Since 2011, the Detroit Police and Fire Retirement System has appointed four receivers to collect on a $10-million unpaid loan to repair and sell homes to low-income buyers. After discovering an elaborate Ponzi scheme and filing multiple lawsuits against the three debtors, one partner committed suicide while the other two fled and are thought to be in Panama.
(page 7 of 7)
In fact, the task of tracking down the Kastanes became more bizarre as time went on. George Kastanes and his lawyer would later claim that McWhorter received $100,000 from a major drug dealer to hire Kilpatrick’s father, Bernard Kilpatrick, to help seal the deal. In return, the drug dealer received a cut of the properties. Bernard Kilpatrick has denied the allegation.
It’s not clear how McWhorter hooked up with Kastanes, who was then in his early 60s, and his wife Teresa, nearly 10 years younger. They were principals in a flock of companies incorporated in South Carolina with similar names to McWhorter’s Paramount Limited entity.
George Kastanes is a former pilot with Eastern Airlines who went to law school after the airline folded. After obtaining his law degree he went into the real estate business with his wife, buying up foreclosed homes and selling them to buyers who would not normally qualify for bank-backed mortgages — a plan eerily similar to the one McWhorter outlined to the board of trustees.
The couple was even featured in a 2007 Wall Street Journal story in which they were depicted as entrepreneurs trolling what they termed the rock bottom of the housing industry, “the sub-subprime market.”
With their debt to the police and fire fund now at more than $16 million, including interest, and with millions more in other judgments against them in courts around the country, the couple has dropped off the radar.
After breaking the story on the $10-million heist, The Detroit News tracked George Kastanes in 2012 to a luxury hotel on the island of St. Kitts in the West Indies. He denied doing anything illegal, and said he and his wife were not crooks. While he cheerfully admitted to living it up on St. Kitts, he declined to comment on his wife’s whereabouts. Another news report said she was in Costa Rica undergoing treatment for an illness.
The latest sighting of George and Teresa Kastanes, reportedly on a Facebook posting in June, claimed they were in Panama. If the authorities ever find the couple, it’s unclear whether they have any assets to pay off their debts. db