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By MICHAEL SASSO msasso@tampatrib.com
Liquidation looms for National Gold
Published: March 5, 2010
TAMPA – Mark Yaffe, a Tampa businessman who became one of America’s leading gold coin dealers, will see much of his empire dismantled after a bankruptcy judge’s decision Wednesday.
U.S. Bankruptcy Court Judge Michael Williamson on Wednesday converted National Gold Exchange’s Chapter 11 bankruptcy case to Chapter 7 bankruptcy. The judge’s action spells the end for the gold and rare coin company because Chapter 7 bankruptcy leads to a company’s liquidation.
National Gold’s chief creditor, Sovereign Bank, already had seized most of the company’s assets months ago, but was prevented from selling them when National Gold filed for bankruptcy protection last summer.
Those assets include millions of dollars in gold and rare coins and Yaffe’s unusual collection of antique music boxes, which are similar to player pianos.
Now, with the judge’s order, the bank is authorized to liquidate the items. Richard McIntyre, National Gold’s bankruptcy attorney, expects the music boxes could sell for at least $7 million, while the coins should sell for more than $5 million.
Meantime, Yaffe is trying to sell his opulent mansion in Tampa’s Avila community to pay his creditors. The 29,000-square-foot residence is stocked with his renowned collection of music boxes.
Yaffe’s troubles started last summer when a lawyer sent a letter to Sovereign Bank claiming Yaffe was improperly using some National Gold assets to pay for his mansion.
Acting on the tip, Sovereign Bank quickly began an investigation and found several problems at National Gold, including missing coins and faulty accounting.
Despite his company’s liquidation, Yaffe expects to continue in the gold coin business, McIntyre said. He recently has received loans from his father and others allowing him to launch a new, if much smaller, coin operation called Phoenix Gold, McIntyre said.
By Eric Morath
The falling popularity of the National Hockey League’s Tampa Bay Lightning is threatening to cut into recoveries for National Gold Exchange Inc.’s creditors.
The Chapter 11 trustee operating National Gold Exchange is seeking to unload the Tampa, Fla., coin wholesaler’s Lightning season tickets as part of his effort to sell assets to repay creditors.
But the trustee said chances of getting full price for the $101.75 per seat tickets are slim.
Individual game “tickets can be sold for anywhere between 30% and 70% below face value,” trustee Joseph J. Luzinski said in bankruptcy-court papers. He also noted that it appears many other season ticketholders are trying to sell their seats and that tickets typically are available at the box office on the day of the game.
Luzinski suggested the company try to hawk the Lightning tickets on eBay or Craigslist because listings on those Web sites are free. A classified ad in the in the Tampa Tribune would cost the company $150, he said.
The Lightning electrified the state of Florida in 2004 when it became the southernmost team ever to win hockey’s Stanley Cup. As defending NHL champions, the Lightning ranked second in total attendance.
This season, the second-place Lighting sell only 74% of their seats on average, according to ESPN. That ranks second worst in the 30-team league.
Bankruptcy Beat favorite Phoenix Coyotes bring up the rear, selling only 56% of their seats.
National Gold Exchange’s Mark Yaffe could emerge from bankruptcy in March
By James Thorner, Times Staff Writer
In Print: Thursday, November 19, 2009
More than $36 million in debt, Tampa gold and coin dealer Mark Yaffe plans to emerge from bankruptcy as early as March.
At a hearing in Tampa bankruptcy court Wednesday, Yaffe’s National Gold Exchange, one of the world’s largest precious coin wholesalers, said it had mediated a tentative deal with Sovereign Bank, its largest creditor.
The agreement would force Yaffe to liquidate his 30,000-square-foot mansion in Tampa’s Avila neighborhood, sell off part of his multimillion-dollar collection of antique music machines and turn over future profits to creditors.
“We’re confident we’ll have the approval of the bank,” Yaffe bankruptcy attorney Richard McIntyre said.
Sovereign lawyer Robert Soriano confirmed “there’s a core of a deal there,” provided Yaffe discloses his finances more deeply. But getting that information hasn’t been easy.
Investigators working on the bankruptcy case said they had yet to fully crack Yaffe’s “antiquated” computer system to retrieve financial records.
Yaffe himself has also been reluctant to talk. According to testimony Wednesday, Yaffe has invoked his Fifth Amendment right against self-incrimination.
National Gold filed for Chapter 11 bankruptcy in July after Sovereign called back $36 million worth of loans. Although the company had been current in repaying Sovereign, the bank got a tip that Yaffe had siphoned off about $10 million from his company to build his mansion.
The informer was a lawyer for the Bilzerian family, former friends and neighbors of Yaffe who had a falling out over a broken business deal.
U.S. bankruptcy Judge Michael Williamson gave National Gold 60 days to come up with a reorganization plan to satisfy Sovereign. A hearing to confirm it is scheduled for March 3.
James Thorner can be reached at jthorner@sptimes.com or (813) 226-3313.
Summary
The Austrian Mint wants $650,000 in gold coins delivered to gold and coin dealer Mark Yaffe of Tampa returned.
The Austrian Mint wants $650,000 in gold coins delivered to gold and coin dealer Mark Yaffe of Tampa returned.
From September 2008 to April 2009, the Austrian Mint delivered 1,500 gold coins to Yaffe’s company, National Gold Exchange, according to a report in the St. Petersburg Times. Yaffe was supposed to sell them on consignment.
But Yaffe filed for bankruptcy in July, and now the Austrian Mint wants the Vienna Philharmonic gold coins returned.
Yaffe has filed a reorganization plan that would pay off creditors through 2016. His top creditor is Sovereign Bank of Boston, which is owed $36 million. The plan includes a provision for Yaffe to be allowed $74,000 a month to maintain the 30,000-square-foot mansion he’s trying to sell for $25 million in Tampa, according to the newspaper report.
Done in by his musical medley
By James Thorner, Times Staff Writer
Published Friday, September 25, 2009
TAMPA — Mark Yaffe’s 300 guests could have easily mistaken him for a lord of a bygone era as he ushered them under a 10-foot high Venetian glass chandelier in the great hall of his mock English Jacobean palace.
Yaffe was hosting a fundraiser for Hillsborough County Community College that night in 2005, attended by the high and mighty of Tampa. Baseball Hall of Famer Wade Boggs was there. Actors in medieval costumes mingled among them.
Waltzing through the surroundings, it seemed obvious: Yaffe had arrived.
He was a college dropout who rose to head National Gold Exchange, a Tampa-based coin wholesale business that brought in half a million dollars a week.
But behind the glitz, Yaffe’s empire was on shaky ground. This summer, his bank demanded he repay a $35 million business loan. Hidden in the bankruptcy court documents: Yaffe was nursing a multimillion-dollar passion that was eating away his business, the bank said.
Yaffe had blown through tens of millions of dollars on his collection of antique music machines and the mansion he had custom built to display them.
The making of a collection
Yaffe loved coins even as a high school student in 1970s suburban Boston. Clutching his allowance, he would take a train into the city to feed his habit.
He attended Boston College, hoping to specialize in business, but dropped out his junior year. “I was learning more with coins than in school,” Yaffe told the Tampa Bay Business Journal in 1997. “And I figured I was sleeping too much in class.”
Colleagues describe Yaffe as an introvert with a genius’ attention to detail. He can plow through a pile of 1,000 gold coins and, using his trained eye, immediately pinpoint the fakes by noting nearly microscopic mint marks.
Yaffe moved to Tampa in 1988, ensconcing himself in a 10,000-square-foot house in the exclusive Avila community in North Tampa. That’s when he developed his second great passion: music machines.
Before stereos, before FM radio, before talking motion pictures, cabinets of automatons, self-playing pianos and “orchestrions” were parlor room entertainment for the wealthy. Their popularity waned before World War II. Most were simply too big, too obsolete, too hard to maintain.
“The analogy I use is if you found one of the first IBM computers,” said Ken Goldman, a Boston coin dealer and Yaffe’s friend. “It would take up half your room, it wouldn’t work and no one would want it.”
The hobby made a comeback as tycoons desired to decorate their estates with bulky historical artifacts.
Jasper Sanfilippo, the owner of Fisher Nut Co., has one of the great collections. His Chicago-area mansion is so crammed with mechanical music machines it’s been dubbed the Place de Musique.
Goldman, who built his own extensive collection of music contraptions, turned Yaffe on to the hobby.
Yaffe applied his talent for detail to assembling one of the world’s best collections. He described the allure during a brief interview after a recent bankruptcy hearing in Tampa. Forty-nine years old, with salt-and-pepper hair above a pair of accountant’s glasses, Yaffe came alive when he described the hobby.
“Consider a painting on the wall,” he said, gesturing to a framed print hanging in the courthouse. “After a while you get bored just looking. With these machines you can listen to beautiful music. And on top of that, they’re works of art.”
Yaffe began by patiently building his collection with relatively inexpensive pieces. In 1994 he joined a group of aficionados called the Music Box Society International. That year, he spent hundreds of thousands of dollars at a single Sotheby’s auction.
Soon after, Yaffe was ready to move into the million-dollar club.
Giving in to his orchestrion fixation
Yaffe coveted an orchestrion in a collection belonging to a bearded German collector named Siegfried Wendel.
Orchestrions resemble tin pan bands in one huge cabinet. They mechanically resemble fairground band organs and carousel calliopes.
At a convention of the Music Box Society at Orlando’s Clarion Hotel in 1995, Yaffe approached Wendel and inquired about buying a banged-up Hupfeld Phonolist Violina.
The Violina is an 90-year-old player piano equipped with automated violins. Dozens of metal mechanical fingers press down on the violins to adjust the pitch while a metal wheel rotates around the instruments to produce the bow stroke.
Yaffe proposed a price. Wendel refused to sell.
But Yaffe was tenacious. On a trip to Europe a year later, he phoned Wendel at his home in Rudesheim on Germany’s Rhine River. Could he come see Wendel’s collection?
Wendel agreed. This time Yaffe succeeded. He bought the Violina for $450,000. Craftsman from California invested 3,000 man hours and three years in its restoration. That cost Yaffe $174,000 more. The piece is valued at $1 million.
The collection grew so fast that Yaffe was forced to stash machines in his garage, in off-site warehouses, even in his brother’s house.
“These things are fun to show off,” Goldman said. “You don’t have to lock them away in a vault like a coin collection.”
By 1997, the hobby was taking its toll on Yaffe’s finances. Yaffe downsized. He traded his 10,000-square-foot house for a 5,000-square-foot model. He ditched his $200,000 yellow Ferrari convertible. His antique music machine no longer had a proper home.
But a comeback was just years away.
‘These collections dictate where you live’
Forget 5,000 square feet. Yaffe was going to build what would become the second-biggest estate in the Tampa Bay area.
The mansion, sheathed in Romanian marble, would be two stories and top out at 29,000-square-feet. Modeled on a 17th-century British royal palace, it was to have 13 bathrooms, 14 fire places and a magnificent foyer.
The focal point would be the grand hall. More than 3,000 square feet filled with scores of music machines, some twice the height of a person, towering toward the 27-foot ceilings. A room so big it would take Yaffe an hour to properly show off the artifacts.
Crowds would gawk at million-dollar, German orchestras-in-a-box. In carved oak and mahogany cabinets more than 7 feet high, moving wires stroked real violins, automated sticks rattled snare drums and blasts of air tooted pipes.
Yaffe would turn a crank on $50,000 Victorian-era automatons, prompting a Cambodian dancing girl and a tight rope walker to perform lifelike routines set to music. Antique Nickelodeons, coin-operated pianos and cylindrical music boxes would tinkle, twirl and tumble through the cavernous hall.
Those who hadn’t wearied of the automata and music boxes could continue their tour in wings astride the great room.
“Some of these things are 12 feet tall. You can’t put them in your standard 8-foot-ceiling house,” Goldman said. “These collections dictate where you live.”
First Yaffe had to finish the house. As the home progressed, he continued to grow the collection. In 2000 he bought a rare Hupfeld Helios, a cabinet containing 256 pipes that mimic clarinets, flutes, cellos and other instruments. The seller was Fisher Nut’s Sanfillipo. He drove a hard bargain, charging Yaffe $1.2 million. Yaffe paid $352,000 to restore it.
Yaffe took out several mortgages worth millions. What had started as a relatively modest 12,000-square-foot blueprint had ballooned into the 29,000-square-foot palace. Once, to tide things over, Yaffe asked a neighbor for a $200,000 loan.
‘I don’t regret ... the music boxes’
Enter Paul Bilzerian. In 2006, Yaffe turned to Bilzerian, a neighbor in Avila. In fact, Yaffe’s house is surpassed in size only by the mansion Bilzerian built years earlier.
Bilzerian had been lying low after troubles with the federal government in the late 1980s and early 1990s. The former corporate raider had served a year in prison for securities fraud, but defiantly maintains his innocence to this day.
Yaffe asked Bilzerian to raise private capital to take National Gold to a new level. New York investors came to Tampa, but the deal collapsed at the last minute. Bilzerian’s son sued Yaffe for fees and commissions connected with the broken deal. It was a Bilzerian lawyer who dropped the bomb on Yaffe this summer by relaying to bankers his suspicions about misused collateral.
Creditors in the bankruptcy case accuse Yaffe of selling at least $12 million dollars worth of coins belonging to National Gold and pumping proceeds into his stalled mansion project. They say he cooked the books to hide the deed. Meanwhile Yaffe continued to tap a $35 million line of credit from Boston-based Sovereign Bank. He would run through every cent, though he religiously made monthly payments to Sovereign. National Gold Exchange plunged into bankruptcy this summer when Sovereign demanded repayment.
Yaffe denies he misused the collateral. The financing of the mansion and music machine collection was transparent and legitimate, he said.
“The allegation of taking money out and improperly using it to build the house is untrue,” his lawyer Daniel Saxe said. “To link these music machines to the bankruptcy filing is inaccurate in my opinion.”
Whatever the circumstances, the story of squandered wealth didn’t surprise Russell Belk, business professor at Toronto’s York University who wrote the book Collecting in a Consumer Society. High-end collectors tend to rationalize spending by telling loved ones it’s an investment, he said. But they usually lose money or, at best, break even.
“Regardless of wealth, collectors can find a level of collecting that strains that wealth,” he said. “They need better pieces, bigger pieces. It’s luxury consumption.”
The bank seized all of Yaffe’s coins, effectively putting National Gold out of business. They’re locked away in a Brinks vault. Ahead lies months of wrangling in bankruptcy court. The music boxes remain secure in the regal splendor of Yaffe’s mansion, under the watchful eye of the federal courts.
Yaffe’s life has been upended. The mansion, where he lives with his wife and two children, has been on the market for $25 million for close to a year.
“I don’t regret collecting the music boxes, but I regret building the home,” Yaffe said. “The house has drawn negative attention.”
Yaffe has promised to break up his prized collection, the machines he crossed continents and sacrificed bank balances to acquire. He plans to sell about 15 of the most expensive machines. The liquidation should help him hang on to the rest of the collection.
Wherever Mark Yaffe’s future leads him — a resurrected coin business, a humbler home — jingling music machines and dancing automatons will likely accompany the journey.
James Thorner can be reached at jthorner@sptimes.com or (813) 226-3313.
This article has been revised to reflect the following correction: In a Sunday story about Mark Yaffe’s music box collection, Fisher Nuts chairman emeritus Jasper Sanfilippo’s name was misspelled.
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October 05, 2009
His banker accuses him of building the grand marble-clad estate with gold coins he was supposed to have stuck aside as collateral for a $35-million business loan. He built the house to display a museum quality collection of mechanical music machines.
Sovereign Bank forced Yaffe into bankruptcy in July by calling the loan. Yaffe proposes a reorganization plan that would repay Sovereign over 7 years. National Gold is one of the world’s largest rare coin wholesalers.
But there’s a hitch: Sovereign suggests Yaffe could face criminal charges for defrauding the bank and might not be in a position to run the company during those critical repayment years. Here’s the gist of it:
“Mark Yaffe, as a 50% owner of NGE, should be required to disclose whether he is aware of any criminal investigations…and whether he has retained criminal defense attorney,” Sovereign said in a court filing on Friday.
There’s a lesson in here somewhere. How about this: Don’t try to emulate Louis XIV if you’re short of cash and have no peasants to soak.
Yaffe’s got a case of the regrets. He told me two weeks ago that his wife and kids hate living in his Tampa Versailles. He dreams these days about downsizing to a 4,000-square-foot wood frame.
That’s the fantasy of more than a few over-strapped Tampa Bay home owners.
Posted by James Thorner at 02:24:44 PM on October 5, 2009
in Economy , Housing and taxes , Regional housing issues | Permalink
Mark Yaffe has a $25 million home and has stocked it with huge antique music boxes, similar to player pianos. He faces the prospect of selling off much of his collection to satisfy bankruptcy creditors. TAMPA TRIBUNE / SCOTT ISKOWTIZ
What is rare could be lost for good
ANTIQUES: Collector turns to bankruptcy to try to save items from creditors
By MICHAEL SASSO The Tampa Tribune
Published: Wednesday, September 30, 2009 at 1:00 a.m.
Last Modified: Tuesday, September 29, 2009 at 11:20 p.m.
TAMPA – Even by Avila Golf & Country Club’s opulent standards, Mark Yaffe’s home is something to behold.
With 10 bedrooms and 14 fireplaces, the 29,000- square-foot manor rises from the estate like an English countryside castle. What’s inside, however, may be even more striking. The Yaffe household is a shrine to more than 100 self-playing antique mechanical musical instruments.
Some are worth at least $1 million, including the real showpieces: “orchestrions” – boxy devices with mechanical arms that pound drums, plink a xylophone and tickle piano keys.
Scattered about are other oddities, including antique shadow boxes with moving figurines of monkeys playing instruments, and automaton dolls, early precursors to theme-park animatronics that blink their eyes, move their lips and raise their parasols.
With all the moving figurines, his two children were “creeped out” at times, Yaffe said.
Today, a portion of the collection, once appraised at $13 million, is embroiled in a scandal that has engulfed Yaffe’s rare-coin business, National Gold Exchange, which Yaffe and his brother built into one of the nation’s leading gold and rare-coin dealers.
Many of the most valuable pieces will be sold as part of the company’s bankruptcy case.
The music stopped for Yaffe two months ago, and the businessman found his collection and his coin business in danger of being lost to the bank.
Through the years, National Gold Exchange received at least $35 million in loans from Pennsylvania-based Sovereign Bank. Collateral for the loan: the company’s collection of rare coins and Yaffe’s set of fine music boxes.
The bank took action in July, when it received a tip from a lawyer for fellow Avila resident Paul Bilzerian, who was in litigation against Yaffe. The tip claimed Yaffe had spent some of the bank money on his Avila mansion. Court testimony hasn’t supported that claim. However, a bank officer testified that Sovereign Bank audited National Gold and found its record-keeping a shambles.
Afraid that the collateral on its loans was imperiled, Sovereign Bank got a judge’s permission to show up at National Gold Exchange and wrest control of the business. National Gold quickly responded by filing for Chapter 11 bankruptcy protection
Tampa Bay Business Journal – by Jane Meinhardt Staff Writer
An attorney for Sovereign Bank, the major secured creditor of National Gold Exchange, blasted a financial disclosure statement filed with the Tampa coin dealer’s proposed Chapter 11 bankruptcy reorganization plan.
Robert Soriano, a shareholder in Greenberg Traurig’s local office, called the statement “pie in the sky numbers on a piece of paper.”
“It’s totally unacceptable,” Soriano said in a bankruptcy court hearing Wednesday in Tampa on the status of NGE’s case. “It requires a leap of faith.”
In an 8th floor courtroom packed with lawyers, the hearing featured the first public comments on the company’s future plans.
Soriano’s comments are the first hint of how NGE creditors may consider the company’s plan to pay its debts and reorganize. Creditors will vote on confirming the plan.
Sovereign contends NGE owes it nearly $35 million on loans. After liquidating some rare music machines owned by Mark Yaffe, NGE’s vice president and treasurer, and part of the coin inventory, the company wants to make monthly payments to the bank over six years.
The bank objects to that, especially since NGE receivables reported to the bank are “bogus” and the coin inventory collateral that was supposed to be worth $26 million is not, Soriano said, questioning the source of money for the proposed monthly payments.
“There’s nothing in the disclosure statement to indicate where that’s coming from,” he said. “There’s no evidence it’s feasible. The plan doesn’t make any sense.”
Soriano argued that the bank’s investigation into the company showed $232 million flowed through the business in 12 months, yet with all this cash it showed little in receivables.
“There’s hundreds of millions of dollars not accounted for,” he said, contending the solution is a quick and orderly liquidation of assets then pursuit of accounts receivables and possible lawsuits. “We don’t think it was a legitimate company.”
According to past testimony, NGE’s revenue last year was $285 million. The company’s bankruptcy petition showed it had about $50 million in debts and no assets. It shut down in late July.
Yaffe is trying to do the right thing for creditors, said Richard McIntyre, a Tampa lawyer who filed the disclosure statement and the reorganization plan.
The Phoenix Gold Corp., Yaffe’s new coin wholesale company, was formed as a means to pay back creditors and already is making money, McIntyre said. The reorganization plan calls for Phoenix to merge with the reorganized debtor. Yaffe attended the hearing and spoke quietly to his lawyers as he took notes.
McIntyre suggested supplementing the disclosure statement and possibly going to mediation to resolve issues with the bank, although the relationship between the coin dealer and bank “may be beyond chilly.”
Bankruptcy Judge Michael G. Williams ordered the debtor to file an amended disclosure statement and ordered meditation for the bank, Phoenix and the Chapter 11 trustee.
Tampa’s National Gold Exchange files bankruptcy reorganization plan
By James Thorner, Times Staff Writer
Posted: Sep 04, 2009 06:20 PM
Hoping to emerge from Chapter 11 bankruptcy, National Gold Exchange has put forward a multiyear reorganization plan that would clear 100 percent of its debts.
The Tampa-based coin business, one of the largest coin wholesalers in the world, owes more than $30 million to Boston’s Sovereign Bank, which forced the bankruptcy by calling a loan in July.
In a court filing late Friday, National Gold founder Mark Yaffe promised to hand over proceeds from the sale of his 28,000-square-foot Avila mansion, liquidate at least $1 million in coins, sell off part of his antique music box collection and auction off office furniture and safes.
With the debt that’s sure to remain, Yaffe offered to make monthly payments to creditors through 2016. The payments would range from $175,000 to $290,000.
“Mark is putting his money where his mouth is,” said Daniel Saxe, Yaffe’s attorney. The court and the creditors have yet to approve the plan.
More On National Gold Exchange….
24/08/09
Friday, August 21, 2009
Despite Ch. 11 and fraud allegations, coin dealer back in business Tampa Bay Business Journal – by Jane Meinhardt Staff Writer
PHOTO ILLUSTRATION BY ALEX KERVIN
View Larger TAMPA — Well-known and embattled coin dealer Mark Yaffe has a new company with what may be an appropriate name: The Phoenix Gold Corp.
Just two weeks after National Gold Exchange Inc. — the coin business Yaffe and his brother opened more than 20 years ago — filed for Chapter 11 bankruptcy reorganization, Yaffe is operating another firm dealing in coins.
In e-mails to other coin dealers, Phoenix Gold describes itself as a wholesale distributor of precious metal products. Its address on North Dale Mabry Highway is several doors from NGE’s current location.
State corporate records show Phoenix Gold incorporated Aug. 4 with Yaffe as the sole officer.