Developer seeks $5 billion from Subway founder

AP News
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Posted: Dec 03, 2009 7:37 PM

A developer on Thursday sued the founder and president of Subway restaurants for $5 billion, claiming the billionaire businessman hijacked his dreams of creating the nation's first eco-sustainable city.

Multimillionaire Anthony Pugliese filed the lawsuit in Palm Beach County Circuit Court against Fred DeLuca, alleging breach of contract, fraud, and predatory lending, among other claims.

Destiny, the new city set to be built on some 41,000 acres of overgrown brush and cattle pastures just off Florida's Turnpike about 160 miles north of Miami, was to be even larger than Disney World.

It had been Pugliese's vision since early 2000. He was looking to build a city larger than Miami, but with just about 150,000 people, a biotechnology hub, 40 miles of navigable lakes, and a sustainable energy source.

According to the complaint, DeLuca persuaded Pugliese to let him handle financing of the deal for the project that was to be valued at some $9 billion. In the process, Pugliese claims he was pushed out of most business dealings even though he remained a partner. In addition, he says DeLuca secured financing at a low interest rate only to charge Pugliese a much higher inflated rate while pocketing the remainder of the funds.

"DeLuca is making money off the loan itself," said Pugliese's attorney, Tricia Hoffler. "Anthony is mistakenly believing that he is getting the best deal ... That was just the beginning of the deception ... DeLuca just took over and squeezed our guy out. Anthony is still a partner but without a say."

A Subway spokesman said the suit was "unrelated to Subway business."

"We have no comment and can provide no further information," said Les Winograd.

Winograd said he was speaking for DeLuca, who was not made available.

"This wasn't really just about money," Pugliese said. "This was a project that was close to our hearts because I conceived it, and I felt I could really make a difference."

In the lawsuit, Pugliese claims he brought DeLuca on as a partner only to learn in the ensuing years that he was being defrauded. It was filed on behalf of Pugliese by the Florida firm of well-known attorney Willie E. Gary.

No buildings have been erected on the land, though state and federal officials have given it the go-ahead, and discussions were under way for roads and infrastructure. Whether the project comes to fruition remains to be seen, since both sides are suing each other.

Pugliese says he's already sunk more than $10 million cash into the deal.

"It's devastating," he said. "We've just lost faith."