Therefore the funds used to purchase a property came exclusively from investors.
In September 2008, Siesta Park LLC commenced operation. This property had at least a 90% occupancy, and also it should have had a $120,000 cash reserve. However, records indicate that Connolly absconded with the assets of Siesta Park to his general account, letting it be lost to foreclosure even with a sufficient cash flow to pay the mortgage. Within only two months, Connolly Properties failed to pay the mortgage on time, and again in February 2009 Connolly Properties paid the mortgage late. By May 2009, the Siesta Park mortgage was in default - a victim not of "the economy," but rather David Connolly's defalcation of its assets.
Siesta Park was transferred by David Connolly in a deed dated April 29, 2011, to his partner's son Joseph Colasuonno, with no notice whatsoever to investors in Siesta Park. Ownership is under the holding company "Siesta Realty LLC". David Connolly sent a letter dated July 7, 2011 to investors, stating that "we" have recovered Siesta Park, and investors' equity was reduced to 20% of its original amount.
It is believed that a similar set of events surrounded the transfer of a much larger property, Allentown Apartments LLC, to Colasuonno under the new company "Allentown Metro Holdings LLC," including a letter to investors stating that ownership had been reduced to 20% of its original value. Siesta Park was about a $2.4m property, Allentown Apartments about an $8m property.
Here is the letter that was sent to Siesta Park investors, on the letterhead of the company that replaced bankrupt Connolly Properties, Fidelity Management:
The only problem is this letter contained a material misrepresentation, which appears intended to lull investors into believing they continued to have an interest in Siesta, when in fact Connolly had relieved them of any ownership whatsoever a few months earlier. He didn't issue any ownership papers, and on questioning in 2015, he stated that the letter above was "premature". The only problem with this explanation is that the deed is dated April 29, 2011 and was recorded June 22, 2011. So this letter appears to have had one purpose only - to mislead investors and cause them not to ask questions.
Here us Connolly's response from his current home in federal prison, after a March 2015 letter of inquiry was sent to his wife Donna, 50% partner in Connolly Properties, and who received 50% of the distribution checks in return for Connolly Properties mismanaging Siesta Park into foreclosure:
