additional $250,000 “Exit Tax” against Schmid. The Council, excluding Scott Safford, who recused himself, unanimously supported the fine 4-0.

A ‘Smoking Gun’ Letter?

While the natural inclination was to treat the Schmid case like the Persaud case, the two had entirely different fact patterns. This difference is evidenced by a “Smoking Gun” letter from FMB Town Development dated November 18, 2020 – almost a full year after FMB Town cashed Schmid’s check. The evidence supports Schmid’s claim, with the letter explicitly stating, “There are no active Code Enforcement cases on this property (80 Avenue E).“

In early November 2020, White Sand submitted a zoning verification letter. The response was clear. At least as of that date, the 80 Avenue E property was free and clear of all violations.

This evidence—on the Town’s letterhead—makes the levied fines and violations impossible. It also marshals to Schmid an unlikely supporter.

“We always try to stay above the fray. We watched the May 6 Council Meeting, and I was upset about what Jesse Schmid said, which was defamatory and libelous. Our lawyers are already exploring options,” Joe Orlandini said.

We showed the FMB real estate virtuoso the November 18, 2020, letter. He was not surprised.

“That letter shows what we have said all along. When we make a deal and have obligations, we meet those obligations,” Orlandini said. “We paid what Roger said we were obligated to on the 80 Avenue E deal, and the Town’s records memorialize it.”

Orlandini believes Schmid is a “character,” but his claims against the Town, particularly under the Hernstadt administration, have merit.

“To call [Roger’s] entire modus operandi a shakedown would be to put it mildly. He consistently changed the terms of deals we negotiated in good faith to his benefit,” Orlandini said.

Another source close to the FMB government with knowledge of the facts said Hernstadt proceeded as Town Manager without a personnel manager or a finance manager. “There were no real checks and balances. And there were always problems with money, crediting, and follow-up. Liens that should have been removed stayed in place, so [Schmid’s] claims don’t surprise me,” the anonymous source said.

Another community leader who did not wish to be named pointed to the mathematical impossibility of the violations claimed against Schmid and White Sand.

“The lawyers agreed the number is $250 per day. If you count the days—every day—from November 18, 2020, until the day of Ian, you have 1,044 days. I’m no mathematician, but $250 times 1,044 isn’t $1.25 million. It’s $261,000 – a little over the $250,000 the Town Council told Jesse to pay. And they agreed he had already paid the original $50,000. If he goes to Court, he will win and probably get attorneys’ fees, sanctions, and punitive damages. He’ll also get all the discovery he wants about the Town’s financial dealings during Roger Hernstadt’s tenure as town manager,” the unnamed community leader source said.

Even Terry Persaud said that dealing with Hernstadt, compared to current Town Manager Andy Hyatt and Operations Manager Frankie Kropacek, is night and day.

“I had a problem with a violation. The picture was not right. It had to be at least three months old. I told Andy this, and he took it back to his people. When he returned, he said I was right; the digital stamp on the picture was old, and the situation had been corrected. Nothing like that would have happened in the past,” he said.

Hasty Town Council Decisions?

By the end of the Town Council’s consideration of the 80 Avenue E property, Mayor Allers did his best “Monty Hall” and solicited a number. “Let’s get to a number and whatever that number is, and if somebody’s got a number put it out there.”

Council Member King obliged him by throwing out the $250,000 figure, which Town Attorney Vose quickly endorsed. “That’s roughly one-quarter of what we will get in the litigation,” she said.

Vice Mayor Atterholt immediately asked about the litigation risks.

“I don’t think there really is any risk involved in the litigation. It is a lot of work for my firm, but hey, we take it on. So, you know, I’m not worried about the work we would do on it. But I don’t see – there’s no counterclaim, there’s no basis for a counterclaim, I don’t see a risk,” Town Attorney Vose said.

This decision came despite Council Members King and Woodson previously admitting their lack of awareness regarding the property’s history on the record.

We subsequently spoke to Karen Woodson last week at her 49th birthday party. We showed her the November 18, 2020 letter. She was unaware of the letter’s existence until that time.

“As this matter is in litigation, I must consult with the Town Attorney and have nothing to say on the merits. However, I can tell you that had I seen that letter, I would not have voted as I did. I don’t think [John King] would have either. We were presented limited facts,” Council Member Woodson said.

We spoke to Mayor Allers, who immediately defended his position on the Schmid matter.

“Much of this occurred before my watch, under Roger,” Mayor Allers said.

Dan Allers took office as a Town Council Member in April 2020.

Once he reviewed the November 18, 2020, letter we forwarded him, we asked about a forensic accounting for Roger’s time as Town Manager. He said he was inclined to follow the Town audit committee’s recent recommendation that such a review was unnecessary.

The Mayor was also dismissive of Schmid’s allegations that the Mayor was “conflicted” and “in Tom Torgeson’s pocket.”

“[Jesse Schmid] can say what he wants to say. The fact is that there were violations, and he wanted a number to resolve them that day, so we gave him one. He didn’t even pay the $200 filing fee he was supposed to pay to bring the issue up on the Town Council Agenda,” Mayor Allers said.

Vice Mayor Atterholt echoed the tough job everyone on the Town Council has. “We are an island, and it’s almost impossible for someone to be in business and not have dealings. I know [Mayor] Dan to be one of the hardest-working people I know. He makes little more than $19,000 as Mayor, yet he’s working from morning to night for our Town.”

Mayor Allers, Vice Mayor Atterholt, and Council Member Scott Safford are all running for re-election this November.

As stated above, Council Member Safford recused himself from the 80 Avenue E matter after making disclosures and following the Town Attorney’s recommendation.

The Wrecking Ball?

Schmidt says he was ready to walk away for $50,000 at the meeting. Now, he views the $250,000 sum as a slap in the face and an “Illegal Exit Tax.”

“Their number is so far off-base, I’m ready for the wrecking ball. No one can be this stupid – this was all planned. I’m going to expose them all,” Schmid said.

The White Sand owner says he can prove corrupt practices within Fort Myers Beach’s governance—before and after the storm. Schmid believes Hernstadt engaged in contractor fraud and possible hidden assets, and he’s not alone.

“I think the only records anyone really wants to see are Roger Hernstadt’s Belize bank accounts,” a long-time FMB resident said anonymously.

While Mayor Allers avoided discussing Hernstadt’s tenure, he could not confirm whether all pertinent documents related to the former Town Manager’s dealings with Schmidt and White Sand were reviewed by current Town Attorney Stuparich. He also could not confirm whether Attorney John R. Herin, Jr., of Fox Rothschild LLP, the law firm representing the Town during the Hernstadt administration, had reviewed all pertinent documents.

With potential court proceedings on the horizon, the dispute between Jesse Schmid and the FMB Township could unveil deeper issues within the former administration and its handling of real estate developers. Schmid, determined to clear his name and finances, is ready to take his case to court. According to legal experts, he may become entitled to a slew of documents in discovery.

Martina Hedvicek is an attorney and former State Prosecutor in Charlotte County who practices law throughout Southwest Florida. We asked generally what happens to client files in a lawyer’s possession after a representation has ended. We also asked about post-natural disaster circumstances we have seen recently in Southwest Florida after Ian. Attorney Hedvicek said ethical rules allowed her to speak generally on the issue for educational and informational purposes only and that anyone with a specific legal problem should seek qualified counsel from an attorney through the Florida Bar.

“Attorneys representing governmental entities, including cities or towns, owe complex and special duties in various instances. In most cases, the ultimate client is the state or municipality, which has a right to all the files and records generated during the representation. In many instances, there may be an additional public recordkeeping obligation,” Attorney Hedvicek said.

The seasoned litigation attorney said that lawyers must retain files for a reasonable time, even after the attorney-client relationship has terminated.

“Florida Ethics Opinions are clear that if an attorney wishes to dispose of files generated during a representation, the client should be notified and asked to pick up the material or give authority to dispose of it if there is any question,” Attorney Hedvicek said.

The noted barrister also says that claims of wrongdoing can be very serious and legally complex in a litigation setting.

“Ethical considerations often include defining the limits of attorney-client privilege in dealings with town officials and others,” says Attorney Hedvicek. “For example, the attorney-client privilege is waived when third parties are present in a communication. Also, the privilege will not cover the perpetration of a crime or fraud. These are grave considerations.”

As if mountains of forced legal disclosures and sizeable legal bills are not its pitfall, local developer Terry Persaud pointed out the potential budget shortfalls facing the town post-2025. He emphasized the need for a more substantial tax base and increased commercial activity instead of punitive financial measures against developers like Schmid and others.

“Sometimes, the town officials create unnecessary conflict among community members. We cannot afford that distraction at this time. FMB neither have the money nor the time to waste,” Persaud said.

Jesse Schmid believes he can litigate from a position of strength.

“Anyone looking at FMB’s public numbers shows big question marks in the upcoming budgets. How do they generate that revenue when they litigate, pay lawyers, and lose? How do they attract businesses and investment capital when they have so clearly announced that they will stick you with an ‘Exit Tax’ if they can get away with it,“ Schmid said.

Schmid feels that if the Town Council chooses litigation, it will be in peril and endanger the Town’s future.

“I’m being told the Town will fold, and Lee County will take over if they can’t fix their budget problems – and quickly. I can tell you, it won’t happen by shakedowns,” Schmid said.

A Records Request

Almost to a person, FMB residents and business owners described Roger Hernstadt’s tenure as FMB Town Manager as aggressive and unethical. Some suggested that a thorough audit could lead to criminal charges. However, all persons must benefit from the doubt and the presumptions of regularity, good faith, and innocence.

The lack of a planned forensic accounting for the “Hernstadt Years” has raised additional suspicions about the Town’s financial management.

To that end, this outlet has submitted a Records Request to the Town of Fort Myers Beach:

May 13, 2024

Dear Sir or Madam:

We respectfully request the following pursuant to a Freedom of Information Records Request under Chater 119, F.S., and all other applicable laws:

Any and all records related to the premises at 80 Avenue E, Fort Myers Beach, FL 33931 (the “Premises”), AND/OR Jesse Schmid (“Mr. Schmid”), White Sand Properties of Fort Myers Beach, LLC (“White Sand”), Joseph Orlandini (“Mr. Orlandini”), and any persons in any way related to the Town of Fort Myers Beach (“FMB”) from 2017 until the present (the “Request”).

These records should include but are not limited to, any and all non-privileged communications between Town Manager Roger Hernstadt and/or other FMB persons and the Town Attorneys for FMB, Fox Rothschild LLP, related to the above-referenced Request and during the tenure of their respective service.

To the extent there are privileged communications, we would request a privilege log acknowledging (a) basic information to describe the documents or electronically stored information withheld, and (b) a clear statement of which privileges the responding party believes cover those documents.

We thank you in advance for your time. If you have any questions or concerns, please do not hesitate to contact me.

Regards,

Richard Luthmann

Investigative Reporter

239-631-5957

We will keep the readership further apprised of our findings as we receive additional information.