Paul G. Roiff is the developer of XV Beacon, an upscale boutique hotel located next to the Massachusetts State House in Boston.
Owning one of Boston’s swankiest hotels and a pair of tony restaurants catering to the social elite, developer Paul G. Roiff has no trouble making new friends. Keeping the old has been harder, however, often with good reason.
A few have passed away – one apparently at the hands of the New England mafia – while other relationships have been impacted by various scandals, including bank fraud and a bevy of real estate misdeeds committed by former acquaintances (see sidebar). Despite that, Roiff has renewed his kinship with at least one controversial Massachusetts couple – felon William W. Lilly and his longtime girlfriend and alleged foil, Valerie E. Kaan.
Wintering along Florida’s Altantic Ocean a few miles from the $8 million Boca Raton mansion where Lilly and Kaan now reside, Roiff has become a regular companion of the couple, who left Massachusetts five years ago amidst a federal probe into whether Lilly was ducking a $5.1 million penalty incurred for defrauding two banks during real estate deals in the late 1980s and early 1990s. Following a 2002 civil settlement, Kaan ostensibly now is paying down Lilly’s fine, including a $1.5 million installment belatedly submitted in April that has put the bill at more than 50 percent paid.
In a recent interview, Roiff acknowledged he has completed several real estate transactions with companies the U.S. government claims Lilly controls through Kaan acting as a straw, including undeveloped lots just north of Daytona Beach and one prime Palm Beach County parcel embroiled in a permitting dispute. Roiff also is a director of Galt Ocean Properties Inc., a Florida corporation that lists Kaan as a principal.
Acknowledging that he is listed as a director, Roiff said the Galt entity was merely structured to provide leverage on a loan to let Kaan buy a Fort Lauderdale asset out of bankruptcy. Roiff also said the plan “died a long time ago,” although the company renewed its Florida license for another year in April. The key point, Roiff said, is that his business dealings are with Kaan and not his disgraced former business associate.
“It was all Valerie,” Roiff insists of the meteoric growth of Bay Communities and several dozen other limited liability companies that have spun off from that core firm during the past decade. While acceding that Kaan’s overnight conversion from a destitute ventriloquist to real estate magnate with holdings up and down the Eastern Seaboard seems “unbelievable,” Roiff said he is convinced the Winthrop native has accomplished the feat without the aid of Lilly. “She catapulted herself to the stratosphere,” said Roiff. “It’s just a spectacular story.”
‘Discount’ Days
Roiff, who migrated to Boston in the early 1970s from Rhode Island, initially attended college before launching a small real estate rental company on the bustling Boston/Brookline border. That enterprise led to a series of real estate and business relationships with Lilly, including one instance in which Roiff loaned the self-described “Condo King” nearly $2 million for Lilly’s lavish abode in Marblehead. Hard by the Atlantic Ocean, “The Castle” became a glaring example of Lilly’s excess when the developer’s hyperactive empire collapsed in 1990. The many trappings, which included Rolls Royce vehicles for Lilly and his ex-wife, Sharon, were lost following Lilly’s indictment on 31 federal counts related to false mortgages on condominium projects in Massachusetts and New Hampshire. Roiff subsequently became one of the Hub’s premier residential developers, as well as the owner of the luxurious XV Beacon St. hotel and the Federalist and Mistral restaurants in Boston.
After being sentenced to five years, Lilly departed for Pennsylvania’s Allenwood Federal Penitentiary in June 1993 owing Roiff a substantial sum of money, a debt which Roiff has previously said ran into the hundreds of thousands of dollars. Roiff said he “kept [his] distance” from Lilly and Kaan for a time after Lilly was released from jail in 1997, but now estimates that he encounters one or both at least once a month.
Lilly has not repaid the debt, but Roiff said he “got over it,” and has since acquired four lots at a Bay Communities property in Flagler County. “Valerie would call and say, ‘We’re a little short this month. Do you want to buy something at a discount?'” recounted Roiff, who often jumped at the chance.
“If there’s a lending opportunity or they have something to sell at a discount, I’m always willing to do business,” said Roiff, who last summer acquired the Palm Beach County asset in upscale Highland Beach just as the permits for a seven-story, 34-unit condominium complex were set to expire and two lenders were pursuing legal action. Maxime Development LLC, which lists Kaan as a principal, traded 3200 South Ocean Blvd. to Roiff’s Luxury Developers LLC for $5 million after failing to launch the project over the past three years, but the property remains undeveloped under Roiff’s stewardship. Roiff also said Maxime remains responsible for the underlying indebtedness, with one lender telling a Florida newspaper in May that he was still owed $1.1 million. That lender, Sobhi Ibrahim, referred questions last week to his attorney, Steven Daniels, who did not return phone calls by press deadline.
A ‘Silly’ Notion
In pursuing its civil case seeking the restitution, the U.S. Attorneys Office in Boston maintained that Bay Communities and any satellite corporations that list Kaan as president or director are actually owned by Lilly, citing in one filing “a facade of false ownership” that employed confederates from Lilly’s development days to assist Kaan in the cover-up. Also charged with helping perpetrate the scam, which allegedly began with the purchase a single condominium unit in Charlestown in 1993, were former Lilly attorney Robert G. Kline, failed Bay State developer William F. Harkins and contractor John P. Thompson.
An investigation headed up by Assistant U.S. Attorney Christopher Alberto, coupled with a series of articles by Banker & Tradesman that began in 1997, detailed how Kaan was equipped with a cell phone, camera and multiple rolls of film to visit properties in Massachusetts and provide information to Lilly via telephone and overnight delivery. Lilly made more than 10,000 phone calls from prison in one 10-month period, including some 3,000 to Kaan. Lilly allegedly employed additional straws to purchase some assets, including the sale of several defunct condominium units in Amesbury.
Regardless of the available technology and compliant helpers, Lilly could not have built the Bay Communities real estate empire from jail, argued Roiff. “How could he be the one making the decisions from 1,000 miles away?'” he asked. “It’s silly.”
Roiff recalled visiting Kaan in South Boston in the mid-1990s when she was painting a condominium unit Bay Communities had recently acquired. “I know I wouldn’t be in coveralls painting those units if they weren’t mine,” said Roiff, who is renowned for employing sweat equity on his own projects. At the time, Roiff said, Kaan was driving a decrepit automobile and caring for the children she had by her jailed boyfriend. Somehow, Roiff marveled, Kaan pooled her scant resources to launch a firm now active throughout the Sunshine State.
Alberto noted that Kaan could not even name companies she had founded when deposed by the government, even though the entities had been formed just a few months before the interview. Kaan could only acquire the properties through financial assistance from Kline and other Lilly cohorts, opined Alberto, insisting the government’s scenario for the company’s growth is accurate.
“The United States would not bring a complaint unless it was convinced of the allegations in the complaint, unless it was convinced that Bill Lilly was the prime moving force behind Bay Communities and Valerie Kaan was merely a straw through which he works,” said Alberto. “It’s as simple as that.”
If Kaan were not complicit, Alberto asked, why would she pay back more than $5 million owed by Lilly? Roiff maintained that Kaan’s decision was not an admission of guilt, however, but because the case “was disrupting her business.”
“It was more financially expeditious for her to dispose of the situation than to have it litigated,” said Roiff, claiming “they were concerned of being convicted of being successful.”
Alberto scoffed at Roiff’s conclusion. “It’s not $100,000 or $500,000,” he said. “Its $5 million – that’s a lot to pay to make yourself feel comfortable.” Alberto also cited Lilly’s coaching of Kaan outlined in more than 1,100 pages of transcripts from Allenwood’s phone system, conservations in which he would often tell Kaan who to pay on a project, how to arrange for contractors and vendors and other specific details related to the real estate endeavors. But if Lilly served as “a mentor” to Kaan, that is not untoward, according to Roiff. “If Arnold Palmer tells Tiger Woods how to swing the golf club, who swings it, Arnold Palmer or Tiger Woods?” he asked.
Roiff said he has been so impressed with Kaan’s rebound in the past decade that he has suggested to his son, Harvard thespian Michael Roiff, that it would make a good movie plot. The younger Roiff has not warmed to the suggestion, said his father, who nonetheless believes in the material.
“It is a real rags-to-riches story,” claimed Roiff. It is also a love story, he offered, maintaining there is little chance Kaan would ever turn on her aging beau, who has a history of womanizing and heavy gambling. “Those two adore each other,” Roiff said. “I don’t know what they would do without each other.”
Roiff also dismissed earlier Banker & Tradesman articles about Kaan’s regular practice of acquiring condominium units or parcels that her companies already own, then flipping the assets to a third party. While many have questioned that practice, and other sources claim state of Florida officials are reviewing some of those transactions, Roiff said he is not concerned.
“She goes out of her way to fully disclose everything,” he said of Kaan, adding. “If I thought that there were any improprieties, there’s not a chance I would do business with them.”
