SECURED CAPITAL GROUP LLC v. PENSACOLA HERITAGE INVESTMENTS LLC et al

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF FLORIDA
PENSACOLA DIVISION
SECURED CAPITAL GROUP, LLC,
Plaintiff,
v. 	Case No. 3:25cv610-MCR-HTC
PENSACOLA HERITAGE
INVESTMENTS, LLC, et al.,
Defendants.
_______________________________/
REPORT AND RECOMMENDATION
On December 12, 2025, the undersigned recommended a default judgment be
entered in favor of Plaintiff Secured Capital Group LLC (“Secured Capital”) in the
amount of $2,488,500 in compensatory damages and that a hearing be held on
Secured Capital’s request for punitive damages and attorneys’ fees and costs.1 Doc.
65. On May 1, 2026, the District Judge adopted the undersigned’s recommendation.
Doc. 67. 	After conducting an evidentiary hearing, the undersigned recommends
punitive damages be entered in the amount of $500,000.
1 The basis for the default judgment is that Defendants committed perjury and made material
misrepresentations in their responses to discovery and other filings with the Court. Doc. 65.
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I. 	Background and Procedural History
As set out in detail in the previous Report and Recommendation (Doc. 65),
this action arises out of a breach of two escrow agreements Secured Capital entered
into with Defendant Pensacola Heritage Investments LLC (“PHI”), through its
manager Defendant John E. McCorvey (“McCorvey”), and allegations of fraud
related to those agreements. 	See Doc. 1 at 22-35. 	Under the terms of the Escrow
Agreements, PHI agreed to serve as the “Escrow Agent” and hold in escrow a total
of $3 million (the “Escrow Funds”) for Secured Capital. The purpose of the Escrow
Funds was to temporarily provide two companies—Orlando All Sports Dome LLC
(“Dome”) and The Tormenta Group, LLC (“Tormenta”)—with funding while the
companies tried to obtain permanent financing from Knight’s Lending LLC to
develop sports facilities. 	In addition, Dome and Tormenta were each required to
deposit $150,000 with PHI.
Although 	the 	Escrow Agreements 	prohibited 	PHI 	from 	disbursing 	or
distributing the Escrow Funds “other than as dictated in [the] agreement” or as
authorized by Secured Capital, it is undisputed that Defendants breached the Escrow
Agreements by retaining for themselves or diverting without authority $2,488,500
of the Escrow Funds. 	For example, as more fully set out in the Report and
Recommendation, PHI transferred at least $87,442.86 of the Escrow Funds to
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Defendant Pensacola Heritage Title LLC (“PHT”). 	Additionally, funds were
transferred to McCorvey for personal expenditures.
After conducting an evidentiary hearing on Secured Capital’s motion for
default judgment and considering McCorvey’s testimony and the documentary
evidence presented by Secured Capital, the undersigned determined that McCorvey
committed fraud on the Court and, even at the evidentiary hearing, was unable to
provide any credible answers. 	As discussed in the Report and Recommendation,
throughout this litigation, Defendants acted in bad faith and brazenly lied to the
Court and Secured Capital on numerous occasions in pleadings, a sworn document,
and discovery responses that they transferred the Escrow Funds, in good faith, to an
account at Stifel at the direction of Dome, Tormenta, and Franklin Ansah. Thus, the
Court exercised its inherent power and sanctioned the Defendants by entering a
default judgment.
In recommending that a default judgment be entered as a sanction for
Defendants’ fraud on the court, the undersigned also determined that Secured Capital
had stated allegations, which when accepted as true, were sufficient to support the
elements of each of its claims. 	As the undersigned noted, however, “[a]lthough a
defaulted defendant admits well-pleaded allegations of liability, allegations relating
to the amount of damages are not admitted by virtue of default. Rather, the Court
determines the amount and character of damages to be awarded.” Miller v. Paradise
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of Port Richey, Inc., 75 F. Supp. 2d 1342, 1346 (M.D. Fla. Nov. 9, 1999) (citation
omitted). 	“The plaintiff has the burden of proving the amount of damages to be
awarded.” 	Wallace v. The Kiwi Grp., Inc., 247 F.R.D. 679, 681 (M.D. Fla. Jan. 3,
2008).
The 	undersigned 	determined 	Secured 	Capital 	had 	met 	its 	burden 	of
establishing it is entitled to $2,488,500 in compensatory damages. 	However,
although 	the 	undersigned 	concluded 	Secured 	Capital’s 	allegations 	against
Defendants for fraudulent inducement and breach of fiduciary duty were sufficient
to support a claim for punitive damages, the undersigned determined the Court could
not fashion an amount for those damages without an evidentiary hearing. 	See
Jenkins v. Clerk of Ct., U.S. Dist. Ct., S. Dist. of Fla., 150 F. App’x 988, 989-90 (11th
Cir. 2005) (“Punitive damages are not a certain or ascertainable sum, and cannot be
entered without a hearing.”); Adolph Coors Co. v. Movement Against Racism & the
Klan, 777 F.2d 1538, 1543-44 (11th Cir. 1985) (holding a “judgment of default
awarding cash damages could not properly be entered ‘without a hearing unless the
amount claimed is a liquidated sum or one capable of mathematical calculation’”)
(quoting United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)).
On May 1, 2026, the District Judge adopted the Report and Recommendation
and remanded the matter to the undersigned to conduct an evidentiary hearing on
attorneys’ fees and punitive damages. Doc. 67. On June 12, 2026, the undersigned
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conducted an evidentiary hearing on the issue of punitive damages.2 At the hearing,
Secured 	Capital 	admitted 	the 	following 	documents 	into 	evidence: 	Exhibit 	1
“Accounting” (Doc. 77-1) and Exhibit 2 “Deposition of Defendant John McCorvey”
(Doc. 77-2). 	The only witness who testified at the hearing was Defendant
McCorvey.3 Secured Capital seeks a punitive damages award of four times the
amount of compensatory damages.
II. 	Findings of Fact
Based on the evidentiary hearing, the undersigned makes the following
findings of fact and determinations of law.4
1. 	Secured Capital entrusted the Defendants with the Escrow Funds.
2. 	Defendants were prohibited from distributing or disbursing the Escrow
Funds other than as authorized by the Escrow Agreement or Secured Capital.
3. 	In January 2025, Defendants certified they were holding $3,000,000 of
the Escrow Funds.5 Nonetheless, Defendants failed to return $2,488,500 of the
Escrow Funds to Secured Capital despite a demand for same.
2 Secured Capital filed a notice with the Court disclaiming any intent to seek attorneys’ fees and
costs. Doc. 70.
3 Although McCorvey was shown several exhibits for purposes of refreshing his memory, none
were admitted into evidence.
4 Some of the facts stated herein were findings made in the Report and Recommendation.
5 See Doc. 1 at 38; Doc. 29-3 at 2
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4. 	After the lawsuit was filed, McCorvey testified under oath that he
transferred the Escrow Funds to a brokerage account as requested and directed by
the principals involved in the transaction and a representative of the principals.
5. 	The Court ordered Defendants to provide an accounting of the Escrow
Funds. The Court also enjoined Defendants from further dissipating the remaining
Escrow Funds of approximately $16,000.
6. 	Contrary to the representations he made to the Court and in discovery
responses, at McCorvey’s deposition, he admitted the Escrow Funds were not
transferred to a brokerage account at the principals’ request.
7. 	To this day, Defendants have failed to provide a true account of how the
Escrow Funds were used. They have also failed to provide complete bank account
statements to Secured Capital. 	What Defendants have provided is a makeshift
accounting, created by their counsel from incomplete bank statements, which
purports to, but does not, provide any clarity on what Defendants did with the
Escrow Funds.
8. 	Nonetheless, the “accounting” shows hundreds of thousands of dollars
went to John McCorvey, personally.
9. 	The “accounting” also shows Defendants began diverting the Escrow
Funds almost immediately after receiving them.
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10. 	Defendants continued to dissipate the Escrow Funds after the litigation
was filed, in contravention of the Court’s injunction.
11. 	Defendants are liable to Secured Capital for breach of contract, breach
of fiduciary duty, negligence, fraud, conversion, aiding and abetting, and conspiracy.
12. 	McCorvey has a 1/3 ownership interest in two vacant lots, and each lot
is worth around $19,000. He also has a 1/3 ownership interest in a 2,600 square foot
residential home, valued at approximately $380,000-$400,000, with a mortgage of
$283,000-$300,000. 	Despite seemingly limited 	income, McCorvey 	pays 	the
mortgage on this residence, where his mother lives. A portion of the Escrow Funds
was transferred into McCorvey’s private account to pay this mortgage.
13. 	McCorvey also pays an approximate $4,500 monthly mortgage on a
property he lives in with his fiancée, which is owned by an LLC. McCorvey claims
to have no interest in that LLC. The property is valued at approximately $450,000-
$500,000 and has a mortgage of approximately $380,000.
14. 	McCorvey’s other assets and liabilities include two vehicles, a 2016
Chevy 	worth 	approximately 	$8,000 	and 	a 	2023 	GMC 	Sierra, 	valued 	at
approximately $60,000-$65,000. Both vehicles have loans on them and McCorvey
claims to be three to four months behind on those loan payments. 	Additionally,
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McCorvey claims to have $3,500-$4,000 in cash, less than $1,000 in a 401(k)/IRA,6
and a personal loan of $15,000.
15. 	It is unclear, however, what companies McCorvey owns or has an
interest in, as his testimony was not credible and inconsistent. 	For example,
McCorvey could not provide a straight response to whether he had an interest in J &
J 116, LLC, an entity which owns an entertainment venue worth approximately $1.7
million, with a loan of approximately $1.3 million. Although McCorvey testified at
his deposition he owned a 30-40% interest in J&J 116, at the hearing he testified he
“manages” that entity and does not have an ownership interest.
16. 	Defendants, particularly McCorvey, continue to be engaged in the
business of either holding funds in escrow or acting as a “pass through” for funds
from third parties.7 McCorvey receives a percentage fee for each transaction as a
“pass through,” ranging from 2% to 10% of the total funds transferred. For example,
on May 28, 2026, $200,000 was deposited into a PHI business account and $100,000
was withdrawn on that same date. 	When questioned about this transaction,
McCorvey explained that PHI was serving as a “pass through” and received a fee
for its services. McCorvey, however, could not identify the entity who deposited the
6 Based on an account statement from Charles Schwab, McCorvey withdrew approximately
$45,000 in January 2026. McCorvey testified he used these funds to pay bills.
7 When asked how he makes a living, McCorvey said by operating as a “pass through.”
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funds, why the company needed to use PHI as a “pass through,” or how much of a
fee PHI received.
17. 	PHT has $200,000 that it is holding in “escrow.”
18. 	Defendants have at least one other default judgment against them
regarding similar violations of an Escrow Agreement. 	See Not Another, LLC v.
Orlando All Sports Dome, LLC, et al., 2025-CA-001806-O, in the Circuit Court of
the Ninth Judicial District in and for Orange County, Florida.8 The Defendants owe
approximately $157,000 for the default judgment in that case. See id.
19. 	McCorvey also owes approximately $80,000 for a judgment against
him regarding a lawsuit related to a business called Cask and Flights, another
business in which he has an ownership interest.
20. 	PHT has a judgment against it for $50,000, related to a merchant credit
card account.
III. 	Discussion
Based on the evidence presented at the default judgment and punitive damages
hearings, the Court finds that Secured Capital has shown through clear and
convincing evidence that Defendants intentionally engaged in fraud. 	The Court
8 According to the allegations in Not Another, LLC, which are accepted as true because of
Pensacola Heritage’s default, Not Another, LLC, deposited funds totaling $180,000 with
Pensacola Heritage as an Escrow Agent and Pensacola Heritage was to return $150,000 to Not
Another, LLC by October 24, 2024. 	See Motion for Default Judgment, 2025-CA-001806-O.
Although Not Another, LLC made a demand to Pensacola Heritage on November 25, 2024, to
return the funds, Pensacola Heritage failed and refused to do so. Id.
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further finds Defendants had a specific intent to harm Secured Capital when
Defendants knowingly entered into an Escrow Agreement with Secured Capital and
accepted the Escrow Funds with no intent to hold the funds in escrow. Thus, for the
reasons discussed below, the undersigned finds Secured Capital is entitled to a
punitive damages award of $500,000. This amount is not excessive and comports
with due process while at the same time serving as both a punishment and deterrent
to the Defendants and other actors.
A. Legal Standard
Under Florida law,9 punitive damages may be awarded only if the trier of fact
determines based on “clear and convincing evidence,”10 that the defendant is guilty
of “intentional misconduct” or “gross negligence.” 	Diamond Tr. u/a/d 10/28/2005
v. Diamond, 2022 WL 4493035, at *4 (11th Cir. Sept. 28, 2022) (citing Fla. Stat.
§ 768.72(2)). 	Intentional 	misconduct 	occurs 	when 	a 	“defendant 	had 	actual
knowledge of the wrongfulness of the conduct and the high probability that injury
or damage to the claimant would result and, despite that knowledge, intentionally
pursued 	that 	course 	of 	conduct, 	resulting 	in 	injury 	or 	damage.” 	Fla. 	Sat.
9 In diversity cases, the court applies state substantive law to determine whether there is sufficient
evidence of conduct warranting punitive damages. Toole v. Baxter Healthcare Corp., 235 F.3d
1307, 1317 (11th Cir. 2000).
10 “‘Clear and convincing evidence’ is evidence that is precise, explicit, lacking in confusion, and
of such weight that it produces a firm belief or conviction, without hesitation, about the matter in
issue.” TMCT PLLC v. Wright, 2025 WL 4033368, at *8 (S.D. Fla. Nov. 24, 2025), report and
recommendation adopted, 2025 WL 3628139 (S.D. Fla. Dec. 15, 2025) (collecting cases awarding
punitive damages in default judgment cases).
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§ 768.72(2)(a). To prove intentional misconduct, a plaintiff must present evidence
that the defendant’s conduct was committed “in an outrageous manner or with fraud,
malice, wantonness or oppression.” Imperial Majesty Cruise Line, LLC v. Weitnauer
Duty Free, Inc., 987 So. 2d 706, 708 (Fla. 4th DCA 2008) (citing Hospital Corp. of
Lake Worth v. Romaguera, 511 So. 2d 559, 565 (Fla. 4th DCA 1986)); Owens-
Corning Fiberglas Corp. v. Ballard, 749 So. 2d 483, 486 (Fla. 1999) (“[P]unitive
damages are appropriate when a defendant engages in conduct which is fraudulent,
malicious, deliberately violent or oppressive[.]”). 	“‘Gross negligence’ means that
the defendant’s conduct was so reckless or wanting in care that it constituted a
conscious disregard or indifference to the life, safety, or rights of persons exposed to
such conduct.” Fla. Stat. § 768.72(2)(b).
“The purpose of punitive damages is to ‘punish the wrongdoer.’” IBP, Inc. v.
Hady Enters., Inc., 267 F. Supp. 2d 1148, 1171 (N.D. Fla. Feb. 26, 2002) (quoting
St. Regis Paper Co. v. Watson, 428 So. 2d 243, 247-48 (Fla. 1983)). 	It is also to
deter a defendant and others from engaging in similarly reprehensible conduct in the
future. 	See Myers v. Central Fla. Inv., Inc., 592 F.3d 1201, 1216 (11th Cir. 2010).
In awarding punitive damages, the court must ensure (1) “the manifest weight of the
evidence does not render the amount of punitive damages assessed out of all
reasonable proportion to the malice, outrage, or wantonness of the tortious conduct”;
(2) the award “bears some relationship to the defendant’s ability to pay and does not
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result in economic castigation or bankruptcy of the defendant”; and (3) the award
“must bear some reasonable relation to compensatory damages.” 	See Engle v.
Liggett Grp., Inc., 945 So. 2d 1246, 1263-64 (Fla. 2006). However, because, under
Florida law, punitive damages are “permissive” rather than mandatory, the court is
not obligated to award any amount of punitive damages. 	See Diamond, 2022 WL
4493035, at *5.
Florida imposes certain caps on an award of punitive damages. 	Per Florida
Statute § 768.73, punitive damages shall not exceed three times the amount of
compensatory damages, unless a defendant acted to achieve unreasonable financial
gain, or if a defendant had a specific intent to harm Secured Capital. 	Fla. Stat. §
768.73(1)(a)(1). 	The 	statutory 	limit 	is 	raised 	to 	four 	times 	the 	amount 	of
compensatory damages if the evidence shows the defendant was motivated solely by
unreasonable financial gain and there was a high likelihood of harm to the plaintiff.
Fla. Stat. § 768.73(1)(b). And when “the fact finder determines that at the time of
injury the defendant had a specific intent to harm the claimant and determines that
the defendant’s conduct did in fact harm the claimant, there shall be no cap on
punitive damages.” Fla. Stat. § 768.73(1)(c).
Finally, to ensure the amount of a punitive damages award comports with due
process, courts consider the following three guideposts: (1) the reprehensibility of
the conduct, (2) the disparity between the harm or potential harm and the punitive
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damages award, and (3) the similarities between the award and the penalties imposed
in similar cases. 	BMW of North America, Inc. v. Gore, 517 U.S. 559, 575 (1996);
see also, Engle, 945 So. 2d at 1264.
B. Analysis
Here, 	Secured 	Capital 	seeks 	a punitive damages 	award 	of 	four 	times
compensatory damages. 	However, the undersigned finds that to be excessive.
Instead, the undersigned recommends punitive damages be assessed in the amount
of $500,000. The undersigned finds this amount to be proportional to Defendants’
wrongful conduct; reflects the Defendants’ ability to pay; and is reasonably related
to the compensatory damages. Additionally, the undersigned finds the amount to be
consistent with the due process concerns recognized in BMW.
Secured Capital trusted Defendants to hold the Escrow Funds for the purpose
of allowing other entities to obtain funding for sports development projects. 	The
Escrow Agreements prohibited Defendants from disbursing the Escrow Funds, other
than as specifically directed by Secured Capital or the agreements. However, almost
immediately after the funds were transferred into escrow, Defendants distributed the
funds to themselves for their own personal benefit.
While Defendants may argue it was always their intent to return the funds at
some point, that simply cannot be the case. At the time Defendants converted the
Escrow Funds to their own use, Defendants were indebted to other investors on other
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projects, some of whom had similarly deposited funds with Defendants to hold in
trust or escrow. 	Defendants were essentially running some sort of Ponzi scheme;
they were robbing Peter to pay Paul until the well ran dry. Furthermore, the evidence
shows that Defendants hid their wrongful behavior from Secured Capital both before
and after the litigation was filed by making false representations about the status of
the Escrow Funds. 	Defendants’ lies delayed these proceedings and prevented
Secured Capital and the Court from discovering their misconduct. 	Defendants’
misconduct began the moment they entered the Escrow Agreements with Secured
Capital and continued throughout this litigation. 	Indeed, to this day, Defendants
have not fully disclosed what happened to the more than $2.4 million entrusted to
them.
Furthermore, 	this 	is 	not 	the 	first 	or 	only 	time 	Defendants 	have
misappropriated funds entrusted to them or faced court sanctions. 	A default
judgment was entered against PHI in December 2025 in the amount of $157,000 for
similar violations of an escrow agreement. 	See Not Another, LLC v. Orlando All
Sports Dome, LLC, No. 2025-CA-001806-O (Fla. 9th Cir. Ct. Dec. 16, 2025). And
given that Defendants continue to accept and hold funds in trust from other third
parties, it is unlikely going to be the last time, unless Defendants face real
consequences for their action.
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Finally, while the Court recognizes that it is not bound by any cap here, and
that courts have regularly awarded three and even four times compensatory damages
in cases involving monetary fraud or specific intent to harm,11 the undersigned does
not find such an award to be appropriate here for several reasons.
First, the compensatory damages amount is significant, and an award of four
times that amount is almost $10,000,000. Thus, a smaller amount is warranted. See
Criswell v. Lisenby, 2007 WL 9735884, at *5-6 (N.D. Ga. Apr. 17, 2007) (awarding
$500,000 in punitive damages despite finding evidence of specific intent to harm
because plaintiff already owed over $3,000,000 in other damages), report and
recommendation adopted, 2007 WL 9735874 (N.D. Ga. Oct. 9, 2007); see also,
Handal v. Joseph, 2014 WL 12860593 at *2 (S.D. Fla. July 18, 2014) (awarding
$1,000,000 in punitive damages on motion for default judgment and stating, “[w]hile
Defendant’s conduct was egregious enough to exceed the 4:1 ratio endorsed by the
Supreme Court, the Undersigned does not find that this case warrants a punitive
damage 	award 	beyond 	the 	application 	of 	the 	Supreme 	Court’s 	single-digit
multiplier”); Goldsmith v. Bagby Elevator Co., Inc, 513 F.3d 1261, 1284 (11th Cir.
2008) (“We have upheld punitive damages awards that were greater than single-digit
11 Notably, the compensatory damages in those other cases, unlike in the present case, were all at
or below $500,000. See Energy Source, Inc., v. Gleeko Props., LLC, 2012 WL 13008451, at *5-
6 (S.D. Fla. Dec. 12, 2012) (awarding punitive damages of three times compensatory damages, in
a fraud case, where the compensatory damages were $439,200), report and recommendation
adopted, 2013 WL 12244329 (S.D. Fla. Jan. 4, 2013).
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multipliers of compensatory damages when the awards of compensatory damages
were, like Goldsmith’s damages, relatively small and there was a substantial need
for deterrence.”). Indeed, when the wrong is an economic rather than physical harm,
“[i]t should be presumed a plaintiff has been made whole for his injuries by
compensatory damages, so punitive damages should only be awarded if the
defendant’s culpability, after having paid compensatory damages, is so reprehensible
as 	to 	warrant 	the imposition 	of further sanctions 	to 	achieve punishment 	or
deterrence.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003).
Second, the Defendants’ ability to pay a larger amount is questionable. 	As
stated above, a punitive damages award must bear some relationship to the
Defendants’ ability to pay. 	See Myers, 529 F.3d at 1216. 	“If [the] defendant’s
financial worth is meager it would be to his advantage to introduce such evidence in
order to mitigate the damage award.” See IBP, Inc., 267 F. Supp. 2d at 1171 (citation
omitted). 	Here, Defendants argue they are unable to pay any significant damages
award and that such an award would bankrupt them. 	Given McCorvey’s lack of
credibility, the undersigned is not convinced that the Defendants’ financial picture is
as dire as he would like to represent. Nonetheless, it does not appear that Defendants
have significant funds or assets available to satisfy a large punitive damages award.
As stated above, in addition to the more than $2 million compensatory damages
award in this case, Defendants are also facing judgments in other cases of over
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$200,000. 	Additionally, based on the evidence presented at the default judgment
hearing, Defendants were using Secured Capital’s funds to cover their personal
expenses and pay other debts.
Third, aside from the loss of the funds, Secured Capital did not suffer any
other damage. Although the Escrow Funds were remitted to the Defendants for the
purpose of obtaining construction loans for the development of sports facilities, there
is no evidence before the Court that the loss of the Escrow Funds resulted in other
monetary or business damage to Secured Capital. For example, there is no evidence
regarding the effect the loss of the Escrow Funds had on Secured Capital’s operations
or investors. See Energy Source, Inc., 2012 WL 13008451, at *5-6 (awarding treble
damages because plaintiffs were unable to proceed with contract as a result of
defendants’ fraudulent and wrongful conduct).
For the reasons set forth above, the undersigned finds a punitive damages
award of $500,000 to be sufficient.
Accordingly, it is RECOMMENDED that:
1. 	Secured Capital be awarded punitive damages of $500,000.
2. 	The clerk enter a final judgment in favor of Secured Capital in the total
amount of $2,988,500, consisting of $2,488,500 in compensatory damages and
$500,000 in punitive damages.
3. 	The clerk close the file.
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At Pensacola, Florida, this 24 th day of July, 2026.
/s/ Hope Thai Cannon
HOPE THAI CANNON
UNITED STATES MAGISTRATE JUDGE
NOTICE TO THE PARTIES
Objections to these proposed findings and recommendations must be filed within
fourteen (14) days of the date of the Report and Recommendation. Any different
deadline that may appear on the electronic docket is for the court’s internal use only
and does not control. An objecting party must serve a copy of its objections upon
all other parties. A party who fails to object to the magistrate judge’s findings or
recommendations contained in a report and recommendation waives the right to
challenge on appeal the district court’s order based on the unobjected-to factual and
legal conclusions. See 11th Cir. Rule 3-1.
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