Last Updated: 7:30 p.m.
An attorney for Flagler County government accused the lone hold-out in a planned dune-rebuilding project along State Road A1A in Flagler Beach of “bad faith,” “fraud” and deception, and is asking a federal court to revoke the hold-out’s discharge from bankruptcy and convert her case to Chapter 7, enabling the government to seize all but her homesteaded assets.
Cynthia d’Angiolini, the 71-year-old property owner, through her attorney, today countered with a motion arguing that “Flagler County is not a creditor in this case and has no standing.”
D’Angiolini appears to have skirted the requirements of her bankruptcy case, giving the county an opening to convince her to stop holding out. But the opening may prove illusory. It is the latest complication in a vexing issue that has held the dune-rebuilding project hostage for over two years. The county is now at risk of losing the project and the money for it. (See: “In Stunning Revelation, Dune Hold-Out Had Filed for Bankruptcy–and Not Disclosed Parcels’ Value; County Now Has Leverage.”)
“The Debtor’s refusal to negotiate in good faith and to instead attempt to hold Flagler County and its residents hostage concerning the grant of money for the project was frustrating enough,” Flagler Beach bankruptcy attorney Scott Spradley wrote in a motion filed Wednesday. “But to now learn through Flagler County’s own diligence that the Debtor is operating in bad faith in the Federal Bankruptcy system is an abomination of the highest order.”
The only properties that concern county government are the two dune “remnants,” d’Angiolini’s small, beach-front parcels that front the ocean, on the east side of State Road A1A. The parcels can’t be built on. Flagler County has been seeking easements to those parcels to allow the U.S. Corps of Engineers to proceed with a 2.6-mile dune-rebuilding project south of the Flagler Beach pier. That stretch, recognized as “critically eroded” by the state, has been severely and repeatedly damaged by storms and erosion.
Whether the disclosure of the “abomination” will work to the county’s benefit is far from clear. The county had faced a Dec. 31 deadline to certify to the U.S. Army Corps of Engineers that it has all easements signed. The Corps has extended its deadlines many times in the past three years. It will not continue to do so. Without the easements signed, Flagler will lose the project, along with $17 million in federal and state funding, plus the chance to federalize that portion of beach for the next 50 years. A federalized beach means that every time a storm damages the beach, the federal government will repair it at its own expense, including the cost of new sand.
[At Thursday evening’s Flagler Beach City Commission meeting, County Attorney Al Hadeed told commissioners the Dec. 31 deadline may not be so hard after all. “Obviously, we briefed the Army Corps on this issue, there will not be a cancellation of the program,” he said. “They understand that we’re attempting to get it in an expedited fashion. It may not come December 31. It maybe shortly after that, so we’re just going to monitor this thing. We’ll let them know exactly when we’re able to secure those interests. So it’s not being canceled. It’s not being terminated or anything like that, if there are people that have that anxiety, but that’s because of this unique circumstance.”]
The easements do not mean the government would take possession of the land. They would only grant permission for the Corps to work on the land, rebuilding dunes now and in the future to protect d’Angiolini’s property, A1A and homes and businesses along the 2.6 mile of road. Some 140 other property owners have signed easements.
D’Angiolini for over two years has refused to sign. Her motives were not clear until recently, when open discussions of the case at the County Commission implicitly pointed to her holding out for money–not out of concern for the land. She is singly holding up the project to such a point that last month’s storms again destroyed parts of A1A, requiring millions in emergency repairs. That entailed 5,795 cubic yards of sand between South 7th and South 28th Street, the stretch that includes the d’Angiolini properties, and 9,059 tons of combined coquina and granite rock revetments, according to the Department of Transportation’s latest tallies.
Had the Corps rebuilt the dunes by then, it is almost certain the road would have been spared, and taxpayers spared the expense.
The county has been threatening to sue d’Angiolini for over two years and acquire the easements by eminent domain. It’s hung fire on the assumption that she was negotiating in good faith. Just last month, County Attorney Al Hadeed was saying that a resolution was “close.” At the time, he did not know of the alleged deception of d’Angiolini’s bankruptcy filing.
Until now, d’Angiolini knew she had immense leverage over the county to dictate terms for her signature. That leverage had appeared in jeopardy because of the possibly fraudulent way she filed for bankruptcy. On the other hand, d’Angiolini and her attorneys are giving no indication that the county’s latest maneuvers are swaying them. Today’s filing by d’Angiolini, while possibly cogent legally, is especially disingenuous, if not cynical, for again exploiting an end-run around the county’s–and the public’s–interest.
A stand-off is developing. But one of the two sides will have to blink. For Flagler, that blink may come too late.
D’Angiolini filed for Chapter 13 bankruptcy three years ago, enabling her to work out a three-year payment plan based on the value of her assets. (Chapter 7 is different and less lenient). She never disclosed ownership of the two parcels. Nor did the county know, until last week, that she had dissimulated the value. All along she had been negotiating terms with the county, including a substantial fee, in exchange for her signature on the easement documents.
D’Angiolini owed her creditors $37,000. The plan devised through the court allowed her to make monthly payments of just $150 for three years, including the portion of the money going to her attorney. The monthly fee was based on the value of her homesteaded property and other minor assets–not including the two beach remnants.
The bankruptcy forms she filled out include several warnings about misrepresenting figures, including a thickly black-boxed set of warnings headlined “Read These Important Warnings.” One of them, directly addressing the concealment of property, reads: “Bankruptcy fraud is a serious crime; you could be fined and imprisoned if you commit fraud in your bankruptcy case. Making a false statement, concealing property, or obtaining money or property by fraud in connection with a bankruptcy case can result in fines up to $250,000, or imprisonment for up to 20 years, or both.”
“It would appear unlikely if not impossible that the failure to disclose the Beach Front Property was an inadvertent act by the Debtor,” Spradley’s motion reads. “This is because the Debtor had retained separate counsel to represent her in negotiations with the Flagler County [Commission] for easement rights concerning that very Beach Front Property, going back to approximately December 2020 when compensation offers were made on behalf of the County. Accordingly, the Debtor apparently sought to conceal her interest in the Beach Front Property and thus diminish her obligation to and prejudice her creditors, while hoping to capitalize on the funds she would presumably receive from [Flagler government] through these negotiations, which, to date, have not been successful.”
On Wednesday, d’Angiolini filed an “amendment and clarification” of her incomplete filing, adding the two small parcels and claiming their value to be as assessed by the property appraiser: $2,420 each. Her attorney, Ann Rogers of Ormond Beach, filed a motion to modify the debt plan. The filing had no explanation about why the parcels had been left out three years ago.
That was the first indication that d’Angiolini was not swayed by the county’s latest moves. Today’s was another. But she appears to be playing chicken with the bankruptcy court, which would not likely look kindly on being deceived. Rogers did not respond to a call to her office before this article initially appeared.
“The remedy when something like that happens after the debtor has already received her discharge of debt, is to revoke that discharge of debt and start over again,” Spradley said in an interview. “The trade off is you fully and accurately disclose your assets and your sources of income, and then you pay what you’re required to pay for a term of three years in her case, then you get a discharge of all your debt. Well, the first part of that was faulty, because she did not disclose her assets. Therefore, while she complied with her plan, the plan was faulty. As a consequence, we feel that the discharge should be revoked. It’s improper to have a discharge under the circumstances.”
Revoking the chapter 13 discharge is step one. Converting it to Chapter 7 is step two. “That would then eliminate from her control those two parcels, and what the Chapter 7 trustee would do would be to sell those two properties without her input, and use the money to pay creditors.” Her home, being homesteaded, is not vulnerable to such seizures.
Spradley was not impressed by the Wednesday filing by d’Angiolini, lacking an explanation as to why she had not disclosed the remnants’ ownerships nor provided a proper value for them. In a footnote in his motion, he noted that d’Angiolini “valued those properties in an amount the Flagler County [Commission] believes to be the value of easement rights, only, rather than the actual fair market value of the Beach Front Property, which is a considerably higher amount.” The motion calls it “too little, too late.”
Spradley says he expects the county to object to the values d’Angiolini ascribed to the lands, but also to continue talking to d’Angiolini. Meanwhile, “if necessary, we will ask that this be considered on an expedited basis” in court, due to the urgency of the Corps of Engineer’s pending project (and deadline) and yet another hurricane season approaching. The Spradley motion includes numerous images documenting the damage to A1A and the shoreline from recent storms.
“I don’t know whether she’s just dishonest, but she’s certainly non compliant,” he said of d’Angiolini. “It just doesn’t make sense to me that all of this could have happened. I know the players to a degree, I know the bankruptcy lawyer and it just doesn’t make sense, what’s happening here.”
He does not anticipate that the creditors will object to his motion, nor to the request that the bankruptcy be converted to Chapter 7. That was before the d’Angiolini motion in standing, which prompted one reaction from Spradley today: “We disagree. There will be a legal response in due course.”
Next will be a court hearing. When? That’s a wild card. Federal court is not moved by human-scale calendars.
Spradley’s office is a block from the beach, his home a block from the Intracoastal, both on the barrier island. He had personally documented the effects of Hurricane Ian on the island in a running account here. “In this case, I’m keenly aware of how the circumstances in this case directly affect my community, my neighborhood, my house,” he said. “That doesn’t cloud my judgment in how I bring this case and filed it. It’s just that that is a thing. I do have an interest in how turns out, just because I happen to live here.”