Last week's MBW cover story on failed developer Martin Kandel incorrectly credited him for launching the Hillside at Seminary residential project in Baltimore County.
In fact, Mr. Kandel's company built 10 homes on land purchased from a partnership that developed the Hillside at Seminary's homesites. The development has a total of 84 homesites.
Martin Kandel found it impossible to resist the charms of real estate, a fast track to wealth and prestige if ever there was one. So he thought.
FOR THE RECORD - CORRECTION
Investors found it hard to resist Mr. Kandel's earnestness, his profit forecasts and his track record as a successful real estate attorney.
They were mutually attracted by a common goal: making a killing in real estate. And for a couple of years, they were right on track.
By the relatively tender age of 30, Mr. Kandel launched Hillside at Seminary, an upscale housing development in Baltimore County. He moved on to a condominium project at Deep Creek Lake. And he gobbled up other development sites in Baltimore, Howard and Cecil counties.
In May, it all exploded spectacularly in bankruptcy.
Still only 33 -- an age when many of his peers are worrying about making mortgage payments -- Mr. Kandel faced more than $13 million in debts. After filing for a bankruptcy liquidation, he quietly departed for Florida -- providing a nasty surprise for scores of private and corporate investors who had entrusted him with millions of dollars.
On one hand, Mr. Kandel's story is a tale of labyrinthine real estate deals assembled by a complex young man pursuing power and prestige. On the other hand, his story is as elementary and easy to understand as unalloyed greed, which played a part in his downfall and in the losses of many his investors.
When he left his law practice to become a developer in 1987, the real estate market was white hot. It seemed anybody with a dollar or two to invest could make money -- and he found plenty of people eager to back an unproven developer like himself. Today, with real estate activity on the decline nationwide, Mr. Kandel and his investors are among the many whose dreams have been --ed by an ebbing market.
There's an axiom that sometimes it's better to be lucky than good. As a developer, Mr. Kandel was neither. He had the bad luck to enter the real estate business just before the market went down the tubes. And, he admits now, his inexperience afforded him little opportunity to rebound once things went bad.
Now living in self-imposed exile in Tampa, the failed developer has a message for those who invested in his Maryland development deals and got burned: He gave it his best shot. And he's sorry.
"I was a typical lawyer who wanted to get into real estate, and it all looked so easy. . . ." Mr. Kandel said last month in Baltimore, after attending a U.S. Bankruptcy Court creditors' meeting. "I just didn't succeed -- that's what it all boils down to."
Many investors accept his explanation, and blame themselves for betting tens of thousands of dollars on a developer with little track record.
Yet Mr. Kandel's apology leaves scads of questions unanswered. It doesn't begin to help Dawn Musgrave fathom how she'll replace nearly $40,000 that was partially earmarked for her children's college education.
A Pikesville adoption lawyer, Mrs. Musgrave and her husband invested in Cedar Manor, a Kandel project in Ellicott City that served as a black hole for hundreds of thousands of dollars and was beset with zoning and development problems. Development, which in part entailed constructing roads and laying sewer lines, was started but never finished.
"We had $36,667 -- it was money that was set aside to redo a kitchen and to start college for the kids," Mrs. Musgrave says. "I'm going to live with this all the way through putting my kids through school. I hope it's not as painful then, but it's going to be painful."
Mrs. Musgrave knew Mr. Kandel better than most investors -- she was the law partner of his wife, Paula. That is, until Mrs. Kandel moved to Tampa in June with the couple's two young girls.
Mr. Kandel's urgent need to taste success -- at a double time pace -- asserted itself early.
The son of a cleaning supply salesman and a bookkeeper, Mr. Kandel had a comfortable childhood in Queens, N.Y. Even so, he became the first member of his family to graduate from college and wasted little time doing it, taking summer courses to earn a political science degree from Rutgers in three years. He was 19 ** when he graduated.
While at Rutgers, he met his first wife, a woman from Silver Spring. They married and moved to Baltimore, where Mr. Kandel enrolled in the University of Baltimore law school. His first brush with major adversity came when he was 21 and in his first year of law school: His wife was killed in a car crash.
Mr. Kandel contrasts the dark days that followed her death to those he's confronting now.