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Rising from Ruin is an on-going MSNBC.com special report chronicling two coastal Mississippi towns, Bay St. Louis and Waveland, as they rebuild after Hurricane Katrina.

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An artist's rendering from a Paradise Properties brochure envisions the completed Breezes condominium project.

Two brothers involved in the Paradise Bay project in Hancock County -- the biggest post-Katrina development on the Mississippi Gulf Coast -- were key figures in an Internet stock scam that federal authorities say bilked investors out of more than $12 million, MSNBC.com has learned.

Additionally, one of the men was barred from the franchising business for life after federal lawyers sued him in a fraud case they said cost investors $6 million. The other brother filed for bankruptcy in 2002, and both have yet to satisfy a federal judgment against them of nearly $10 million.

And while the brothers -- Richard S. and Donald R. Kern -- say they have developed numerous real estate projects in Florida, California, Colorado and even Russia, neither they nor their associates would provide specific names and locations of any of the developments despite repeated requests by MSNBC.com.

Click here to read the full story.

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19 COMMENTS

I already thought that the Paradise Bay project for Hancock County sounded too good to be true... just seemed fishy. If it is such a great idea why didn't anyone think of it before Katrina? Hancock county officials better do a lot more checking before they get tangled up with THESE two. I might be wrong but they're starting to smell like two more "storm chasers" just down here trying to capitalize on all the misery and desperation. They're operating on a much grander scale than the other storm chasers down here though.

How much difference is there between them and the mortgage lending people that advertise right in the middle of the disaster flood article? Oh yeah, they just happen to put it right after the part about people being evacuated from their homes, coincidence?

there will always be scam artist's....i have come to know how to spot em {most of the time}.....dangitt!

Yeeppppp...... Ah thinks mebbee someone aught keep a sharp eye on THESE two....they's lookin' like some new-fangled kind a "carpetbagger" or somethin'. Ol' Pappy use to tell us young-uns, "if it looks like horse hockey, smells like horse hockey an' has a horse-hockey-like color, texture an' consistency, well then, guess whut? It ain't no rose."

Maynard, are you andy in disguise? I can't imagine the mayor and the townspeople going for this type of development. There is such a desire to maintain the family oriented, residential nature of the Bay/Waveland area. Plus...when it smells bad...and you get that funny feeling in the pit of your stomach, you walk away. These people are pretty savvy. I don't expect much will come of "Paradise Properties" and their condominiums! Thank you MSNBC for your research! I expect you've talked to the mayor about it?

I ain,t in disguise...dangitt!....Maynard,s right but i heard it different..."if it walks like a duck"...you know the rest....my story and Maynard's are just a little differant...BUT MEAN DA SAME THING!!!

Laurie....if Mayard and I were in charge of a town....can you imagion .................OH SH**. our mayor ain't worth a a damn.....and he's a rebublican!!!!!........DUHHHH

andy, too funny!

I hope that nobody has made any downpayment on a condo at Paradise Bay! The Kern brothers say that they were "unwitting dupes" in the "Pump and Dump" scheme. Maybe, but I find that hard to swallow and so did the SEC. According to the SEC the Kerns allegedly "sold stock of a shell companies in unregistered transactions and aided and abetted" and "realized illicit proceeds totaling over $6.029 million".
If that's not bad enough, the permit used to fill in wetlands on the proposed site for Paradise Bay was issued in 2002 to Mike Cure for expansion of the seafood processing facility that was located at the site of Bayou Caddy Fisheries.
I received an email from the Chief,Inland Branch of the Mobile District Corps of Engineers. He said "the developer has been notified that any use of the site other than construction of a seafood processing or similar facility will not be in compliance with the permit and a new permit application will be required for the alternative proposal. When submitted, the new proposal will be placed on public notice and undergo a full public interest review and reevaluation prior to rendering a permit decision."
Looks to me like they learned from "Unwitting Dupe 101" and have made Mike Cure theirs.


The lack of knowledge around here leads to a lot of crazy information and ideas. It is true that Cure has a permit to expand his seafood business ... before Katrina and before Paradise Properties Group. The fact he decided to enter into an agreement with a developer does not put him in violation. The developer will pursue their appropriate permits once they have closed on the land. That would be the normal practice for this sort of thing. Why would a developer spend money to permit the land before they are closed on it? Like the letter you quoted said "when submitted, the new proposal will be placed on public notice and undergo a full public interest review and reevaluation prior to rendering a permit decision." Lucky for our area these developers are willing to take a risk and too bad they are receiving so little support. Personally, I would like to see something good happen around here. I don't know if the Kerns did something wrong or not, but they were not charged with any criminal activity. The AP wire said that clearly. And I don't think they are the only people in the company. My understanding is the deposits for condos at their project are fully refundable at this point, so doesn't seem to me anyone is at risk. I assume Mike Cure is a smart enough businessman to cover the details with all the partners and apparently he thinks the Kerns are fine. Certainly they told that to the Board of Supervisors yesterday with a petition they filed supporting the development.

I wonder why the post I sent yesterday has not been added to the list. Is it because I am not bashing the people trying to build here?

you know, we have had developers like them in our area.....Maybe that's part of the reason we have the highest taxes and car tags in Mississippi!....some of those folk's were elected....some still are!....dangitt

Marylin'

You say you would like to see something good happen around here and I think most people would agree with that. I also think that most people would agree that what the Paradise Bay people are proposing and promoting is not good - in fact it is exactly the opposite. If this project gets built (which i seriously doubt given the past history of its "developers") it will bring with it many more problems than it will solve. Not the least of these problems are environmental. I'm not sure whose brilliant idea it was to allow enormous development in the middle of some of the most sensitive and important wetlands in the county. Remember, wetlands are extremely critical to the health of our oceans, and to the continued wildlife population.

I'm not against growth, it just needs to be done in a way that is sustainable, both from an economic and environmental view.

PS - developers have a proven track record of naming their projects after precisely the thing they destroy in the process of building them.

marilyn, don't worry....they don't update....sometimes for dang near a week!!!!

WHY don't they give names and locations of previous projects?

From what I heard, the developers plan to preserve the wetland area but either way, hasn't that whole area already been torn up over and over during the past 50 years and all sorts of stuff dumped into it? Those canals aren't natural.

Marilyn,
I urge you to take a look at this website article:

http://www.ipsnews.net/news.asp?idnews=30112

Perhaps the area has been torn up, but that is not justification to aid in it's demise. The wetlands are essential for the survival of the Mississippi and Louisana coasts. That includes those of us who live here. We should be doing all that we can to fight against the destruction and loss of our wetlands. If we protect the wetlands by prohibiting further destruction (and even work to reverse previous destruction), they will protect us much more effectively in the event of a major hurricane.

It is unbelievable the amount of educated business people who think this is a legitimate development that is ACTUALLY going to materialize. Anyone with any minimal lick of common sense can tell this is a sick joke and a complete scam. Its bad enough believing Biloxi can sustain these large scale condo developments but CLERMONT HARBOR FOR GOD'S SAKE??? CLERMONT HARBOR HAS TROUBLE MAINTAING BAIT AND TACKLE SHOPS PEOPLE!!!! Investors need to start getting real or they deserve to be robbed.

I for one hope Paradise Properties gets the go ahead to do what they want with the bayou Caddy , Clermont harbor and Lakeshore area. That area has always been depressed, even before the storm. The Coastal Community watch group doesn't seem to want any development of the Bayou Caddy, Clermont Harbor and Lakeshore areas, seems to me they should stay in their areas and leave ours alone. They did nothing to help with improvements of that part of the area before the storm. The fire department, the water and sewer etc.... They are just afraid those communities post Paradise properties development might turn out better than theirs. Worry about your own space.

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