Overseer Candidate's Homes Blow in Wind

As a candidate for one of the boards that governs Harvard, Leonard Miller '55 is packaging himself as a housing magnate whose expertise can help the University fight homelessness and urban decay.

"I would like to help Harvard use its leadership and research capabilities to reshape and define the future the future of our cities, and thus to improve the quality of life in America," Miller said in the statement sent out to the Harvard graduates who elect members of the Board of Overseers. The board is charged with approving or rejecting major decisions made by the university.

But the experience of hundreds of families in southern Florida contradicts the image Miller projects. They have accused Lennar Corporation, which he founded and now chairs, of building substandard homes too weak to withstand the battering of Hurricane Andrew.

Andrew's 120 mile-per-hour winds ripped large sections out of the roofs of many Lennar-built homes, leaving their interiors exposed to driving rains.

A group of homeowners decided to sue the corporation, one of the nation's largest homebuilders, despite Lennar officials' claims that their houses were built to standard.

The company upholds its claim, even though it settled out of court in 1993 at a cost of $2.4 million.

Carpenters and Lawyers

The lawsuit after Hurricane Andrew was not the first legal challenge Lennar faced for allegedly shoddy construction techniques, according to the Miami Herald.

In May 1991, about 80 owners from the Hampshire Homes development in Kendall, Fla. filed suit against Lennar for failing to comply with the South Florida Building Code, which is particularly stringent because of the danger of violent storms.

The complaint alleged that Lennar used untreated wood and ungalvanized nails, bolts and screws to build one and two-story homes. Homeowners claimed that their houses were rotting because of Lennar's constriction techniques.

The Miami Herald reported that Lennar agreed to pay for porch repairs on some of the houses but declined to make other repairs, arguing that the homes were fundamentally sound.

Then, in 1992, Hurricane Andrew struck.

Attorneys for Hampshire homeowners amended their suit to include the hurricane damage and pressed on.

Five other Lennar developments were also hard hit by Andrew, and residents in those areas filed a separate suit.

They claimed that their homes were built with defective roof trusses, shoddymaterials, improperly installed roofs, hurricanestraps, untreated wood and ungalvanized nails. Asin the Hampshire Homes suit, the plantiffs arguedthat Lennar houses failed to meet the SouthFlorida Building Code.

Lennar made efforts to help Andrew's victimsrecover.

"We immediately set up care centers in areasstruck by Hurricane Andrew," Miller said in atelephone interview yesterday. "We providedsupplies and information centers, we helped withinsurance claims and with finding people otherplaces to five."

"I think we're good corporate citizens of thestate," he added. "People have trust andconfidence in our company.

But the hurricane damaged Lennar's corporatecredibility as well as its real estate. A group ofHampshire owners sought an order to keep Lennarfrom attempting to rebuild the devastateddevelopments.

Louis Robles, the attorney for the owners,sought to keep Lennar from contacting orcommunicating with any homeowners without priorcourt approval.

"I have a real problem with that, without their[the homeowners] having advice of counsel," Roblestold The Miami Herald. "I don't know what Lennaris telling the homeowners frankly."

"I trusted [Lennar] because it was the largestbuilder in Florida," said Susan Woolf, a Hampshirehomeowner who decided to move rather thanattempting to repair her home after the hurricane."It just goes to show you can't trust anyoneanymore."

Miller and other Lennar officials argued inthis case as well that their houses werestructurally sound and built to code. HurricaneAndrew, they said, was simply too powerful formost buildings to withstand.

"In this town right now, what we need is moreroofers, carpenters, electricians and plumbers,not more lawyers," Miller said at the time.

He and others executives vowed to contest thehomeowners' claims.

"We plan to fight these lawsuits aggressively.They are totally, in our view, without merit,"Miller told a Miami Herald reporter at the time.

But by March 1993, Lennar had agreed to settleboth suits for a total payment of $2.4 million, orabout $3,800 per plaintiff after taxes andlawyers' fees were deducted.

In a statement issued with the settlementLennar officials reasserted their belief that theywere not at fault in the damage caused by the"extraordinary storm."

A Money Manager

Southern Florida residents might adviseHarvard's graduates not to make Miller an overseerfor his construction expertise.

But the man who offers himself to theUniversity as a housing expert is increasingly amoney manager as well.

While Miller says Lennar was founded to providehousing for moderate income families, the companyhas been moving to diversify its activities forseveral years. It has added investment andfinancial divisions, both of which are highlysuccessful.

"Housing is still our main focus," Miller saidyesterday. "The diversification is to smooth outcycles in the housing industry.

The two businesses we've moved into work on atiming that is different than homebuilding."

Lennar builds houses in Florida, Arizona and,recently, Texas, but the company's investment andfinancial divisions operate nationwide.

Partnering with prestigious New York brokeragehouses, Lennar has invested millions of dollars inexpanded portfolios whose assets range fromcommercial real estate to bad mortgages fromfailed savings and loan institutions.

In fact, in the early 1990s, Lennar was thelargest buyer of Florida real estate from theResolution Trust Corporation, the federal agencyestablished to liquidate insolvent S&Ls.

Buying from the RTC has allowed Lennar to pickup assets at bargain-basement prices.

Along with the investment firm Morgan Stanley,which raised an $800 million "vulture" realtyfund, Lennar acquired the assets of Ameri-FirstBank, appraised at $900 million, for about halftheir actual value.

A partnership with Westinghouse Electric Corp.and Lehman Brothers put Lennar in control of $3billion worth of assets for about half of theirvalue, as well.

These, as well as other investments, haveenabled Lennar to profit while other firms havesuffered, and have earned Miller admiration fromindustry onlookers.

Kenneth Campbell, who tracks the real estateindustry for Audit Investments in New Jersey, toldThe Miami Herald: "I'll bet some of the others inthe business will be looking around, saying,"What's he know that we don't?"

For Miller, there is no contradiction betweenhis image as a housing-oriented candidate and theactual diversity of his business interests.

"I certainly feel that [investment] experiencewould be a help as an Overseer," he said

Lennar made efforts to help Andrew's victimsrecover.

"We immediately set up care centers in areasstruck by Hurricane Andrew," Miller said in atelephone interview yesterday. "We providedsupplies and information centers, we helped withinsurance claims and with finding people otherplaces to five."

"I think we're good corporate citizens of thestate," he added. "People have trust andconfidence in our company.

But the hurricane damaged Lennar's corporatecredibility as well as its real estate. A group ofHampshire owners sought an order to keep Lennarfrom attempting to rebuild the devastateddevelopments.

Louis Robles, the attorney for the owners,sought to keep Lennar from contacting orcommunicating with any homeowners without priorcourt approval.

"I have a real problem with that, without their[the homeowners] having advice of counsel," Roblestold The Miami Herald. "I don't know what Lennaris telling the homeowners frankly."

"I trusted [Lennar] because it was the largestbuilder in Florida," said Susan Woolf, a Hampshirehomeowner who decided to move rather thanattempting to repair her home after the hurricane."It just goes to show you can't trust anyoneanymore."

Miller and other Lennar officials argued inthis case as well that their houses werestructurally sound and built to code. HurricaneAndrew, they said, was simply too powerful formost buildings to withstand.

"In this town right now, what we need is moreroofers, carpenters, electricians and plumbers,not more lawyers," Miller said at the time.

He and others executives vowed to contest thehomeowners' claims.

"We plan to fight these lawsuits aggressively.They are totally, in our view, without merit,"Miller told a Miami Herald reporter at the time.

But by March 1993, Lennar had agreed to settleboth suits for a total payment of $2.4 million, orabout $3,800 per plaintiff after taxes andlawyers' fees were deducted.

In a statement issued with the settlementLennar officials reasserted their belief that theywere not at fault in the damage caused by the"extraordinary storm."

A Money Manager

Southern Florida residents might adviseHarvard's graduates not to make Miller an overseerfor his construction expertise.

But the man who offers himself to theUniversity as a housing expert is increasingly amoney manager as well.

While Miller says Lennar was founded to providehousing for moderate income families, the companyhas been moving to diversify its activities forseveral years. It has added investment andfinancial divisions, both of which are highlysuccessful.

"Housing is still our main focus," Miller saidyesterday. "The diversification is to smooth outcycles in the housing industry.

The two businesses we've moved into work on atiming that is different than homebuilding."

Lennar builds houses in Florida, Arizona and,recently, Texas, but the company's investment andfinancial divisions operate nationwide.

Partnering with prestigious New York brokeragehouses, Lennar has invested millions of dollars inexpanded portfolios whose assets range fromcommercial real estate to bad mortgages fromfailed savings and loan institutions.

In fact, in the early 1990s, Lennar was thelargest buyer of Florida real estate from theResolution Trust Corporation, the federal agencyestablished to liquidate insolvent S&Ls.

Buying from the RTC has allowed Lennar to pickup assets at bargain-basement prices.

Along with the investment firm Morgan Stanley,which raised an $800 million "vulture" realtyfund, Lennar acquired the assets of Ameri-FirstBank, appraised at $900 million, for about halftheir actual value.

A partnership with Westinghouse Electric Corp.and Lehman Brothers put Lennar in control of $3billion worth of assets for about half of theirvalue, as well.

These, as well as other investments, haveenabled Lennar to profit while other firms havesuffered, and have earned Miller admiration fromindustry onlookers.

Kenneth Campbell, who tracks the real estateindustry for Audit Investments in New Jersey, toldThe Miami Herald: "I'll bet some of the others inthe business will be looking around, saying,"What's he know that we don't?"

For Miller, there is no contradiction betweenhis image as a housing-oriented candidate and theactual diversity of his business interests.

"I certainly feel that [investment] experiencewould be a help as an Overseer," he said