UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF FLORIDA 

Panama City Division 

ROBERT J. MEYER, Individually and on 

Behalf of All Others Similarly Situated, 

 Plaintiff, 

 v. 

THE ST. JOE COMPANY, et al., 

 Defendants. 

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Civil Action No. 5:11-cv-00027-RSEMT 

CONSOLIDATED CLASS ACTION 

COMPLAINT FOR VIOLATIONS 

OF FEDERAL SECURITIES LAWS 

JURY TRIAL DEMANDED

 

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TABLE OF CONTENTS 

I. INTRODUCTION ...................................................................................................1 

II. THE EXCHANGE ACT CLAIMS..........................................................................2 

A. Jurisdiction And Venue................................................................................7 

B. Parties...........................................................................................................8 

1. Lead Plaintiff ...................................................................................8 

2. The Company...................................................................................8 

3. Officer Defendants...........................................................................8 

C. Factual Background And Substantive Allegations ....................................11 

D. The Drastic Downturn in the Florida Residential Real Estate Market ......12 

E. St. JoeZs Residential Real Estate Development Projects Suffered 

During the Class Period .............................................................................16 

1. Further Development of St. JoeZs Projects Was Not 

Economic .......................................................................................16 

2. St. JoeZs Development Projects Were Not Performing Well.........17 

(a) RiverTown ........................................................................ 18 

(b) WaterColor and the WaterSounds .................................... 21 

(c) SummerCamp Beach ........................................................ 23 

(d) WindMark Beach.............................................................. 26 

3. Average Sales Prices Decreased Across All of St. JoeZs 

Projects...........................................................................................29 

F. St JoeZs Residential Real Estate Projects Were A Core Part of the 

CompanyZs Class Period Operations .........................................................34 

G. DefendantsZ False And Misleading Statements And Omissions ...............36 

1. Fourth Quarter and Full Year 2007 Financial Results...................36 

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2. First Quarter 2008 Financial Results .............................................42 

3. Second Quarter 2008 Financial Results.........................................45 

4. Third Quarter 2008 Financial Results............................................47 

5. Fourth Quarter And Full Year 2008 Financial Results..................50 

6. First Quarter 2009 Financial Results .............................................55 

7. Second Quarter 2009 Financial Results.........................................57 

8. Third Quarter 2009 Financial Results............................................61 

9. Fourth Quarter and Full Year 2009 Financial Results...................64 

10. First Quarter 2010 Financial Results .............................................69 

11. Second Quarter 2010 Financial Results.........................................71 

12. Third Quarter 2010 Financial Results............................................74 

H. The Truth Is Revealed................................................................................76 

I. Failure to Comply with SEC Regulations and Generally Accepted 

Accounting Principles (bGAAPc)..............................................................79 

1. Failure to Comply With Regulation S-K, Item 303.......................79 

2. Failure to Comply With Regulation S-X and GAAP.....................82 

J. Additional Indicia of Scienter....................................................................92 

1. DefendantsZ Knowledge of Average Sales Prices on St. JoeZs 

Properties .......................................................................................92 

2. DefendantsZ Fair Value Analyses Grossly Differ From Their 

Undiscounted Future Cash Flow Analyses....................................96 

3. The February 2008 Stock Offering................................................98 

4. Defendants Knew the Airport Could Not Justify Carrying 

Values ............................................................................................99 

5. The Officer Defendants Were Highly Compensated During 

the Class Period............................................................................100 

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K. Loss Causation/Economic Loss ...............................................................101 

L. Control Person Allegations......................................................................102 

M. No Safe Harbor ........................................................................................104 

N. Applicability Of Presumption Of Reliance Under The Affiliate Ute 

Doctrine And/Or, In The Alternative, The Fraud On The Market 

Doctrine....................................................................................................105 

III. CLASS ACTION ALLEGATION RELEVANT TO ALL CLAIMS .................107 

IV. EXCHANGE ACT COUNTS..............................................................................109 

COUNT I: Violation Of Section 10(b) Of The Exchange Act And Rule 

10b-5(b) Promulgated Thereunder Against St. Joe and The Officer 

Defendants ...........................................................................................................109 

COUNT II: Violation Of Section 20(a) Of The Exchange Act Against the 

Officer Defendants...............................................................................................113 

V. THE SECURITIES ACT CLAIMS.....................................................................114 

A. Nature Of The Securities Act Claims ......................................................115 

B. Jurisdiction And Venue............................................................................116 

C. Parties.......................................................................................................116 

D. Substantive Allegations ...........................................................................120 

VI. SECURITIES ACT COUNTS.............................................................................125 

COUNT III: For Violations Of § 11 Of The Securities Act Against St. Joe, 

Rummell, Greene, McCalmont, Connolly, the Director Defendants and 

Deutsche Bank .....................................................................................................125 

COUNT IV: For Violations Of § 12(a)(2) Of The Securities Act Against 

St. Joe, Rummell, Greene, McCalmont, Connolly And Deutsche Bank .............127 

COUNT V: For Violations Of § 15 Of The Securities Act Against 

Rummell, Greene, McCalmont, And Connolly ...................................................129 

JURY TRIAL DEMANDED...........................................................................................130 

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I. INTRODUCTION

1. Lead Plaintiff City of Southfield Fire & Police Retirement System (bLead 

Plaintiffc or bPlaintiffc), by its undersigned attorneys, hereby brings this Consolidated 

Amended Class Action Complaint (bComplaintc) against The St. Joe Company (bSt. Joec 

or the bCompanyc), certain of its officers and directors, and Deutsche Bank Securities 

(bDeutschec). The allegations herein are based on PlaintiffZs personal knowledge as to its 

own acts and on information and belief as to all other matters, such information and 

belief having been informed by the investigation conducted by and under the supervision 

of its counsel, which included interviews of former employees of St. Joe and other 

persons with knowledge of the matters alleged herein (some of whom have provided 

information in confidence; these confidential witnesses (bCWsc) will be identified herein 

by number (CW 1, CW 2, etc.)), review and analysis of publicly available information, 

including United States Securities and Exchange Commission (bSECc) filings by St. Joe, 

as well as regulatory filings and reports, securities analystsZ reports and advisories about 

the Company, press releases and other public statements issued by the Company, media 

reports about the Company, and consultations with experts. Lead Plaintiff believes that 

substantial additional evidentiary support will exist for the allegations set forth herein 

after a reasonable opportunity for discovery. 

2. Plaintiff brings this federal securities class action on behalf of itself and all 

similarly situated persons and entities that purchased St. JoeZs publicly traded securities 

between February 19, 2008 and October 12, 2010, inclusive, including purchasers of the 

CompanyZs securities pursuant or traceable to the CompanyZs public offering of over 17 

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million shares of common stock on or about February 27, 2008 (the purchasers being the 

bClassc and the time frame being the bClass Periodc). Lead Plaintiff seeks remedies 

under the Securities Act of 1933, 15 U.S.C. §§ 77a et seq. (the bSecurities Actc), and the 

Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq. (the bExchange Actc). 

II. THE EXCHANGE ACT CLAIMS

3. St. Joe is one of the largest real estate development companies in Florida, 

owning approximately 577,000 acres of land concentrated primarily in Northwest 

Florida. Approximately 405,000 acres (70%) of St. JoeZs total land holdings are within 

15 miles of the coast of the Gulf of Mexico. St. Joe is engaged in residential 

development, commercial and industrial development and rural land sales, and also has 

significant ownership interests in timber. The Company operates through four business 

segments: (1) residential real estate; (2) commercial real estate; (3) rural land sales; and 

(4) forestry. 

4. For more than two years, St. Joe systematically and fraudulently misled 

the market regarding the true value of its residential real estate development projects. 

The Company has recognized only marginal impairments over the Class Period 

(including quarters in which St. Joe booked no impairment at all), even though sales and 

sale prices of property lots in St. JoeZs projects have plummeted, and St. Joe has 

dramatically reduced or halted development spending in partially developed projects. By 

failing to take appropriate impairment charges reflecting the known true value of its 

development projects, St. Joe materially overstated its asset values and its earnings during 

the Class Period. 

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5. Many of St. JoeZs residential real estate projects remain largely unfinished 

and undeveloped. One of its largest projects, RiverTown in St. Johns County, is less than 

5% developed with only 215 developed lots out of a planned 4,500. The WindMark 

project in Gulf County is only 15% developed with 224 developed lots out of a planned 

1,516. Similarly the WaterSound and SummerCamp Beach projects in Walton and 

Franklin Counties, respectively, are both less than 50% developed. Even though only 

fractions of their biggest projects have been developed, St. Joe has only invested 

minimally in further development, and large tracts of undeveloped land remain. 

6. Under the relevant accounting rules, explained more fully below, St. Joe 

must test its development projects for impairment when there are certain indicators of 

impairment such as, inter alia, a significant decrease in the market price of real estate 

properties, as occurred in Florida during the Class Period. Indeed, St. Joe tacitly admits 

that these indicators were present throughout the Class Period since it claims to have 

tested its development projects for impairment every quarter during the Class Period. 

7. Testing for impairment is critical. Impairment charges are special, nonrecurring charges on an asset with an overstated carrying value. Thus, taking an 

impairment charge decreases the previously reported value of an asset and reduces 

earnings. 

8. Because St. Joe classified its residential real estate projects as long-lived 

assets bto be held and used,c once it determined there were certain indicators of 

impairment, St. Joe was required to perform an undiscounted cash flow analysis for these 

development projects to determine the brecoverable valuec for each project m the value of 

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the project to St. Joe over its useful life. If the undiscounted cash flow total meets or 

exceeds the carrying value for the relevant project (which represents the amount St. Joe 

has spent to date in developing the land, including acquisition costs), no impairment 

charge is necessary. 

9. Generally Accepted Accounting Principles (bGAAPc) require that all 

available evidence be considered (including current conditions in the real estate market) 

when performing a valid cash flow analysis for the purposes of impairment testing and 

measurement. Florida has been hit especially hard by the economic recession, and real 

estate prices have suffered accordingly, yet St. Joe repeatedly represented, quarter after 

quarter, that the values of its partially developed projects remain near constant. 

10. Core factors that St. Joe and its senior officers knew and were required to 

consider in deriving the carrying value of the CompanyZs residential real estate projects 

include: (1) the recent sales prices of lots and units; (2) the bsales velocitiesc for the 

region, i.e., the sales volumes and rates of sales; (3) the number of developed units that 

were ready to be sold; and (4) the time period for each projectZs useful life (i.e., the time 

period for complete development), which in turn depends on the expiration date of the 

permits and entitlements St. Joe obtained from agencies in order to develop the land. 

11. Given the states of the economy and the real estate market, the recent sales 

history at St. JoeZs residential real estate projects, and the development progress of its 

projects, Defendants knew, or were severely reckless in not knowing, that the value of St. 

JoeZs residential real estate development projects were overstated in the CompanyZs 

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financial statements and, accordingly, should have been significantly impaired under 

GAAP. 

12. Other factors that Defendants purportedly relied on to support St. JoeZs 

overstated carrying values were equally untenable. St. Joe repeatedly touted the new 

binternational airportc in Panama City, which St. Joe emphasized would drive up 

property values for its nearby projects. However, as Defendants knew: (1) the airport is 

tiny, unbefitting its binternationalc moniker; (2) it is served by only two airlines, 

Southwest and Delta, with limited flight options; (3) St. Joe had to agree to cover any 

losses suffered by Southwest for the first three years of operations in order to secure the 

airlineZs services for the airport; and (4) unlike other regional airports, the new airport 

does not serve any colleges, commercial districts, or dense population centers. The 

airport, in fact, is located in the middle of a pine forest. 

13. The inescapable conclusion is that St. Joe fraudulently manipulated the 

values of its assets by overstating their carrying values and failing to take the necessary 

impairment charges required by GAAP. As a result, the Company overstated its earnings 

throughout the Class Period. 

14. For the quarters during the Class Period in which St. Joe did take small 

impairment charges to its development projects, the CompanyZs undiscounted cash flow 

analysis must not have met the carrying value for the relevant project. To determine the 

amount of impairment necessary, St. Joe must then conduct a fair value analysis. Given 

current market conditions during the Class Period, there was no possibility of a nonfraudulent fair value analysis supporting the minimal charges recorded by St. Joe. 

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15. St. JoeZs failure to timely write down its impaired residential real estate is 

further evidenced by the comparatively huge impairments recorded by the Company on 

its sales of entire residential projects, where St. Joe is forced to write-off the difference 

between the final sales price (which is dictated by current market conditions, as is any 

valid fair value analysis) and reported carrying value. 

16. In December 2009, for example, St. Joe announced that it was going to 

sell the Victoria Park residential real estate project. For the quarters immediately 

preceding the sale of the project, the Company represented that no impairment charge 

was necessary. However, just two days before the sale was completed, the Company 

took an impairment charge for over 80% of the projectZs purported carrying value. In 

other words, St. Joe m by not taking any impairment chargem misled the market into 

believing that the carrying value of Victoria Park was completely recoverable when, in 

fact, the value of the project was significantly impaired. The disparity between St. JoeZs 

carrying value for the property and its actual fair market value thus demonstrates that the 

propertyZs carrying value was grossly overstated. 

17. On October 13, 2010 the truth about St. JoeZs inflated carrying values 

finally emerged. David Einhorn, an investor in St. Joe, undertook a lengthy and in-depth 

analysis of St. JoeZs real estate properties, relying on detailed information gleaned from 

tax assessment records, Freedom of Information Act requests, County records, and onthe-ground surveillance of St. JoeZs properties, and presented his conclusions to the 

market at the Value Investing Congress. Shocked investors learned (1) how undeveloped 

many of the properties were; (2) of the severe drop in sales prices at many of St. JoeZs 

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projects; and (3) how many of St. JoeZs properties were less than ideally situated for 

residential projects. Thus, the market finally learned the truth about St. JoeZs real estate 

development properties from evidence Einhorn presented that conclusively establishes 

the Defendants were manipulating their carrying values. 

18. As a result of the Einhorn presentation, St. JoeZs stock plummeted 9.7% in 

a single day, with 12,828,900 shares traded (compared to an average daily trading volume 

during the Class Period of 1,093,197 shares). 

A. Jurisdiction And Venue

19. The claims asserted herein arise under and pursuant to Sections 10(b) and 

20(a) of the Exchange Act, (15 U.S.C. §§ 78j(b) and 78t(a)), and Rule 10b-5 promulgated 

thereunder (17 C.F.R. § 240.10b-5). 

20. This Court has jurisdiction over the subject matter of this action pursuant 

to Section 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331. 

21. Venue is proper in this District pursuant to Section 27 of the Exchange 

Act, 15 U.S.C. § 78aa and 28 U.S.C. § 1391(b). Many of the acts and transactions 

alleged herein, including the preparation and dissemination of materially false and 

misleading information, occurred in this District. St. JoeZs principal executive offices are 

also located within this District. 

22. In connection with the acts, conduct and other wrongs alleged in this 

Complaint, Defendants, directly or indirectly, used the means and instrumentalities of 

interstate commerce. 

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B. Parties

1. Lead Plaintiff

23. On January 25, 2011, this Court appointed City of Southfield Fire & 

Police Retirement System as Lead Plaintiff in this action. As evidenced by the 

Certificate previously filed, Lead Plaintiff purchased St. Joe stock during the Class Period 

and was damaged thereby. 

2. The Company

24. Defendant St. Joe is a Florida corporation with its principal executive 

offices located at 133 South WaterSound Parkway, WaterSound, Florida. St. Joe is one 

of the largest real estate development companies in Florida, owning approximately 

577,000 acres of land concentrated primarily in Northwest Florida. Approximately 

405,000 acres (70%) of St. JoeZs total land holdings are within 15 miles of the coast of 

the Gulf of Mexico. The Company operates through four business segments: (1) 

residential real estate; (2) commercial real estate; (3) rural land sales; and (4) forestry. St. 

Joe trades its securities on the New York Stock Exchange under the ticker symbol bJOE.c 

3. Officer Defendants

25. Defendant William Britton Greene (bGreenec) has served as the 

CompanyZs Chief Executive Officer (bCEOc) since May 2008 and as President of the 

Company since October 2007. Greene has worked at the Company since 1998, holding 

various positions, including President of West Florida Residential and Resort Operations, 

President of St. Joe Towns & Resorts, and President of St. Joe Commercial Real Estate. 

Greene signed the CompanyZs Forms 10-K for the Fiscal Years 2007, 2008, and 2009, 

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and Forms 10-Q throughout the Class Period. Pursuant to Sections 302 and 906 of 

Sarbanes-Oxley Act of 2002 (bSarbanes-Oxleyc), Greene certified the accuracy of the 

CompanyZs Forms 10-K for the Fiscal Years 2008 and 2009, as well as its Forms 10-Q 

throughout the Class Period. Greene also signed the CompanyZs registration statement on 

Form S-3 in connection with the CompanyZs February 2008 stock offering. 

26. Defendant William S. McCalmont (bMcCalmontc) has served as the 

CompanyZs Chief Financial Officer (bCFOc) since May 2007 and as Executive Vice 

President of the Company since January 2009. McCalmont signed the CompanyZs Forms 

10-K for the Fiscal Years 2007, 2008, and 2009, and Forms 10-Q throughout the Class 

Period. Pursuant to Sections 302 and 906 of Sarbanes-Oxley, McCalmont certified the 

accuracy of the CompanyZs Forms 10-K for the Fiscal Years 2007, 2008, and 2009, as 

well as its Forms 10-Q throughout the Class Period. McCalmont also signed the 

CompanyZs registration statement on Form S-3, in connection with the CompanyZs 

February 2008 stock offering. 

27. Defendant Peter S. Rummell (bRummellc) was the CompanyZs Chairman 

of the Board and CEO from January 1997 until he retired from his position as CEO in 

May 2008, and as Chairman in July 2008. Rummell signed the CompanyZs Form 10-K 

for the Fiscal Year 2007 and Form 10-Q for the Second Quarter 2008. Pursuant to 

Sections 302 and 906 of Sarbanes-Oxley, Rummell certified the accuracy of the 

CompanyZs Form 10-K for the Fiscal Year 2007, as well as its Form 10-Q for the Second 

Quarter 2008. Rummell also signed the CompanyZs registration statement on Form S-3, 

in connection with the CompanyZs February 2008 stock offering. 

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28. Defendant Janna L. Connolly (bConnollyc) has served as the CompanyZs 

Senior Vice President and Chief Accounting Officer since January 2010. Connolly has 

approximately 28 years of accounting experience and joined the Company in November 

1996 as Controller. Connolly is a Certified Public Accountant in the State of Florida. 

Connolly signed the CompanyZs Forms 10-K for the Fiscal Years 2007, 2008, and 2009, 

and Forms 10-Q throughout the Class Period. Connolly also signed the CompanyZs 

registration statement on Form S-3, in connection with the CompanyZs February 2008 

stock offering. 

29. Defendants Greene, McCalmont, Rummell and Connolly are collectively 

referred to hereinafter as the bOfficer Defendants.c The Officer Defendants, because of 

their positions with the Company, possessed the power and authority to control the 

contents of St. JoeZs reports to the SEC, press releases and presentations to securities 

analysts, money and portfolio managers, and institutional investors, i.e., the market. 

Each of the Officer Defendants was provided with copies of the CompanyZs reports and 

press releases alleged herein to be false and misleading prior to, or shortly after, their 

issuance and had the ability and opportunity to prevent their issuance or cause them to be 

corrected. Because of their positions and access to material non-public information 

available to them, each of the Officer Defendants knew that the adverse facts specified 

herein had not been disclosed to, and were being concealed from, the public, and that the 

positive representations which were being made were then materially false and 

misleading. 

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C. Factual Background And Substantive Allegations

30. St. Joe was founded in 1936 as a paper mill and timber company. It is 

now one of the largest real estate development companies in Florida. The Company 

operates through four business segments: (1) Residential Real Estate, which develops 

mixed use resort, seasonal, and primary residences and amenities such as golf courses; 

(2) Commercial Real Estate, which plans, develops, and sells real estate for commercial 

purposes and concentrates on the area surrounding the airport in Panama City; (3) Rural 

Land Sales, which focuses in the sale and limited development of timberland; and (4) 

Forestry, which grows, harvests, and sells St. JoeZs extensive timber holdings. The 

Company currently owns approximately 577,000 acres of land, the majority of which is 

located in Northwestern Florida. Approximately 70 percent of St. JoeZs land is within 15 

miles of the Gulf of Mexico. St. Joe acquired much of its land in the 1930s and 1940s. 

31. Although the Company was originally formed to operate as a paper mill, 

by the 1990s St. Joe was focused on real estate development. By the summer of 2005, St. 

JoeZs stock was soaring, regularly closing at more than $80 per share. Not surprisingly, 

the economic recession that followed (with its concomitant real estate crash) had a 

profound effect on the Company, bringing St. JoeZs main business to a standstill and 

forcing the Company to stop investing in further development, in order to avoid incurring 

even greater losses. By 2010, the Company had sold nearly half of its real property, 

including much of its timberland, to stay afloat. 

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32. Despite (1) the economic recession, which the Company itself has 

conceded was bthe worst since the Great Depression,c1; and (2) the sharp decline in 

demand and drastically reduced sales prices for the homes and developed lots in St. JoeZs 

residential real estate projects, St. Joe recorded only minimal impairment charges, if any, 

to the carrying values of its residential real estate projects during the Class Period. 

D. The Drastic Downturn in the Florida 

Residential Real Estate Market 

33. Prior to and during the Class Period, residential real estate development 

made up the overwhelming majority of St. JoeZs business. According to the CompanyZs 

Forms 10-K filed with the SEC during the Class Period, in 2008, St. JoeZs total 

investment in residential properties comprised almost 85% of its entire investment in real 

estate. In 2009, residential real estate investment totaled 82% of St. JoeZs total 

investment in real estate. 

St. JoeSs Investment in Real Estate ($ in thousands) 

2009 2008 

Residential Real Estate Operating Property $173,190 $185,798 

Residential Real Estate Development Property $470,364 $596,011 

Total Real Estate Investment $784,500 $923,541 

Percentage of Total Real Estate Investment 82% 85% 

34. Similarly, the CompanyZs financial statements reveal that residential real 

estate made up a majority of St. JoeZs total assets during the Class Period. Residential 

real estate made up 63.2% of St. JoeZs total assets in 2007, 64.2% in 2008 and 58.6% in 

 1

 Source: 2008 Form 10-K. 

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2009. Residential real estate revenues, the CompanyZs largest asset class, declined 

drastically during the Class Period, while losses in residential real estate soared. 

2006 2007 2008 2009 

Revenue from Residential Real 

Estate ($ in thousands) 

$358,439 $155,550 $65,498 $89,850 

(Loss) Income from Residential 

Real Estate2

$23,827 ($43,071) ($115,062) ($137,855)

35. St. JoeZs business suffered greatly from the downturn in the real estate 

market. According to the CompanyZs Forms 10-K filed with the SEC during the Class 

Period, the CompanyZs home and homesite sales plummeted from 1,160 closed units in 

2005 to a mere 164 in 2009. 

2005 2006 2007 2008 2009 

Closed Units 1610 1260 478 122 164 

36. The drop in sales is further evidenced when analyzed on a quarterly basis. 

For example, in the first two quarters of 2007 St. Joe sold 247 units compared with just 

36 units in the first two quarters of 2008. 

37. Similarly, the CompanyZs gross profit and gross profit margin from home 

and homesite sales decreased dramatically during the Class Period. Gross profit plunged 

from $39.1 million to $2.7 million, and gross profit margins deteriorated from 34% to 

9%. 

2007 2008 2009 

Sales of Homes & Homesites ($ in millions) $116.0 $28.0 $31.3 

 2

 Includes total impairment charges of $94.8 million, $60.3 million and $13.6 million 

for 2007, 2008 and 2009, respectively. 

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2007 2008 2009 

Gross Profit $39.1 $4.0 $2.7 

Gross Profit Margin 34% 14% 9% 

38. Just prior to and during the Class Period the United States, in general, and 

Florida, in particular, experienced one of the largest real estate crashes in decades. 

Empirical evidence and the CompanyZs own disclosures demonstrate that the real estate 

market in Florida, which was one of the first states affected by the deteriorating real 

estate market, was devastated by the crash. 

39. A comparison of the percent change, by quarter, in the Federal Housing 

Finance AgencyZs Home Price Index for Florida and the United States, from 2007 to the 

third quarter of 2010, reveals the extent of the devastation suffered by the Florida real 

estate market:3 

 3

 Home Price Index information obtained from www.fhfa.gov/Default.aspx 

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40. Historical data from the Case Shiller Home Price Index for the city of 

Tampa, Florida for the same period further evidences this decline:4 

 4

 Tampa is the closest city to the majority of St. JoeZs residential real estate for which 

Case Shiller provided housing index information. 

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E. St. JoeSs Residential Real Estate Development Projects Suffered 

During the Class Period 

1. Further Development of St. JoeSs Projects Was Not Economic

41. Given the state of the real estate market in the United States, particularly 

Florida, and the performance of St. JoeZs residential real estate projects over the course of 

the Class Period, the Company concluded that it would not be economical to continue 

investing in the development of its residential real estate projects. 

42. Beginning in 2007, St. Joe effectively ceased its development activity. 

The Company drastically decreased the amount of money it invested in developing its 

residential real estate. As shown in the table below, St. Joe invested $570,925,000 in 

2006 on its residential real estate. In 2007, that amount dropped almost 60% to 

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$227,675,000. In 2008, St. JoeZs capital expenditures on its properties again declined 

another 87% to $28,515,000, resulting in a decline of more than 95% in only two years. 

By 2009, St. JoeZs expenditures on its residential real estate properties decreased yet 

again by more than 50%, to a mere $13,687,000. 

2006 2007 2008 2009 

Capital Expenditures for Residential Real 

Estate 

($ in thousands) 

$570,925 $227,675 $28,515 $13,687

43. Moreover, the Company reduced its employee workforce by more than 

two thirds, or 69%, in 2007. A large portion of this reduction was centered in the 

residential real estate segment. In 2006, St. Joe reported that it had 441 employees in its 

residential real estate sector. By 2007, that number was just 148 employees. 

44. That St. Joe so severely reduced the amount spent on its operating 

properties establishes that the Company had effectively halted development on its 

residential real estate projects. This lack of development, in turn, directly affects the 

undiscounted cash flow analyses that the Company is required to perform for each of its 

residential real estate projects. The recoverability of those assets was negatively affected 

by the halt in development, and the Company falsely and fraudulently overstated the 

value of those assets, and its earnings, by failing to take the appropriate impairment 

charges required by this material change in circumstances. 

2. St. JoeSs Development Projects Were Not Performing Well

45. As discussed below, when evaluating its properties for impairment, St. Joe 

is required to take into account all available evidence. The problems St. Joe encountered 

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with its projects is powerful evidence, fraudulently ignored by Defendants, that St. JoeZs 

residential real estate was materially impaired during the Class Period, and St. JoeZs 

failure to write down these assets establishes that the carrying values of the CompanyZs 

assets were falsely and fraudulently overstated. 

(a) RiverTown

46. RiverTown is a residential real estate project in St. Johns County Florida 

that St. Joe started to develop in 2006. In its 2009 Form 10-K, St. Joe described its plans 

for RiverTown : b[Rivertown is] situated on approximately 4,170 acres located in St. 

Johns County south of Jacksonville, [and] is currently planned for 4,500 housing units 

and 500,000 square feet of commercial space. The centerpiece of the community will be a 

58-acre park along the St. Johns River. RiverTown is planned to include several distinct 

neighborhoods and amenities.c The CompanyZs SEC filings failed to disclose, however, 

that only 215, or less than 5%, of the planned 4,500 units have actually been developed.5 

Of those 215 lots, only 12 have homes built on them.6 Further, only 32 units, or less than 

1% of the planned 4,500 units, have been sold. In fact, on May 22, 2009, Issa Homes m 

one of the builders that had bought several lots within RiverTown m sued St. Joe, alleging 

that, inter alia, the lack of development rendered the property more of a bmoonscapec 

than a luxury development.7

 

 5

 The number of developed lots cited in the RiverTown Development of Regional 

Impact (bDRIc) Biennial Monitoring Report 2008-2009, dated January 31, 2010 

(bRiverTown Biennial Reportc). 

6

 Einhorn Presentation, bField of Schemes: If You Build It, They WonZt Come,c 

citing St. Johns County Tax Appraiser Office. 

7 Issa Homes v. St. Joe Co., Case No. CA09-1229 (Fla. Cir. Ct. St. Johns County). 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 22 of 138
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47. By January 31, 2010, only a tiny fraction of the lots planned for 

RiverTown was developed, and St. Joe had yet to complete any of the retail space, office 

space, light industrial space, golf course, or school that had been planned. Of a planned 

186 acres of community parks, only 37 had been completed.8 

48. CW1, the former Site Development Manager at RiverTown from 2006 

through July 31, 2008, confirmed that RiverTown was barely developed. When CW1 left 

the Company in July 2008, CW1 noted that only a bhandfulc of homes had been built and 

the project still did not have electricity, utility lines had not been cleared and sewer lines 

had not been installed, making it highly unlikely that anyone would purchase the few 

homes that did exist. CW1 agreed with Issa HomesZ bmoonscapec description. 

49. CW1 also explained that, during CW1Zs tenure at the Company, cost 

became a major concern for St. Joe. When CW1 was initially hired in 2006, the 

Company planned to develop all of the land for sale to builders. CW1 was later 

instructed to change the plans and focus only on particular neighborhoods. CW1 stated 

that infrastructure plans changed as well. The Company scaled back its plans for highend aesthetics such as bfancy bridgesc and similar features, and CW1 was instead 

instructed to implement only the necessities. 

50. The lack of progress and the uncertainty of future development at 

RiverTown is underscored by the expiration, in 2016, of its land entitlements (the 

necessary permits required in order to develop the land). By January 31, 2010, 

 8

 Progress reports from the RiverTown DRI Monitoring Report 2008-2009, dated 

January 31, 2010. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 23 of 138
20 

development of RiverTown was far behind schedule, with no possibility of completion 

before the expiration of its land entitlements. 

51. St. JoeZs sales prices for RiverTown units that were developed or 

completed were also plummeting over the Class Period. For example, in October 2007, 

St. Joe sold six RiverTown lots to Weekley Homes at an average sales price of $72,133 

per lot. In August 2010, St. Joe sold two similar lots, also to Weekley Homes, for an 

average price of just $31,300 per lot. This difference represents a 57% decline in the 

value of RiverTown lots. 

52. An independent study, conducted in the first quarter of 2010, of the sales 

velocities over the course of 2008, 2009 and the first quarter of 2010, in conjunction with 

the amount of homesite inventory on the market in central St. Johns county (where 

RiverTown is located), revealed that, as of the first quarter of 2010, there was almost nine 

years of homesite inventory in the region.9 In other words, it would take nine years to 

sell the available lots. 

53. St. Joe listed the carrying value for RiverTown as $65,615,000 in its 2007 

Form 10-K, as $77,143,000 in its 2008 Form 10-K, and as $74,491,000 in its 2009 Form 

10-K.10 St. Joe maintained these carrying values despite (1) that RiverTown was barely 

developed; (2) the Company had determined that it was not going to invest in any further 

 9

 EinhornZs October 13, 2010 presentation bField of Schemes: If You Build It They 

WonZt Comec, citing Metrostudy Jacksonville Residential Survey, 1Q2010. 

10 St. Joe only reports carrying values by county, not by project, in its SEC filings 

making it extremely difficult, if not impossible, to determine the carrying values for 

individual lots and projects particularly if there is more than one residential real estate 

property in a county. All of the carrying values cited in this Complaint are carrying 

values before any accumulated depreciation. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 24 of 138
21 

development of the property; (3) the Company was selling very few lots, and the lots that 

did sell were for significantly lower amounts than prior to the Class Period; and (4) there 

was a nine-year supply of homesite inventory within the region of Florida where 

RiverTown was located. Defendants were aware of this evidence, yet continued to 

represent that the carrying value of the project was 100% recoverable. 

(b) WaterColor and the WaterSounds

54. WaterColor, WaterSound, WaterSound Beach and WaterSound Beach 

West are all St. Joe residential real estate development projects situated in Walton County 

in northwest Florida. WaterColor has 1,140 units planned, is 90% developed, and 81% of 

its planned units have been sold. By contrast, the WaterSound project is the largest of the 

three WaterSound projects with 1,432 units planned, but only 211, or 14% of those units 

have been developed11 and only 29 have been sold.12

55. The WaterSound projects are described by the Company in its 2009 Form 

10-K: 

WaterSound Beach is located approximately five miles east 

of WaterColor and is planned to include approximately 511 

units. Situated on approximately 256 acres, WaterSound 

Beach includes over one mile of beachfront on the Gulf of 

Mexico. The WaterSound Beach Club, a private, 

beachfront facility featuring a 7,000 square-foot, free-form 

pool and a restaurant, is located within the community. 

WaterSound West Beach is located approximately one-half 

mile west of WaterSound Beach on the beach-side of 

County Road 30A. This community is situated on 62 acres 

and includes 199 units with amenities that include private 

 11 WaterSound and Water Color DRI Monitoring Report 2007-2008, dated April 1, 

2009 (bWaterSound North DRI Reportc).

12 Form 10-Q for second quarter 2010. 

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22 

beach access through the adjacent Deer Lake State Park 

and a community pool and clubhouse facility. 

WaterSound is situated on approximately 2,425 acres and is 

planned for 1,432 residential units and approximately 

450,000 square feet of commercial space. It is located 

approximately three miles from WaterSound Beach north 

of U.S. 98 in Walton County. WaterSound includes 

Origins, a uniquely designed Davis Love III golf course, as 

well as a community pool and clubhouse facility. 

56. There are no longer any beachfront lots available at WaterSound Beach. 

The Company sold its last beachfront lot on September 20, 2010 for $1,253,800.13 

WaterSound, WaterSound Beach and WaterSound Beach West collectively contain 253 

interior lots that cannot command nearly as high a sales price as the beachfront lots.14 

Many of the remaining interior lots are situated on land separated from the ocean, and the 

rest of the development, by a highway. Moreover, the average sales prices at 

WaterSound and WaterColor steadily decreased during the Class Period.15

57. At WaterSound, none of the retail or office space has been completed. No 

other units have been initiated.16 With no further investment in the property, it is unclear 

when the WaterSound project will be fully developed, or even when the current existing 

units will be sold. Defendants, however, have failed to take any significant impairment 

charge to these properties during the Class Period. The CompanyZs carrying value for 

 13 Einhorn Presentation, bField of Schemes: If You Build It They WonZt Comec, 

citing Walton County Tax Appraiser Office. 

14 Id. 15 Walton County Property AppraiserZs website, http://qpublic.net/walton/index.html 

16 Id. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 26 of 138
23 

Walton County (encompassing all the WaterColor and all of the WaterSound projects) 

was $171,671,000 in 2007, $158,080,000 in 2008, and $93,765,000 in 2009.17

58. Although the most valuable beachfront property is no longer available at 

WaterColor or WaterSound, and many of WaterSoundZs interior lots are separated from 

the beach by a highway and are undesirable, St. Joe continues to fraudulently maintain its 

carrying value for these assets even while it halts further development. 

(c) SummerCamp Beach

59. SummerCamp Beach is a residential real estate project located in Franklin 

County Florida. In its 2009 Form 10-K, the Company describes SummerCamp Beach as 

being bsituated on the Gulf of Mexico on approximately 762 acres in Franklin County. 

The community includes the SummerCamp Beach Club, a private beachfront facility with 

a pool, restaurant, boardwalks and canoe and kayak rentals. Plans for SummerCamp 

Beach include approximately 499 units.c 

60. St. Joe failed to disclose, however, that Franklin County has a tiny 

population of 11,280,18 with approximately 13% of that population living in Franklin 

 17 The Company only discloses its carrying value by county, therefore, it is 

impossible to know the carrying value for a project if there is more than one project in 

that county. WaterColor, WaterSound, WaterSound Beach and WaterSound Beach West 

are all located in Walton County and the reported carrying value is an aggregate carrying 

value for all of those properties. The decrease in the carrying value for Walton County 

during the Class Period is likely due to the sales made at those properties during the Class 

Period, and is not explained by the minimal impairment charges that St. Joe recorded to 

its existing homes and homesites of $7.8 million in 2007, $12.8 million in 2008, and 7.3 

million in 2009. See ¶ 123 (2009 10-K). 

18 US Census 2009 Estimate, http://quickfacts.census.gov 

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CountyZs prison.19 Only 4,934 people are in the labor force, and the median income is 

$34,787.20 

61. SummerCamp Beach is not fully developed. Of its 499 planned units, 

226, or less than half, are developed.21 Of those 226 units, only 87 have been sold as of 

September 30, 2010. Because St. Joe has stopped further development of many of its 

residential real estate projects, it is unclear when or if this development will ever be 

completed. 

62. The sales prices at SummerCamp Beach have also decreased significantly 

throughout the Class Period. In November 2006, the Company sold five beachfront lots 

for an average price of $880,000 per lot.22 However, in July 2010, St. Joe sold four 

beachfront lots for an average price of approximately $331,000, or a 62.4% decline in 

value.23 Moreover, St. Joe provided the mortgage on the 4 beachfront lots sold in July 

2010.24 

63. The value of interior lots at SummerCamp Beach also plummeted during 

the Class Period. Between 2005 and 2006, interior lots at SummerCamp Beach were sold 

 19 Inmate population information list, 

http://www.dc.state.fl.us/activeinmates/list.asp?DataAction=Paging 

20 US Census 2009 Estimate, http://quickfacts.census.gov 

21 Einhorn Presentation, bField of Schemes: If You Build It They WonZt Comec, 

citing Franklin County Tax Appraiser Office. 

22 Franklin County Property AppraiserZs website, 

http://qpublic.net/franklin/index.html 

23 Id. 24 http://www.myfloridacounty.com/services/officialrecords_intro.shtml 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 28 of 138
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for approximately $150,000 to $165,000.25 By 2010, St. Joe was pricing interior lots for 

as low as $39,000.26

64. St. JoeZs carrying value for this project was $36,329,000 in 2007, 

increasing to approximately $41,218,000 in 2008, and remaining relatively constant at 

approximately $41,768,000 in 2009.27 

65. Thus, St. Joe increased the carrying value for this project during the Class 

Period in spite of (1) the free falling sales prices for both beachfront and interior lots; (2) 

the location of the project in a sparsely populated and low-income area; and (3) halting its 

plans to complete the projectZs development. 

66. CW4 was a former Senior Vice President and Regional General Manager 

employed by the Company from 2004 until June 2008. CW4 reported directly to 

Defendant Greene and was responsible for all land management (including, but not 

limited to, environmental concerns, the DRI process, engineering, feasibility, planning, 

construction, sales, marketing) in CW4Zs region, which included Leon, Franklin and 

Wakulla Counties. As a Regional Manager, CW4 attended quarterly meetings of a 

committee known internally as the bManagement Committeec which consisted of, among 

others, the other four Regional General Managers, Greene, Rummell, and McCalmont 

 25 Franklin County Property AppraiserZs website, 

http://qpublic.net/franklin/index.html 

26 Einhorn Presentation, bField of Schemes: If You Build It They WonZt Comec, 

citing listings offered by SummerCamp Beach exclusive realtor. 

27 These carrying values include the carrying value of the Cutter Ridge project, 

which is also in Franklin County. However, according to the 2008 Form 10-K, the value 

of Cutter Ridge is insignificant due to the minimal amount of work that has been done on 

the project and the stated carrying values largely represent the carrying value for 

SummerCamp Beach. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 29 of 138
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and Connolly. At the quarterly meetings, the Management Committee would discuss in 

detail all of the development projects on a project by project basis. Regional General 

Managers presented detailed information about their projects including, revenues and 

revenue projections, absorption rates, sales information, development plans and budget 

requests. Often, sales directors from the various projects would also attend the meetings. 

67. CW4 confirmed that the 2007 carrying value of $36,329,000 for 

SummerCamp Beach was inflated. According to CW 4, in late 2006 St. Joe sold five lots 

at SummerCamp Beach for an average of $888,000, but the cheapest lots were being 

listed at $150,000. The number of lots available for sale was approximately 140. The 

carrying value of $36,329,000, when spread over 140 lots, gives rise to an average of 

approximately $259,500 per lot. Thus, with a carrying value of $36,329,000, St. Joe 

assumed that it would get an average price per lot of $259,500 at SummerCamp Beach. 

According to CW4, average comparable prices in late 2007 were half that amount. CW4 

commented that if someone saw SummerCamp Beach they would be baghastc and bnot 

be able to understand how any one would pay more than $8 or $9 millionc for the entire 

property. 

(d) WindMark Beach

68. WindMark Beach is located in Gulf County. In its 2009 Form 10-K, St. 

Joe describes WindMark as ba beachfront resort community situated on approximately 

2,020 acres in Gulf County near the town of Port St. Joe. Plans for WindMark Beach 

include approximately 1,662 residential units and 75,000 square feet of commercial 

space.c 

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69. Like many of St. JoeZs other residential real estate projects, WindMark 

remains largely undeveloped. Of 1,516 planned units, only 224 (or 15%) are 

developed.28 Of those 224 developed units only 150 units (10%) were sold as of 

September 30, 2010. Because St. Joe has ceased development of its projects, it is 

uncertain if the project will ever be completed. 

70. The Biennial Report29 for WindMark confirms that no development 

occurred during the two year period covered by the report (April 1, 2008 m April 1, 

2010). The project build-out date for all development is December 31, 2018 and the 

termination and development order expiration dates are December 31, 2023. From the 

current lack of development, it is unlikely that the Company will be able to meet these 

deadlines. 

71. WindMark is located in the rural area of Gulf County, with a population of 

15,755.30 There are only 6,411 people in the labor force and the median household 

income is $38,632.31 

72. Sales prices of the completed units in WindMark have, as with St. JoeZs 

other projects, plummeted during the Class Period. St. Joe sold a beachfront lot at 

 28 WindMark Beach DRI Monitoring Report 2008-2009, dated April 1, 2010. 

29 Biennial reports are status reports that the developer of a property is required to 

submit to the relevant local government agencies that are monitoring the development 

project on a biennial basis. 

30 US Census 2009 Estimate, http://quickfacts.census.gov 

31 Id. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 31 of 138
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WindMark in September 2007 for $695,000. In October 2009, another beachfront lot 

sold for $350,000. In August 2010, a beachfront lot sold for only $188,000.32

73. St. JoeZs carrying value for WindMark, notwithstanding the plummeting 

sales prices, was $189,800,000 in 2007, $195,386,000 in 2008 and $164,511,000 in 2009. 

74. Defendants knew that the carrying value for WindMark was overstated. 

According to CW4, the WindMark project began as a joint venture with two luxury 

resort, spa and timeshare developers. CW4 explained that in late 2007, the joint venture 

fell apart and St. Joe was forced to pay a $5 million break-up fee to one of its joint 

venture partners, with the concomitant knowledge that, without the business partner, the 

huge investment Defendants had made in this property would likely not be recovered. 

75. Sales data from the WindMark property further establishes that the 

carrying value for this property was overstated. Sales history data shows that a 

beachfront lot sold in October 2009 for $350,000.33 The seller was Regions Bank.34 In 

2010, several interior lots at WindMark were sold for an average price of $93,950.35 

There are 17 developed beachfront lots remaining in WindMark and 55 interior lots.36 

Using recent sales history, the remaining developed beachfront lots are worth $5,950,000 

(17x$350,000) and the remaining interior lots at WindMark are worth $5,167,250 (55 x 

 32 The October 2009 and August 2010 sales were not made directly by St. Joe, but 

were resales between third parties. The Officer Defendants knew of resales of properties 

within the CompanyZs development projects. Rummell admitted on the CompanyZs 1Q 

2008 earnings conference call that resale pricing was a bbenchmarkc for St. Joe. 

33 Gulf County Property AppraiserZs website, http://qpublic.net/gulf/index.html 

34 Id. 35 Id. 36 Einhorn Presentation, bField of Schemes: If You Build It, They WonZt Come,c 

citing Gulf County Tax Appraisal Office 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 32 of 138
29 

$93,950).37 WindMark also contains condominium units that Einhorn has valued at 

$5,000,000. Collectively, therefore, the condominiums, beachfront and interior lots are 

worth $17,825,000. In 2009, St. Joe reported WindMarkZs carrying value as 

$164,511,000 and took just $7.3 million in impairment charges for all of its residential 

real estate. Defendants, however, knew from comparable sales evidence and other 

detailed information presented to them at the Management Committee meetings that the 

reported carrying value was overstated. 

3. Average Sales Prices Decreased 

Across All of St. JoeSs Projects 

76. Average sales prices dropped consistently across all of St. JoeZs residential 

real estate properties during the Class Period. The decrease in sales prices was evident 

not only in direct sales by St. Joe, but also in subsequent sales in the secondary market. 

The chart below demonstrates the steep drop in sales prices in Gulf County (consisting of 

WindMark) and Walton County (consisting of WaterColor, WaterSound, WaterSound 

Beach, and WaterSound Beach West) during the Class Period.38 The chart encompasses 

all sales at WindMark including re-sales and sales from foreclosures. 

 37 Einhorn used an average price of $125,000 for interior lots. He used that average 

price based on an August 2010 sale for $104,000 and then rounded up. Even using this 

higher average price, the interior lots are only worth $6,875,000 and the total value of all 

lots plus condominiums is $17,825,000. 

38 Gulf County Property AppraiserZs website, http://qpublic.net/gulf/index.html; 

Walton County Property AppraiserZs website, http://qpublic.net/walton/index.html 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 33 of 138
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Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 34 of 138
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77. The sharp decline is also obvious in the average sales of the SouthWood 

development project in Leon County and the combined average sales prices for 

WindMark, SummerCamp Beach, Artisan Park, and Landings at Wetappo projects.39 

The charts encompass all sales at WindMark including re-sales and sales from 

foreclosures. 

 39 Leon County Property AppraiserZs website, http://qpublic.net/leon/index.html; 

Gulf County Property AppraiserZs website, http://qpublic.net/gulf/index.html; Franklin 

County Property AppraiserZs website, http://qpublic.net/franklin/index.html; Osceola 

County Property AppraiserZs website, http://qpublic.net/osceola/index.html. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 35 of 138
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78. Despite these marked declines in average sale prices, St. Joe failed to 

materially write down the value of its properties at any time during the Class Period. 

79. In an apparent attempt to justify its bloated carrying values, the Company 

refused to lower the asking prices for many of its lots. CW2 was the Director of 

Construction on several projects for St. Joe from March 2006 through September 2009. 

CW2 reported to former President of Development Nick Cassala and Executive Vice 

President for WaterSound Mary Rosenheim. During CW2Zs tenure, CW2 did a lot of 

work at the Wild Heron and RiverCamps projects. CW2 focused primarily on building 

development amenities, and some commercial buildings. CW2 noted that, based on 

studies CW2 performed of sales in comparable properties, lots on St. Joe properties 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 36 of 138
33 

where CW2 worked were significantly over priced. Mindful of the deteriorating market, 

CW2 approached Cassala and Rosenheim and suggested that St. Joe should bcapitalize as 

quickly as [it] could to build up [its] capital reserves.c In order to do that, CW2 

explained, St. Joe would have had to lower its prices to be competitive in the market, 

which Cassala and Rosenheim found unacceptable. CW2 noted that both Cassala and 

Rosenheim were bvery narrow minded about the market value of the properties.c 

80. CW2 also helped to prepare projections of future sales. CW2 explained 

that, during CW2Zs tenure at the Company, St. Joe failed to meet its projected sales 

numbers. The Company projected that it would sell six to ten lots per year at 

RiverCamps in 2009, but only sold half that. According to CW2, the Company simply 

took the projected sales it could not meet and pushed them into the following year, or 

distributed the unmet sales projections over the next several years. As of 2009, St. Joe 

was projecting that by 2013 it would be back to the sales pace set in 2005, when it was 

selling 50 to 60 lots per year. This projection was highly unreasonable given current 

market conditions and that the Company had ceased its development activities. The 

Company itself admitted that market conditions were extremely difficult, and that there 

was no way to predict if things would improve, if ever. According to CW2, St. Joe 

projected selling out at RiverCamps by 2016, even though the project still contained 380 

undeveloped lots, and St. Joe had ceased all development activity. 

81. Every two to three months during his tenure, CW2 performed a market 

analysis which included checking the Multiple Listing System (bMLSc), public records, 

and possible foreclosures including lis pendens notices. CW2 looked for lots of similar 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 37 of 138
34 

size to those at RiverCamps and Wild Heron, and compared them to the St. Joe 

properties. According to CW2, the St. Joe properties were balways substantially higher.c 

CW2 bconstantly updated numbers and presented themc to Cassala, pointing out the trend 

in the distressed and lower priced properties on a map so that Cassala could see the 

proximity of those properties to the St. Joe properties. 

82. On occasion, Cassala informed CW2 that St. Joe could offer some price 

reductions, but they were very modest and not usually more than a few thousand dollars. 

When St. Joe did receive offers for properties that were less than its asking price, Cassala 

informed CW2 that the Company would not accept the offer because doing so would 

have required the Company to take an impairment charge. 

83. According to CW2, St. Joe had invested a great deal of money before the 

Class Period developing its projects. bWaterSound North was tremendously expensive. 

It cost $100,000 per lot and couldnZt sell for close to thatc because they were smaller lots 

with small backyards and big setbacks. They were bbad when the market was half-way 

decent and really bad after the market went bad.c 

F. St JoeSs Residential Real Estate Projects Were 

A Core Part of the CompanySs Class Period Operations

84. Prior to and during the Class Period residential real estate development 

made up the overwhelming majority of St JoeZs business: 

St. JoeSs Investment in Real Estate ($ in thousands) 

2009 2008 

Residential Real Estate Operating Property $173,190 $185,798 

Residential Real Estate Development Property $470,364 $596,011 

Total Real Estate Investment $784,500 $923,541 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 38 of 138
35 

St. JoeSs Investment in Real Estate ($ in thousands) 

2009 2008 

Percentage to Total Real Estate Investment 82% 85% 

85. Similarly, the CompanyZs financial statements show that residential real 

estate makes up a majority of St. JoeZs total assets. Residential real estate equaled 63.2% 

of St. JoeZs total assets in 2007, 64.2% in 2008 and 58.6% in 2009. 

86. In a 2010 letter to shareholders, St. Joe stated: 

When we first embarked on our highest and best use 

strategy, our priority was to seek as many land use 

entitlements for commercial and residential development in 

our region as possible. This continues to be one of our core 

competencies. [Emphasis added]. 

87. The Officer Defendants were all high-ranking officers who were 

intimately involved with, and had day-to-day responsibilities concerning the CompanyZs 

core business of developing and selling residential real estate, including the overarching 

business of valuing the CompanyZs assets. Defendant Greene was, at all relevant times, 

the President of the Company and was the CEO for the majority of the Class Period, 

beginning in May 2008. As the President and CEO, Greene was intimately involved in 

all aspects of the CompanyZs business including its bpriorityc and bcore competencyc of 

entitling land for residential development, and had access to internal reports and 

information regarding the residential real estate projects, their values and impairment 

charges. 

88. CW3 was the Director of Financial Reporting at St. Joe from February 

2006 through May 2010. CW3 reported directly to Defendant Connolly, and was 

responsible for compiling and preparing the CompanyZs SEC filings. CW3 stated that 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 39 of 138
36 

Defendants McCalmont and Connolly were responsible for determining the quarterly 

impairment charges. CW3 noted that impairment was a bhot topicc at St. JoeZs during 

CW3Zs tenure and confirmed that the Company was undertaking impairment analyses for 

all of its properties on a quarterly basis during the Class Period. CW3 described the 

impairment reviews as bvery detailedc and explained that the ultimate analysis was 

performed by Defendants McCalmont and Connolly. Based on these meetings, 

Defendants McCalmont and Connolly told CW3 what impairment charges to report in the 

CompanyZs SEC filings. 

G. DefendantsS False And Misleading Statements And Omissions

89. Because asset values and impairment charges are a key element of each 

core financial metric reported by St. Joe and relied upon by investors, and because St. Joe 

failed to take proper impairment charges, all of St. JoeZs key financial metrics that 

incorporate falsely and fraudulently understated impairment charges during the Class 

Period m including St. JoeZs impairment charges, asset values, income or loss from 

continuing operations, net income or loss and earnings per share (bEPSc) m were rendered 

materially false and misleading. 

1. Fourth Quarter and Full Year 2007 Financial Results

90. On February 19, 2008, the first day of the Class Period, the Company 

issued a press release on Form 8-K entitled bThe St. Joe Company (NYSE: JOE) Reports 

Fourth Quarter And Full Year 2007 Financials.c The press release reported that the 

CompanyZs investment in real estate was $943.5 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced Net 

Income for the fourth quarter 2007 of $1.0 million, or $0.01 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 40 of 138
37 

per share, compared with $22.3 million, or $0.30 per share, 

for the fourth quarter of 2006u 

For the full year 2007, JOE had Net Income of $39.2 

million, or $0.53 per share, compared with $51.0 million, 

or $0.69 per share, for the full year 2006. Full year results 

were affected by: 

v Pre-tax impairment charges for the full year 2007 totaled $23.2 

million, or $0.19 per share after tax, which included: 

ż Approximately $13.6 million primarily related to a write-down 

of costs on homes and home sites in JOEZs residential segment 

to approximate fair value; 

* * * 

Consolidated Results 

 Quarter End 

Dec. 31, 2007 

Year End 

Dec. 31, 2007 

Impairment Losses $600,000 $13,600,000 

Pre-tax Income from 

Continuing 

Operations 

$4,800,000 $18,400,000 

Net Income $1,000,000 $39,200,000 

Net Income Per 

Share 

$0.01 $0.53 

* * * 

Summary Balance Sheet 

 December 31, 2007 

Assets 

Investments in real estate $943,500,000 

91. On February 25, 2008, the Company filed its 2007 Annual Report with the 

SEC on Form 10-K. The CompanyZs Form 10-K reaffirmed the CompanyZs 2007 

financial results, financial position, and the reported value of the CompanyZs investment 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 41 of 138
38 

in real estate as announced on February 19, 2008. With respect to the CompanyZs asset 

impairment costs, St. JoeZs 2007 Annual Report stated: 

During 2007, we recorded total asset impairment costs of 

$23.2 million, $13.0 million of which related to the write 

down of capitalized costs at certain projects due to changes 

in development plans and the impairment of completed 

homes in several of our communities due to current market 

conditions. If market conditions were to continue to 

deteriorate, and the market values for our home sites, 

remaining homes held in inventory and other project land 

were to fall below the book value of these assets, we would 

need to take additional write-downs of the book value of 

these assets. Any such write-downs would decrease the 

value of these assets on our balance sheet and would reduce 

our net income. 

* * * 

Impairment Losses. We review our long-lived assets for 

impairment whenever events or changes in circumstances 

indicate that the carrying amount of an asset may not be 

recoverable. Homes and home-sites substantially 

completed and ready for sale are measured at the lower of 

carrying value or fair value less costs to sell. For projects 

under development, an estimate of future cash flows on an 

undiscounted basis is performed using estimated future 

expenditures necessary to maintain the existing service 

potential of the project and using managementPs best 

estimates about future sales prices and holding periods. 

The decline in demand and market prices for residential 

real estate caused us to conclude that carrying amounts 

within our residential real estate segment may not be 

recoverable, and we performed an impairment analysis. As 

a result of our impairment analyses, we recorded an 

impairment charge of $13.6 million in the residential real 

estate segment. 

* * * 

In 2007 we recorded impairments totaling $13.6 million 

primarily due to current adverse market conditions for 

residential real estate. Approximately $5.2 million of the 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 42 of 138
39 

impairments related to capitalized costs at certain projects 

due to changes in development plans, approximately $7.8 

million related primarily to completed spec homes in 

several communities and approximately $0.6 million 

related to the modified terms of certain promissory notes. 

[Emphasis added]. 

* * * 

Consolidated Results 

 Year End Dec. 31, 

2007 

Impairment Losses $13,609,000 

Pre-tax Income from 

Continuing Operations 

$18,406,000 

Net Income $39,207,000 

Net Income Per Share $0.53 

* * * 

Balance Sheet 

 December 31, 2007 

Assets 

Investments in real estate $943,540,000 

92. The CompanyZs Form 10-K for 2007 was signed by Defendants Greene 

and Connolly. Moreover, all of the Quarterly and Annual Reports contained the 

certification required by Sarbanes-Oxley (bSOXc), which was signed by Defendants 

Rummell and McCalmont: 

I, [Peter S. Rummell / William S. McCalmont], certify that: 

1. I have reviewed this annual report on Form 10-K for 

the year ended December 31, 2007 of The St. Joe 

Company; 

2. Based on my knowledge, this report does not contain 

any untrue statement of a material fact or omit to state a 

material fact necessary to make the statements made, in 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 43 of 138
40 

light of the circumstances under which such statements 

were made, not misleading with respect to the period 

covered by this report; 

3. Based on my knowledge, the financial statements, and 

other financial information included in this report, fairly 

present in all material respects the financial condition, 

results of operations and cash flows of the registrant as of, 

and for, the periods presented in this report; 

4. The registrantZs other certifying officer and I are 

responsible for establishing and maintaining disclosure 

controls and procedures (as defined in Exchange Act Rules 

13a-15(e) and 15d-15(e)) and internal control over financial 

reporting (as defined in Exchange Act Rules 13a-15(f) and 

15d-15(f)) for the registrant and have: 

(a) Designed such disclosure controls and procedures, or 

caused such disclosure controls and procedures to be 

designed under our supervision, to ensure that material 

information relating to the registrant, including its 

consolidated subsidiaries, is made known to us by 

others within those entities, particularly during the 

period in which this report is being prepared; 

(b) Designed such internal control over financial 

reporting, or caused such internal control over 

financial reporting to be designed under our 

supervision, to provide reasonable assurance regarding 

the reliability of financial reporting and the preparation 

of financial statements for external purposes in 

accordance with generally accepted accounting 

principles; 

(c) Evaluated the effectiveness of the registrantZs 

disclosure controls and procedures and presented in 

this report our conclusions about the effectiveness of 

the disclosure controls and procedures, as of the end of 

the period covered by this report based on such 

evaluation; and 

(d) Disclosed in this report any change in the registrantZs 

internal control over financial reporting that occurred 

during the registrantZs most recent fiscal quarter that 

has materially affected, or is reasonably likely to 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 44 of 138
41 

materially affect, the registrantZs internal control over 

financial reporting; and 

5. The registrantZs other certifying officer and I have 

disclosed, based on our most recent evaluation of internal 

control over financial reporting, to the registrantZs auditors 

and the audit committee of the registrantZs board of 

directors: 

(a) All significant deficiencies and material weaknesses in 

the design or operation of internal control over 

financial reporting which are reasonably likely to 

adversely affect the registrantZs ability to record, 

process, summarize and report financial information; 

and 

(b) Any fraud, whether or not material, that involves 

management or other employees who have a 

significant role in the registrantZs internal control over 

financial reporting. 

* * * 

Pursuant to 18 USC §1350, the undersigned officer of The 

St. Joe Company (the bCompanyc) hereby certifies that the 

CompanyZs Annual Report on Form 10-K for the year 

ended December 31, 2007 (the bReportc) fully complies 

with the requirements of Section 13(a) or 15(d), as 

applicable, of the Securities Exchange Act of 1934 and that 

the information contained in the Report fairly presents, in 

all material respects, the financial condition and results of 

operations of the Company.40 

93. The statements in ¶¶ 90-92 were materially false and misleading when 

made because the Officer Defendants, and therefore St. Joe, knowingly and/or recklessly 

materially overstated the value of St. JoeZs residential real estate assets, due to the failure 

to take adequate and necessary GAAP impairment charges. The Officer Defendants, 

 40 Each of the CompanyZs subsequent Class Period Form 10-Qs and 10-Ks also 

contain Sarbanes Oxley required certifications signed by certain of the Officer 

Defendants which are substantially similar to this certification. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 45 of 138
42 

therefore, materially overstated the CompanyZs earnings in order to portray a 

misleadingly positive financial picture of the Company and the state of its residential real 

estate development business, thereby artificially inflating St. JoeZs stock price. To the 

extent that Defendants did take some impairment charges, those minimal charges cannot 

be supported by any non-fraudulent impairment analyses. As explained more fully 

above, St. Joe and the Officer Defendants knew, inter alia, that: (1) the Florida real estate 

market had crashed; (2) many of its large residential real estate projects, including 

RiverTown, the WaterSounds, SummerCamp Beach and WindMark remained largely 

undeveloped; (3) St. Joe had halted further development activity at its residential real 

estate projects; (4) sales prices at its projects sharply declined; and (5) sales volumes at 

its residential real estate properties plummeted during the Class Period. 

2. First Quarter 2008 Financial Results

94. On May 6, 2008, the Company issued a press release on Form 8-K entitled 

bThe St. Joe Company (NYSE: Joe) Reports First Quarter 2008 Financial Results.c The 

press release reported that the CompanyZs investment in real estate was $950.7 million, 

and stated: 

The St. Joe Company (NYSE: JOE) today announced Net 

Income for the first quarter 2008 increased $12.4 million to 

$32.1 million, or $0.40 per share, compared to Net Income 

of $19.7 million, or $0.27 per share, for the first quarter of 

2007. JOEZs first quarter results included pre-tax 

impairment charges of $2.3 million, or $.02 per share after 

taxes, as a result of continuing declines in sales and listing 

prices principally in our primary communities. Also 

included in 2008 results are pre-tax restructuring charges of 

$0.5 million, or less than $0.01 per share after tax, 

compared to $3.2 million, or $0.03 per share after tax, in 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 46 of 138
43 

2007. All per share references in this release are presented 

on a diluted basis. [Emphasis added]. 

* * * 

Consolidated Results 

 Quarter Ended 

March 31, 2008 

Impairment Losses $2,300,000 

Pre-tax Income from 

Continuing Operations 

$49,500,000 

Net Income $32,100,000 

Net Income Per Share $0.40 

* * * 

Summary Balance Sheet 

 March 31, 2008 

Assets 

Investments in real estate $950,000,000 

95. Also on May 6, 2008, St. Joe filed its Quarterly Report with the SEC on 

Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Rummell and 

Connolly, and reaffirmed the CompanyZs quarterly financial results, financial position, 

impairment losses and the reported value of the CompanyZs investment in real estate. 

Additionally, the Form 10-Q discussed asset impairments, reporting: 

The Company reviews its long-lived assets for impairment 

whenever events or changes in circumstances indicate that 

the carrying amount of an asset may not be recoverable. 

Homes and home-sites substantially completed and ready 

for sale are measured at lower of carrying value or fair 

value less costs to sell. For projects under development, an 

estimate of future cash flows on an undiscounted basis is 

performed using estimated future expenditures necessary to 

maintain the existing service potential of the project and 

using managementPs best estimates about future sales 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 47 of 138
44 

prices and holding periods. The continued decrease in 

demand and market prices for residential real estate during 

the first quarter of 2008 indicated that certain carrying 

amounts within our residential real estate segment may not 

be recoverable. As a result of the first quarter 2008 

impairment analysis, the Company has recorded an 

impairment charge of $2.3 million in the residential real 

estate segment. [Emphasis added].

* * * 

Consolidated Results 

 Quarter End Mar. 

31, 2008 

Impairment Loss $2,257,000 

Pre-tax Income from 

Continuing Operations 

$49,500,000 

Net Income $32,052,000 

Net Income Per Share $0.40 

* * * 

Balance Sheet 

 March 31, 2008 

Assets 

Investments in real estate $950,699,000 

96. Following the reporting of its financial results on May 6, 2008, the 

Company held its quarterly earnings call for the first quarter 2008. Defendants Greene, 

Rummell and McCalmont participated in the call and discussed the CompanyZs 

impairment charges for residential real estate. Defendant Rummell stated: 

Joe's first quarter results included pretax impairment 

charges of $2.3 million or $0.02 a share after-tax as a result 

of continuing declines in sales and listing prices in our 

primary communities. Also included in first quarter results 

are pretax restructuring charges of $0.5 million or less than 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 48 of 138
45 

$0.01 per share after-tax, compared to $3.2 million or $0.03 

a share after-tax in 2007. 

97. The statements in ¶¶ 94-96 were potentially false and misleading when 

made for substantially the same reasons set forth in ¶ 93. 

3. Second Quarter 2008 Financial Results

98. On August 5, 2008, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company (NYSE: JOE) Reports Second Quarter 2008 Financial 

Results.c The press release reported that the CompanyZs investment in real estate was 

$947.6 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the second quarter 2008 of $(20.8) million, or 

$(0.23) per share, compared to Net Income of $25.3 

million, or $0.34 per share, for the second quarter of 2007, 

a decrease of $46.1 million. All per share references in this 

release are presented on a diluted basis. 

JOEZs second quarter results included the following 

significant charges: 

v uPre-tax impairment of $1.0 million, or $0.01 per 

share after-tax, associated with certain of JOEPs 

communities and the write-down of a homebuilder note 

receivable; andu

Net income for the first half of 2008 was $11.2 million, or 

$0.13 per share, compared to $45.0 million, or $0.61 per 

share, for the first half of 2007. Included in results for the 

first six months of 2008 were the following significant 

charges: 

V WPre-tax impairment of $3.2 million, or $0.02 per 

share after-tax; andW [Emphasis added].

* * * 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 49 of 138
46 

Consolidated Results 

 Quarter End 

Jun. 30, 2008 

Impairment Losses $1,000,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($32,000,000) 

Net Income ($20,800,000) 

Net Income Per Share $0.23 

* * * 

Summary Balance Sheet 

 June 30, 2008 

Assets 

Investments in real estate $947,600,000 

99. Also on August 5, 2008, St. Joe filed its Quarterly Report with the SEC on 

Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs quarterly financial results, financial position, 

and the reported value of the CompanyZs investment in real estate. Additionally, the 

Form 10-Q discussed asset impairments, reporting: 

Impairment Losses. We review our long-lived assets for 

impairment whenever events or changes in circumstances 

indicate that the carrying amount of an asset may not be 

recoverable. Homes and home-sites substantially completed 

and ready for sale are measured at the lower of carrying 

value or fair value less costs to sell. For projects under 

development, an estimate of future cash flows on an 

undiscounted basis is performed using estimated future 

expenditures necessary to maintain the existing service 

potential of the project and using managementPs best 

estimates about future sales prices and holding periods.

The continued decline in demand and market prices for 

residential real estate during the first six months of 2008 

caused us to evaluate certain carrying amounts within our 

residential real estate segment. As a result of our 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 50 of 138
47 

impairment analyses, we recorded an impairment charge in 

our residential real estate segment of $0.2 million for the 

second quarter of 2008 and $2.2 million for the first 

quarter 2008 primarily related to completed homes in 

several communities. In addition, we recorded a charge of 

$0.8 million related to the write down of a renegotiated 

builder note receivable during the second quarter 2008. 

[Emphasis added]. 

Consolidated Statements of Income 

 Quarter End 

Jun. 30, 2008 

Impairment Losses $976,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($32,499,000) 

Net Income ($20,800,000) 

Net Income Per Share $0.23 

* * * 

Balance Sheet 

 June 30, 2008 

Assets 

Investments in real estate $947,644,000 

100. The statements in ¶¶ 98-99 were materially false and misleading when 

made for substantially the same reason as stated in ¶ 93. 

4. Third Quarter 2008 Financial Results

101. On November 4, 2008, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company (NYSE: JOE) Reports Third Quarter 2008 Financial 

Results.c The press release reported that the CompanyZs investment in real estate was 

$930.4 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the third quarter 2008 of $(19.2) million, or 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 51 of 138
48 

$(0.21) per share, compared to a Net Loss of $(6.8) million, 

or $(0.09) per share, for the third quarter of 2007. 

* * * 

Year-to-Date Results 

Net Loss for the first nine months of 2008 was $(8.0) 

million, or $(0.09) per share, compared to Net Income of 

$38.2 million, or $0.51 per share, for the first nine months 

of 2007. 

Consolidated Statements of Income 

 Quarter End 

Sept. 30, 2008 

Impairment Losses $1,300,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($30,600,000) 

Net Income (Loss) ($19,200,000) 

Net Income (Loss) Per Share ($0.21) 

* * * 

Summary Balance Sheet 

 Sept. 30, 2008 

Assets 

Investments in real estate $930,400,000 

102. Also on November 4, 2008, St. Joe filed its Quarterly Report with the SEC 

on Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs quarterly financial results, financial position, 

and the reported value of the CompanyZs investment in real estate. The Form 10-Q 

discussed asset impairments, reporting: 

The Company reviews its long-lived assets for impairment 

whenever events or changes in circumstances indicate that 

the carrying amount of an asset may not be recoverable. 

Homes and home-sites substantially completed and ready 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 52 of 138
49 

for sale are measured at lower of carrying value or fair 

value less costs to sell. For projects under development, an 

estimate of future cash flows on an undiscounted basis is 

performed using estimated future expenditures necessary to 

maintain the existing project and using managementPs best 

estimates about future sales prices and holding periods. 

The continued decrease in demand and market prices for 

residential real estate during the first nine months of 2008 

and 2007 indicated that certain carrying amounts within the 

CompanyZs residential real estate segment may not be 

recoverable. In addition, during the second quarter 2008 the 

Company recorded an impairment charge of $0.8 million 

related to the write down of a renegotiated builder note 

receivable. As a result of its 2008 impairment analyses, the 

Company has recorded aggregate impairment charges of 

$1.3 million and $4.6 million in the residential real estate 

segment for the three and nine months ended September 30, 

2008. The Company also recorded an impairment charge of 

$13.0 million in the third quarter of 2007. [Emphasis 

added]. 

* * * 

Consolidated Statements of Income 

 Quarter End 

Sept. 30, 2008 

Impairment Losses $1,329,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($30,631,000) 

Net Income (Loss) ($19,198,000) 

Net Income (Loss) Per Share ($0.21) 

* * * 

Balance Sheet 

 Sept. 30, 2008 

Assets 

Investments in real estate $930,420,000 

103. The statements in ¶¶ 101-02 were materially false and misleading when 

made for substantially the same reason as stated in ¶ 93. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 53 of 138
50 

5. Fourth Quarter And Full Year 2008 Financial Results

104. On February 24, 2009, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company (NYSE: Joe) Reports Fourth Quarter and Full Year 2008 

Financial Results.c The press release reported that the CompanyZs investment in real 

estate was $890.6 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the fourth quarter 2008 of $(27.9) million, or 

$(0.31) per share, which includes non-cash charges of 

$57.9 million, or $0.36 per share after tax. This compares 

to Net Income of $1.0 million, or $0.01 per share, for the 

fourth quarter of 2007, which includes non-cash charges of 

$10.5 million, or $0.09 per share after tax. All per-share 

references in this release are presented on a diluted basis. 

JOEZs fourth quarter 2008 results include the following 

non-cash charges: 

v Pre-tax impairment charges of $55.8 million, or 

$0.34 per share after tax, including: 

o $28.3 million write-down related to its SevenShores 

condominium development project;u 

o $8.3 million charge for the write-down of costs to 

approximate fair value on homes in several JOE 

communities; [Emphasis added]. 

* * * 

Full-Year Results 

For the full year 2008, JOE had a Net Loss of $(35.9) 

million, or $(0.40) per share, compared to Net Income of 

$39.2 million, or $0.53 per share, for the full year 2007. 

Full year 2008 results include the following charges which 

totaled $109.5 million, or $0.69 per share after tax: 

v Pre-tax impairment charges totaling $60.4 million 

and pre-tax loss of $1.9 million related to abandoned 

property, or an aggregate of $0.35 per share after tax; 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 54 of 138
51 

* * * 

The full-year 2007 results were affected by the following: 

v Pre-tax impairment charges totaling $23.2 million, 

or $0.19 per share after tax, which includes $9.6 million 

recorded in discontinued operations; 

* * * 

Summary Balance Sheet 

 December 31, 2008 

Assets 

Investments in real estate $890,600,000 

* * * 

Consolidated Statements of Income 

 Quarter End 

Dec. 31, 2008 

Impairment Losses $55,800,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($48,700,000) 

Net Income ($27,900,000) 

Net Income Per Share ($0.31) 

105. Later on February 24, 2009, St. Joe held its quarterly earnings call for the 

fourth quarter and full year 2008. Defendants Greene and McCalmont participated on the 

call, reaffirming the CompanyZs quarterly financial results and financial position, and 

discussing the CompanyZs impairment charges for residential real estate. Defendant 

McCalmont stated: 

The difficult economic conditions caused us to incur 

significant non-cash impairment charges in the fourth 

quarter totaling $55.8 million pretax or $0.34 per share 

after tax. These non-cash impairment charges were 

primarily related to three items. First, we made a decision 

to reduce prices on the majority of our existing housing 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 55 of 138
52 

inventory to reflect current market conditions, facilitate 

sales and eliminate continuing carrying costs. These 

charges affected 114 homes and totaled $8.2 million 

pretax. [Emphasis added].

106. On February 24, 2009, St. Joe filed its 2008 Annual Report with the SEC 

on Form 10-K. The CompanyZs Form 10-K was signed by Defendants Greene and 

McCalmont, among others, and reaffirmed the CompanyZs 2008 financial results, 

financial position, and the reported value of the CompanyZs investment in real estate. 

With respect to the CompanyZs asset impairment costs, St. JoeZs 2008 Annual Report 

stated: 

During 2008, we recorded total asset impairment costs of 

$60.5 million, $41.3 million of which primarily related to 

the write-down of capitalized costs at certain projects and 

the impairment of completed homes in several of our 

communities due to current market conditions. If market 

conditions were to continue to deteriorate, and the market 

values for our homesites, remaining homes held in 

inventory and other project land were to fall below the 

book value of these assets, we could be required to take 

additional write-downs of the book value of those assets. 

* * * 

Impairment of Long-lived Assets and Goodwill. Our longlived assets, primarily real estate held for investment, are 

carried at cost unless circumstances indicate that the 

carrying value of the assets may not be recoverable. If we 

determine that an impairment exists due to the inability to 

recover an assetZs carrying value, a provision for loss is 

recorded to the extent that the carrying value exceeds 

estimated fair value. If such assets were held for sale, the 

provision for loss would be recorded to the extent that the 

carrying value exceeds estimated fair value less costs to 

sell. 

* * * 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 56 of 138
53 

We review our long-lived assets for impairment whenever 

events or changes in circumstances indicate that the 

carrying amount of an asset may not be recoverable. Homes 

and homesites substantially completed and ready for sale 

are measured at the lower of carrying value or fair value 

less costs to sell. For projects under development, an 

estimate of future cash flows on an undiscounted basis is 

performed using estimated future expenditures necessary to 

maintain and complete the existing project and using 

managementPs best estimates about future sales prices and 

holding periods. The continued decline in demand and 

market prices for residential real estate during 2008 caused 

us to evaluate certain carrying amounts within our 

residential real estate segment. 

As a result of our property impairment analyses, we 

recorded aggregate impairment charges in our residential 

real estate segment of $40.3 million during 2008. In 

addition, we recorded a charge of $1.0 million related to the 

write down of a renegotiated builder note receivable during 

2008. 

* * * 

Asset Impairments 

As a result of the CompanyPs property impairment analyses 

for 2008, it recorded aggregate impairment charges of 

$41.3 million consisting of $12.0 million related to 

completed homes in several communities, $28.3 million 

related to the CompanyPs SevenShores condominium 

project and $1.0 million related to the write down of a 

renegotiated builder note receivable. [Emphasis added].

* * * 

Summary Balance Sheet 

 December 31, 2008 

Assets 

Investments in real estate $890,583,000 

* * * 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 57 of 138
54 

Consolidated Statements of Income 

 Year End Dec. 31, 

2008 

Impairment Losses $60,354,000 

Pre-tax Income (Loss) from 

Continuing Operations 

$(62,356,000) 

Net Income $(35,883,000) 

Net Income Per Share ($0.40) 

107. The Notes to Consolidated Financial Statements section of the 2008 Form 

10-K also discussed asset impairments and the CompanyZs segment results, and provided 

the carrying values of the CompanyZs residential real estate and accumulated 

depreciation. In relevant part, the Form 10-K reported: 

Segment Results 

Residential Real Estate 

* * * 

Homes and homesites substantially completed and ready 

for sale are measured at lower of carrying value or fair 

value less costs to sell. For projects under development, an 

estimate of future cash flows on an undiscounted basis is 

performed. The overall decrease in demand and market 

prices for residential real estate indicated that certain 

carrying amounts within our residential real estate segment 

may not be recoverable. As a result of our impairment 

analyses for 2008, we recorded aggregate impairment 

charges of $41.3 million, consisting of $12.0 million 

related to completed homes in several communities, $28.3 

million related to our SevenShores condominium project, 

and $1.0 million related to the write down of a renegotiated 

builder note receivable. [Emphasis added]. 

108. The statements in ¶¶ 104-07 were materially false and misleading when 

made for substantially the same reason as stated in ¶ 93. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 58 of 138
55 

6. First Quarter 2009 Financial Results

109. On May 5, 2009, the Company issued a press release on Form 8-K entitled 

bThe St. Joe Company (NYSE: JOE) Reports First Quarter 2009 Financial Results.c The 

press release reported that the CompanyZs investment in real estate was $888.1 million, 

and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the first quarter 2009 of $(11.7) million, or $(0.13) 

per share, which includes non-cash charges of $1.5 million, 

or $0.01 per share after tax. This compares to Net Income 

of $32.1 million, or $0.40 per share, for the first quarter of 

2008, which included non-cash charges of $2.8 million, or 

$0.02 per share after tax. All per-share references in this 

release are presented on a diluted basis. 

Consolidated Statements of Income 

 Quarter End 

March 31, 2009 

Impairment Losses $1,500,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($18,600,000) 

Net Income ($11,700,000) 

Net Income Per Share ($0.13) 

* * * 

Summary Balance Sheet 

 Mar. 31, 2009 

Assets 

Investments in real estate $888,100,000 

110. Also on May 5, 2009, St. Joe filed its Quarterly Report with the SEC on 

Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs quarterly financial results, financial position, 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 59 of 138
56 

and the reported value of the CompanyZs investment in real estate. Additionally, the 

Form 10-Q discussed asset impairments, reporting: 

The Company reviews its long-lived assets for impairment 

whenever events or changes in circumstances indicate that 

the carrying amount of an asset may not be recoverable. 

Homes and homesites substantially completed and ready 

for sale are measured at lower of carrying value or fair 

value less costs to sell. For projects under development, an 

estimate of future cash flows on an undiscounted basis is 

performed using estimated future expenditures necessary to 

maintain and complete the existing project and using 

managementPs best estimates about future sales prices and 

holding periods. In the first quarter of 2009 and 2008, the 

Company recorded impairment charges in the residential 

real estate segment of $0.2 million and $2.3 million, 

respectively, related to completed unsold homes. In 

addition as discussed in Note 3, the Company recorded a 

$1.3 million impairment charge in the first quarter of 2009 

related to a renegotiated builder note receivable. 

[Emphasis added]. 

* * * 

Consolidated Statements of Income 

 Quarter End 

March 31, 2009 

Impairment Losses $1,536,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($18,653,000) 

Net Income ($11,697,00) 

Net Income Per Share ($0.13) 

* * * 

Balance Sheet 

 Mar. 31, 2009 

Assets 

Investments in real estate $888,057,000 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 60 of 138
57 

111. The statements in ¶¶ 109-10 were materially false and misleading when 

made for substantially the same reason as set forth in ¶ 93. 

7. Second Quarter 2009 Financial Results

112. On August 4, 2009, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company (NYSE: JOE) Reports Second Quarter 2009 Financial 

Results.c The press release reported that the CompanyZs investment in real estate was 

$869.8 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the second quarter 2009 of $(44.6) million, or 

$(0.49) per share, which includes pre-tax non-cash charges 

of $64.7 million, or $0.43 per share after tax. This 

compares to a Net Loss of $(20.8) million, or $(0.23) per 

share, for the second quarter of 2008, which included 

significant charges of $35.3 million, or $0.24 per share 

after tax. All per-share references in this release are 

presented on a diluted basis. 

* * * 

The remaining non-cash charges of $20.0 million pre-tax, 

or $0.13 per share after-tax, included the $7.4 million 

write-off of a note receivable from GVA Advantis, the $6.7 

million write-down related to JOEZs SevenShores 

condominium and marina development project, $5.5 

million of impairments associated with homes and home 

sites in certain of JOEPs communities and $0.4 million of 

impairments for the write-down of a builder note 

receivable. 

Net Loss for the first half of 2009 was $(56.3) million, or 

$(0.62) per share, compared to Net Income of $11.2 

million, or $0.13 per share, for the first half of 2008. 

Included in the results for the first six months of 2009 were 

the following significant non-cash charges: 

v Settlement charge on pension annuitization of $44.7 

million, or $0.30 per share after-tax; and 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 61 of 138
58 

v Pre-tax impairment charges of $21.5 million, or 

$0.14 per share after-tax. [Emphasis added]. 

* * * 

Consolidated Statements of Income 

 Quarter End 

Jun. 30, 2009 

Six Months End 

Jun. 30, 2009 

Impairment Losses $20,000,000 $21,500,000 

Pre-tax Income (Loss) 

from Continuing 

Operations 

($73,600,000) $(92,300,000) 

Net Income ($45,300,000) ($57,000,000) 

Net Income Per Share ($0.49) ($0.62) 

* * * 

Summary Balance Sheet 

 June 30, 2009 

Assets 

Investments in real estate $869,800,000 

113. Also on August 4, 2009, St. Joe held its quarterly earnings call for the 

second quarter of 2009 which reaffirmed the CompanyZs quarterly financial results, 

financial position, and discussed impairment charges. Defendants Greene and 

McCalmont participated on the call. McCalmont stated: 

This morning, we announced a net loss for the second 

quarter of $44.6 million or $0.49 per share on revenues of 

$40.6 million. Our net loss includes pretax non-cash 

charges of $64.7 million or $0.43 per share after tax. This 

compares to a net loss of $20.8 million or $0.23 per share, 

and revenues of $67.5 million for the second quarter last 

year. Last year's quarter included pretax non-cash charges 

of $35.3 million or $0.24 per share after tax. 

[W]e also incurred impairments related to our real estate 

holdings. These charges included an approximate $7 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 62 of 138
59 

million impairment related to an additional write-down of 

our Seven Shores condominium development and the 

Perico marina project located on non-legacy land in 

Bradenton, Florida. This project was written down to 

approximate the current fair market value of the project. 

We also incurred impairments of approximately $6 million 

[to] associate homes, home sites, and a builder note 

receivable in certain of our communities. [Emphasis 

added].

114. During the call McCalmont also addressed an analystZs direct question 

about the modest $6 million impairment taken by the Company on its residential real 

estate. McCalmont implied that the Company was writing down all of its residential real 

estate projects to reflect current market value: 

Buck Horne - Raymond James & Associates - Analyst 

A couple of questions here. I guess, first, a little 

housekeeping -- can I get the finished home count that you 

still had left in inventory and what the remaining book 

value is of those -- of that inventory? 

Bill McCalmont - The St. Joe Company - EVP and CFO 

Buck, at the end of the quarter, we had 123 homes in 

inventory and 1,370 home sites, for a total of 1,493 units. 

Buck Horne - Raymond James & Associates - Analyst 

Okay, all right. And I guess just trying to get a feel for the 

impairments that you took on those homes -- can you give 

us any color on the assumptions or the price reduction that 

you took intra-quarter that required the impairments? 

Bill McCalmont - The St. Joe Company - EVP and CFO 

Sure. We took them at a variety of our communities as we 

trued up the carrying values to reflect current market 

values; that the largest impairments in terms of dollars were 

at five homes at WindMark Beach. And then as we wrote 

down the carrying value of the 27 condominium units at 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 63 of 138
60 

Artisan Park, following the auction results that we 

experienced this past weekend. [Emphasis added.] 

115. Also on August 4, 2009, St. Joe filed its Quarterly Report with the SEC on 

Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs quarterly financial results, financial position, 

and the reported value of the CompanyZs investment in real estate. Additionally, the 

Form 10-Q discussed asset impairments, reporting: 

Impairment Losses. We review our long-lived assets for 

impairment whenever events or changes in circumstances 

indicate that the carrying amount of an asset may not be 

recoverable. Homes and homesites substantially completed 

and ready for sale are measured at the lower of carrying 

value or fair value less costs to sell. For projects under 

development, an estimate of future cash flows on an 

undiscounted basis is performed using estimated future 

expenditures necessary to maintain and complete the 

existing project and using managementPs best estimates 

about future sales prices and holding periods. During the 

second quarter of 2009 we recorded impairment charges of 

$12.1 million in the residential real estate segment related 

to completed unsold homes and homesites and a writedown of our SevenShores condominium and marina 

development projectu 

During the first six months of 2009 we recorded 

impairment charges of $12.4 million in the residential real 

estate segment related to completed unsold homes and 

homesites and a write-down of our SevenShores 

condominium and marina development project. [Emphasis 

added]. 

 * * * 

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61 

Consolidated Statements of Income 

 Quarter End 

Jun. 30, 2009 

Impairment Losses $19,962,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($73,636,000) 

Net Income ($45,275,000) 

Net Income Per Share ($0.49) 

* * * 

Balance Sheet 

 June 30, 2009 

Assets 

Investments in real estate $869,750,000 

116. The statements in ¶¶ 112-15 were materially false and misleading when 

made for substantially the same reason as set forth in ¶ 93. 

8. Third Quarter 2009 Financial Results

117. On November 3, 2009, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company Reports Third Quarter 2009 Results.c The press release 

reported that the CompanyZs investment in real estate was $844.9 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the third quarter of 2009 of $(14.4) million, or 

$(0.16) per share, which included pre-tax charges of $12.9 

million, or $0.08 per share after tax. This compares to a 

Net Loss of $(19.2) million, or $(0.21) per share, for the 

third quarter of 2008, which included pre-tax charges of 

$13.0 million, or $0.09 per share after tax. All per-share 

references in this release are presented on a diluted basis. 

St. JoeZs third quarter earnings included $11.1 million of 

pre-tax, non-cash impairment charges including $9.0 

million related to the settlement of the Saussy Burbank 

notes receivable, $2.0 million associated with various 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 65 of 138
62 

homes, homesites and other long-term assets and $0.1 

million related to various builder notes receivable. 

* * * 

Year-to-Date Results 

Net Loss for the first nine months of 2009 was $(70.7) 

million, or $(0.77) per share, compared to Net Loss of 

$(8.0) million, or $(0.09) per share, for the first nine 

months of 2008. Included in the results for the first nine 

months of 2009 were significant pre-tax charges of $79.1 

million, or $0.52 per share after tax, compared to pre-tax 

charges of $51.8 million, or $0.35 per share after tax, in the 

first nine months of 2008. 

* * * 

Consolidated Statements of Income 

 Quarter End 

Sept. 30, 2009 

Impairment Losses $11,100,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($26,300,000) 

Net (Loss) Income ($14,400,000) 

Net Income Per Share ($0.16) 

* * * 

Summary Balance Sheet 

 Sept. 30, 2009 

Assets 

Investments in real estate $844,900,000 

118. On November 3, 2009, St. Joe held its quarterly earnings call for the 

second quarter of 2009. Defendants Greene and McCalmont participated on the call. 

McCalmont commented on third quarter impairment charges: 

We also incurred pretax non-cash impairments of 

approximately $2.1 million, associated with various homes, 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 66 of 138
63 

home sites and builder note receivables in certain 

communities. 

119. Also on November 3, 2009, St. Joe filed its Quarterly Report with the SEC 

on Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs quarterly financial results, financial position, 

and the reported value of the CompanyZs investment in real estate. Additionally, the 

Form 10-Q discussed asset impairments, reporting: 

Impairment Losses. We review our long-lived assets for 

impairment whenever events or changes in circumstances 

indicate that the carrying amount of an asset may not be 

recoverable. Homes and homesites substantially completed 

and ready for sale are measured at the lower of carrying 

value or fair value less costs to sell. For projects under 

development, an estimate of future cash flows on an 

undiscounted basis is performed using estimated future 

expenditures necessary to maintain and complete the 

existing project and using managementZs best estimates 

about future sales prices and holding periods. 

During the third quarter of 2009: 

v We recorded a $9.0 million write-down related to 

the settlement of the Saussy Burbank notes receivable, a 

$0.1 million write-down of builder notes receivable and a 

$1.1 million impairment charge related to other long-term 

assets; and 

v We recorded a $0.9 million write-down related to 

completed unsold homes and homesites within other 

communities. 

During the third quarter of 2008 we recorded impairment 

charges of $1.3 million related to completed unsold homes. 

During the first nine months of 2009: 

v We recorded a $6.5 million impairment charge 

related to completed unsold homes and homesites in our 

communities and a $6.7 million write-down of our 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 67 of 138
64 

SevenShores condominium and marina development 

projectu[Emphasis added]. 

* * * 

Consolidated Statements of Income 

 Quarter End 

Sept. 30, 2009 

Impairment Losses $11,063,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($26,330,000) 

Net (Loss) Income ($14,490,000) 

Net Income Per Share ($0.16) 

* * * 

Balance Sheet 

 Sept. 30, 2009 

Assets 

Investments in real estate $844,911,000 

120. The statements in ¶¶ 117-19 were materially false and misleading when 

made for substantially the same reason as set forth in ¶ 93. 

9. Fourth Quarter and Full Year 2009 Financial Results

121. On February 23, 2010, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company Reports Full Year and Fourth Quarter 2009 Results.c The 

press release reported that the CompanyZs investment in real estate was $749.5 million, 

and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the full year ended 2009 of $(130.0) million, or 

$(1.42) per share, compared to a Net Loss of $(35.9) 

million, or $(0.40) per share, for the year ended 2008. 

Included in the 2009 results were significant pre-tax 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 68 of 138
65 

charges of $163.1 million, or $1.07 per share after tax, 

compared to pre-tax charges of $109.5 million, or $0.69 per 

share after tax, in the year ended 2008. All per-share 

references in this release are presented on a diluted basis. 

* * * 

Fourth Quarter 2009 Financial Results 

For the fourth quarter of 2009, St. Joe had a Net Loss of 

$(59.3) million, or $(0.65) per share, which included pretax charges of $84.0 million, or $0.56 per share after tax. 

This compares to a Net Loss of $(27.9) million, or $(0.31) 

per share, for the fourth quarter of 2008, which included 

pre-tax charges of $57.9 million, or $0.36 per share after 

tax. 

St. JoeZs fourth quarter earnings included $73.3 million of 

pre-tax, non-cash impairment charges including $67.8 

million related to the sale of the remaining assets at 

Victoria Park ($6.9 million recorded in discontinued 

operations), $3.5 million related to the sale of the St. Johns 

Golf & Country Club (recorded in discontinued 

operations), $1.1 million related to the sale of the assets 

acquired in connection with the settlement of our Saussy 

Burbank notes receivable, $0.8 million associated with 

various homes and homesites and $0.1 million associated 

with a builder note receivable. The Company also wroteoff $7.2 million of capitalized costs related to abandoned 

development plans in certain of our projects and incurred a 

restructuring charge of $3.5 million related to one-time 

termination benefits. [Emphasis added]. 

* * * 

Consolidated Statements of Income 

 Quarter End 

Dec. 31, 2009 

Year End 

Dec. 31, 2009 

Impairment Losses $70,100,000 $102,700,000 

Pre-tax Income (Loss) 

from Continuing 

Operations 

($86,900,000) ($205,100,000) 

Net (Loss) Income ($59,300,000) ($130,800,000) 

Net Income Per Share ($0.65) ($1.42) 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 69 of 138
66 

* * * 

Summary Balance Sheet 

 Dec. 31, 2009 

Assets 

Investments in real estate $749,500,000 

122. Also on February 23, 2010, St. Joe held its quarterly earnings call to 

discuss the CompanyZs the fourth quarter and year end 2009 results. Defendants Greene 

and McCalmont participated on the call. During the call, McCalmont stated: 

For the fourth quarter of 2009 we had a net loss of $59.3 

million or $0.65 per share, which included pretax charges 

of $84 million or $0.56 per share after tax. Included in the 

pretax charges were $73 million of noncash impairment 

charges, including $67.8 million related to the sale of the 

company's remaining assets at Victoria Park in DeLand, 

Florida; $3.5 million related to the sale of the St. Johns 

Golf & Country Club near Jacksonville; $1 million related 

to the sale of assets acquired in connection with the 

settlement of our Saussy Burbank notes receivable; and 

approximately $1 million associated with various homes, 

home sites and a builder's note receivable. 

We also wrote off just over $7 million of capitalized costs 

related to abandoned development projects in certain of our 

projects and incurred a restructuring charge of $3.5 million 

related to one-time termination benefits. [Emphasis 

added]. 

123. On February 23, 2010, St. Joe filed its 2009 Annual Report with the SEC 

on Form 10-K. The CompanyZs Form 10-K was signed by Defendants Greene and 

McCalmont, among others, and reaffirmed the CompanyZs 2009 financial results, 

financial position, and the reported value of the CompanyZs investment in real estate. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 70 of 138
67 

With respect to the CompanyZs asset impairment costs, St. JoeZs 2009 Annual Report 

reported: 

Impairment Losses. During the past three years, we have 

recorded significant impairment charges as a result of the 

continued decline in demand and market prices within our 

real estate markets. The following table summarizes our 

impairment charges for the three years ended December 31: 

 Year End Dec. 31 

 2009 2008 2007 

Impairment Charge: 

Home and Homesites m 

various residential 

communities 

$7,300,000 $12,000,000 $7,800,000 

Investment in Real Estate:

We review our long-lived assets for impairment whenever 

events or changes in circumstances indicate that the 

carrying amount of an asset may not be recoverable. 

Homes and homesites substantially completed and ready 

for sale are measured at the lower of carrying value or fair 

value less costs to sell. For projects under development, an 

estimate of future cash flows on an undiscounted basis is 

performed using estimated future expenditures necessary to 

maintain and complete the existing project and using 

managementPs best estimates about future sales prices and 

holding periods. The continued decline in demand and 

market prices for residential real estate during 2007 through 

2009 caused us to reevaluate certain carrying amounts 

within our residential real estate segment, which resulted in 

the recording of significant impairment charges. 

Given the downturn in our real estate markets, we 

implemented a tax strategy for 2009 to benefit from the sale 

of certain non-strategic assets at a loss. Under federal tax 

rules, losses from asset sales realized in 2009 can be carried 

back and applied to taxable income from 2007, resulting in 

a federal income tax refund for 2009. 

As part of this strategy, we conducted a nationally 

marketed sale process for the disposition of the remaining 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 71 of 138
68 

assets of our non-strategic Victoria Park community in 

Deland, Florida, including homes, homesites, undeveloped 

land, notes receivable and a golf course. Based on the 

likelihood of the closing of the sale, we concluded on 

December 15, 2009 that an impairment charge for $67.8 

million was necessary. We completed the sale on 

December 17, 2009 for $11.0 million. 

In addition, we completed the sale of our SevenShores 

condominium and marina development project for $7.0 

million earlier in 2009, which resulted in an impairment 

charge of $6.7 million due to lower market pricing. We also 

wrote-off $7.2 million of capitalized costs related to 

abandoned development plans in certain of our 

communities. We also sold our St. Johns Golf and Country 

Club for $3.0 million in December 2009 which resulted in 

an impairment charge of $3.5 million. [Emphasis added]. 

* * * 

Consolidated Statements of Income 

 Year End 

Dec. 31, 2009 

Impairment Losses $102,683,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($205,127,000) 

Net (Loss) Income ($130,840,000) 

Net Income Per Share ($1.42) 

* * * 

Summary Balance Sheet 

 Dec. 31, 2009 

Assets 

Investments in real estate $749,500,000 

124. The statements in ¶¶ 121-23 were materially false and misleading when 

made for substantially the same reason as set forth in ¶ 93. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 72 of 138
69 

10. First Quarter 2010 Financial Results

125. On May 4, 2010, the Company issued a press release on Form 8-K entitled 

bThe St. Joe Company Reports First Quarter 2010 Results.c The press release reported 

that the CompanyZs investment in real estate was $747.3 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the first quarter ended March 31, 2010 of $(11.4) 

million, or $(0.13) per share, compared to a Net Loss of 

$(12.0) million, or $(0.13) per share, for the first quarter of 

2009. 

* * * 

Consolidated Statements of Income 

 Quarter End 

March 31, 2010 

Impairment Losses $100,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($17,600,000) 

Net (Loss) Income ($11,400,000) 

Net Income Per Share ($0.13) 

* * * 

Summary Balance Sheet 

 March 31, 2010 

Assets 

Investments in real estate $747,300,000 

126. Also on May 4, 2010, St. Joe filed its Quarterly Report with the SEC on 

Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs quarterly financial results, financial position, 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 73 of 138
70 

and the reported value of the CompanyZs investment in real estate. Additionally, the 

Form 10-Q discussed asset impairments, reporting: 

The Company reviews its long-lived assets for impairment 

whenever events or changes in circumstances indicate that 

the carrying amount of an asset may not be recoverable. 

Homes and homesites substantially completed and ready 

for sale are measured at lower of carrying value or fair 

value less costs to sell. The fair value of homes and 

homesites is determined based upon final sales prices of 

inventory sold during the period (level 2 inputs). For 

inventory held for sale, estimates of selling prices based on 

current market data are utilized (level 3 inputs). For 

projects under development, an estimate of future cash 

flows on an undiscounted basis is performed using 

estimated future expenditures necessary to maintain and 

complete the existing project and using managementPs best 

estimates about future sales prices and holding periods 

(level 3 inputs). In the first quarter of 2010 and 2009, the 

Company recorded impairment charges in the residential 

real estate segment of $0.1 million and $0.2 million, 

respectively. 

* * * 

Segment Results 

Residential Real Estate 

Our residential real estate segment typically plans and 

develops mixed-use resort, primary and seasonal residential 

communities of various sizes, primarily on our existing 

land. We own large tracts of land in Northwest Florida, 

including significant Gulf of Mexico beach frontage and 

waterfront properties, and land near Jacksonville and 

Tallahassee. 

Our residential sales remain weak due to the real estate 

downturn and economic recession in Florida. Inventories of 

resale homes and homesites remain high in our markets and 

prices remain depressed, and, predicting when real estate 

markets will return to health remains difficult. Although we 

have noticed some renewed interest in residential real estate 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 74 of 138
71 

activity, we do not expect any significant favorable changes 

in market conditions during 2010. [Emphasis added]. 

* * * 

Consolidated Statements of Income 

 Quarter End 

March 31, 2010 

Impairment Losses $53,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($17,636,000) 

Net (Loss) Income ($11,424,000) 

Net Income Per Share ($0.13) 

* * * 

Balance Sheet 

 March 31, 2010 

Assets 

Investments in real estate $747,341,000 

127. The statements in ¶¶ 125-26 were materially false and misleading when 

made for substantially the same reason as set forth in ¶ 93. 

11. Second Quarter 2010 Financial Results

128. On August 5, 2010, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company Reports Second Quarter 2010 Results.c The press release 

reported that the CompanyZs investment in real estate was $748.2 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the second quarter ended June 30, 2010 of $(8.6) 

million, or $(0.09) per share, including a pre-tax 

restructuring charge of $1.2 million or $0.01 per share after 

tax. This compares to a Net Loss in the second quarter of 

2009 of $(44.8) million, or $(0.49) per share, which 

included pre-tax non-cash charges of $64.7 million or $0.43 

per share after tax. 

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 75 of 138
72 

Net Loss for the first half of 2010 was $(20.0) million, or 

$(0.22) per share. This compares to a Net Loss during the 

same period of 2009 of $(56.9) million, or $(0.62) per 

share, which included pre-tax non-cash charges of $66.2 

million or $0.44 per share after tax. 

* * * 

Consolidated Statements of Income 

 Quarter End 

June 30, 2010 

Impairment Losses $500,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($14,700,000) 

Net (Loss) Income ($8,600,000) 

Net Income Per Share ($0.09) 

* * * 

Summary Balance Sheet 

 June 30, 2010 

Assets 

Investments in real estate $748,200,000 

129. Also on August 5, 2010, St. Joe filed its Quarterly Report with the SEC on 

Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs financial results, financial position, and the 

reported value of the CompanyZs investment in real estate. Additionally, the Form 10-Q 

discussed asset impairments, reporting: 

Impairment Losses. We review our long-lived assets for 

impairment whenever events or changes in circumstances 

indicate that the carrying amount of an asset may not be 

recoverable. Homes and homesites substantially completed 

and ready for sale are measured at the lower of carrying 

value or fair value less costs to sell. For projects under 

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73 

development, an estimate of future cash flows on an 

undiscounted basis is performed using estimated future 

expenditures necessary to maintain and complete the 

existing project and using managementPs best estimates 

about future sales prices and holding periods. During the 

second quarter of 2010 and the first six months of 2010, we 

recorded impairment charges on homes and homesites of 

zero and $0.1 million, respectively, in the residential real 

estate segment. During the second quarter of 2010 we also 

recorded a $0.5 million write-down resulting from a 

renegotiated builder note receivable in the residential 

segment. [Emphasis added]. 

* * *

Consolidated Statements of Income 

 Quarter End 

June 30, 2010 

Impairment Losses $502,000 

Pre-tax Income (Loss) from 

Continuing Operations 

($14,719,000) 

Net (Loss) Income ($8,630,000) 

Net Income Per Share ($0.09) 

* * * 

Summary Balance Sheet 

 June 30, 2010 

Assets 

Investments in real estate $748,195,000 

130. The statements in ¶¶ 128-29 were materially false and misleading when 

made for substantially the same reason as set forth in ¶ 93. 

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74 

12. Third Quarter 2010 Financial Results

131. On November 2, 2010, the Company issued a press release on Form 8-K 

entitled bThe St. Joe Company Reports Third Quarter 2010 Results.c The press release 

reported that the CompanyZs investment in real estate was $746.8 million, and stated: 

The St. Joe Company (NYSE: JOE) today announced a Net 

Loss for the third quarter ended September 30, 2010 of 

$(13.1) million, or $(0.14) per share, including pre-tax 

charges of $13.1 million, or $0.09 per share after tax. This 

compares to a Net Loss in the third quarter of 2009 of 

$(14.5) million, or $(0.16) per share, which included pretax charges of $12.9 million or $0.08 per share after tax. 

Third quarter 2010 pre-tax charges included an $8.8 million 

reserve for litigation involving a contract dispute related to 

a 1997 land purchase, a $2.6 million charge for legal and 

clean-up costs resulting from the Deepwater Horizon oil 

spill and $1.7 million of restructuring charges. 

Year-to-Date Net Loss for 2010 was $(33.2) million, or 

$(0.36) per share including pre-tax charges of $15.8 million 

or $0.11 per share after tax. This compares to a Net Loss 

during the same period of 2009 of $(71.4) million, or 

$(0.78) per share, which included pre-tax charges of $79.1 

million or $0.52 per share after tax. 

* * *

Consolidated Statements of Income 

 Quarter End 

Sept. 30, 2010 

Impairment Losses -- 

Pre-tax Income (Loss) from 

Continuing Operations 

($21,700,000) 

Net (Loss) Income ($13,100,000) 

Net Income Per Share ($0.14) 

* * * 

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75 

Summary Balance Sheet 

 Sept. 30, 2010 

Assets 

Investments in real estate $746,800,000 

132. Also on November 2, 2010, St. Joe filed its Quarterly Report with the SEC 

on Form 10-Q. The CompanyZs Form 10-Q was signed by Defendants Greene and 

Connolly, and reaffirmed the CompanyZs financial results, financial position, and the 

reported value of the CompanyZs investment in real estate. Additionally, the Form 10-Q 

discussed asset impairments, reporting: 

Results of Operations 

Net loss decreased by $1.4 million to a loss of $(13.1), or 

$(0.14) per share, in the third quarter of 2010, compared to 

a net loss of $(14.5) million, or $(0.16) per share, for the 

third quarter of 2009. 

* * * 

Impairment Losses. We review our long-lived assets for 

impairment whenever events or changes in circumstances 

indicate that the carrying amount of an asset may not be 

recoverable. Homes and homesites substantially completed 

and ready for sale are measured at the lower of carrying 

value or fair value less costs to sell. For projects under 

development, an estimate of future cash flows on an 

undiscounted basis is performed using estimated future 

expenditures necessary to maintain and complete the 

existing project and using managementPs best estimates 

about future sales prices, sales volume, sales velocity and 

holding periods. In addition, the estimated length of 

expected development periods, related economic cycles and 

inherent uncertainty with respect to these projects, such as 

the impact of change in development plans and our intent 

and ability to hold the projects through the development 

period, could result in changes to these estimates. During 

the nine months ended September 30, 2010, we recorded 

impairment charges on homes and homesites of $0.1 

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76 

million, in the residential real estate segment. During the 

first nine months of 2010 we also recorded a $0.5 million 

write-down resulting from a renegotiated builder note 

receivable in the residential segment. [Emphasis added]. 

* * *

Consolidated Statements of Income 

 Quarter End 

Sept. 30, 2010 

Impairment Losses -- 

Pre-tax Income (Loss) from 

Continuing Operations 

($21,649,000) 

Net (Loss) Income ($13,126,000) 

Net Income Per Share ($0.14) 

* * * 

Summary Balance Sheet 

 Sept. 30, 2010 

Assets 

Investments in real estate $746,791,000 

133. The statements in ¶¶ 131-32 were materially false and misleading when 

made for substantially the same reason as set forth in ¶ 93. 

H. The Truth Is Revealed

134. On October 13, 2010, the truth about the carrying values for St. JoeZs 

residential real estate was finally revealed. David Einhorn (bEinhornc), an investor with 

a short position in St. JoeZs stock, had conducted an extensive investigation into St. JoeZs 

residential real estate development business. Einhorn undertook an in-depth analysis of 

the current value of certain of St. JoeZs residential real estate projects that were in 

development, relying on, inter alia, detailed information gleaned from tax assessment 

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77 

records, Freedom of Information Act requests, Florida county public records, and on-theground surveillance of St. JoeZs properties. His conclusions shocked the market and, 

following the presentation of his findings, St. JoeZs stock plummeted 9.7% in a single 

day. 

135. Based on his investigation, which includes evidence similar to the 

evidence set forth at ¶¶ 30-88, 171-85, Einhorn concluded that St. Joe had impermissibly 

failed to take the necessary and required impairment charges to its residential real estate 

projects in development, because it was not possible for the value of the properties to 

meet or exceed their stated carrying values. Einhorn presented his investigation and 

conclusions to the investing public at the Value Investing Congress, in a presentation 

entitled bField of Schemes: If You Build It, They WonZt Come.c41 As Reuters

subsequently reported, EinhornZs presentation notes that St. JoeZs bdevelopment plans 

have fallen flat, leaving it with yghost townsZ and inevitable writedowns.c Einhorn also 

stated how the Company bwas ystuckZ after making an aggressive bet on beachfront 

developments that have gone nowhere, and that it was overvaluing the real estate 

holdings on its books,c and that b[t]hereZs little evidence of how Joe spent so much 

money on these developments. Many developments are ghost towns and little value 

remains.c In addition, Einhorn stated that b[w]ith the popping of the bubble, JoeZs 

business has practically stopped.c 

 41 The presentation included a 139-page slide show of the CompanyZs real estate 

holdings, including footage and film of St. JoeZs developments. 

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78 

136. On this news, shares of the CompanyZs stock fell $2.38 per share, or 9.7 

percent, to close on October 13, 2010 at $22.16 per share, on unusually heavy trading 

volume. 

137. After the close of the market on October 13, 2010, Bloomberg published 

an article entitled bEinhorn Says St. Joe Needs ySubstantialZ Writedowns.c The article 

recounted: 

St. Joe Co.Zs shares plunged after David Einhorn, who 

profited from bets against Lehman Brothers Holdings Inc. 

in 2008, said the Florida real-estate firm must take 

bsubstantialc asset-impairment charges and that further 

building will drive the stock price to zero. 

bThe best properties have been sold, many lots were sold to 

speculators during the boom, and when the boom ended, 

business essentially stopped,c Einhorn, who runs hedgefund operator Greenlight Capital Inc., said today at the 

Value Investing Congress in New York. bThereZs little 

evidence of how Joe spent so much money on these 

developments. Many developments are ghost towns and 

little value remains.c 

* * * 

The company is accounting for untouched land as 

developed, Einhorn said. Also, St. JoeZs RiverTown 

community is a bmoonscape,c and WaterSound is empty, 

he said. 

bJoeZs highest and best use is to return to a rural land 

company,c he said. bManagement should sell the 

company, but it canZt because the stock price is too high.c 

138. The following day the CompanyZs shares declined an additional $2.42 per 

share, or 10.9 percent, to close on October 14, 2010 at $19.74 per share, again on 

unusually heavy trading volume. Over these two days, St. JoeZs shares declined a total of 

$4.80 per share, or over 19.5 percent. 

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I. Failure to Comply with SEC Regulations and 

Generally Accepted Accounting Principles (eGAAPf)

139. All of the financial statements issued by St. Joe during the relevant periods 

alleged herein, including those set forth in its press releases, Forms 10-Q, 10-K and other 

SEC filings issued by the Company, were materially misleading because they failed to 

comply with Generally Accepted Accounting Principles and SEC rules as set forth 

herein. 

1. Failure to Comply With Regulation S-K, Item 303

140. Federal Regulations strictly govern what must be included in documents 

filed with the SEC. The SEC regulates statements by companies bthat can reasonably be 

expected to reach investors and the trading markets, whoever the intended primary 

audience.c SEC Release No. 33 6504, 3 Fed. Sec. L. Rep. (CCH) ¶ 23,120, at 17,095, 17 

C.F.R. § 241.20560 (Jan. 13, 1984). In addition to the periodic reports required under the 

Exchange Act, management of a public company has a duty promptly bto make full and 

prompt announcements of material facts regarding the companyZs financial condition.c 

SEC Release No. 34 8995, 3 Fed. Sec. L. Rep. (CCH) ¶ 23,120A, at 17,095, 17 C.F.R. § 

241.8995 (Oct. 15, 1970). The SEC has emphasized that b[i]nvestors have legitimate 

expectations that public companies are making, and will continue to make, prompt 

disclosure of significant corporate developments.c SEC Release No. 18271, [1981 1982 

Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 83,049, at 84,618 (Nov. 19, 1981). 

141. Regulation S-K provides, in part, that annual and period reports must 

contain a section entitled bmanagementZs discussion and analysis of financial condition 

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and results of operationsc (the bManagement Discussionc). See 17 C.F.R. § 229.10, et 

seq. 

142. Item 303 of Regulation S-K, 17 C.F.R. § 229.303 (bItem 303c), governs 

what must be contained in the Management Discussion. Item 303 requires, in part, that 

the Management Discussion must: 

Discuss registrantZs financial condition, changes in 

financial condition and results of operations. The 

discussion shall provide information as specified in 

paragraphs (a)(1) through (5) of this Item and also shall 

provide such other information that the registrant believes 

to be necessary to an understanding of its financial 

condition, changes in financial condition and results of 

operations. 

143. Paragraph (a)(3) of Item 303 requires, in part, that the Management 

Discussion discuss a companyZs bresults of operationsc as follows: 

(i) Describe any unusual or infrequent events or 

transactions or any significant economic changes that 

materially affected the amount of reported income from 

continuing operations and, in each case, indicate the extent 

to which income was so affected. In addition, describe any 

other significant components of revenues or expenses that, 

in the registrantZs judgment, should be described in order to 

understand the registrantZs results of operations. 

(ii) Describe any known trends or uncertainties that have 

had or that the registrant reasonably expects will have a 

material favorable or unfavorable impact on net sales or 

revenues or income from continuing operations. If the 

registrant knows of events that will cause a material change 

in the relationship between costs and revenues (such as 

known future increases in costs of labor or materials or 

price increases or inventory adjustments), the change in the 

relationship shall be disclosed. 

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144. The instructions in the Notes to Item 303 provide the requirements for 

public companies like St. Joe. Instructions 1 - 3 provide: 

1. The registrantZs discussion and analysis shall be of the 

financial statements and of other statistical data that the 

registrant believes will enhance a readerZs 

understanding of its financial condition, changes in 

financial condition and results of operations. Generally, 

the discussion shall cover the three year period covered 

by the financial statements and shall use year-to-year 

comparisons or any other formats that in the registrantZs 

judgment enhance a readerZs understanding. However, 

where trend information is relevant, reference to the five 

year selected financial data appearing pursuant to Item 

301 of Regulation S-K (§ 229.301) may be necessary. 

2. The purpose of the discussion and analysis shall be to 

provide to investors and other users information 

relevant to an assessment of the financial condition and 

results of operations of the registrant as determined by 

evaluating the amounts and certainty of cash flows from 

operations and from outside sources. 

3. The discussion and analysis shall focus specifically on 

material events and uncertainties known to management 

that would cause reported financial information not to 

be necessarily indicative of future operating results or of 

future financial condition. This would include 

descriptions and amounts of (A) matters that would 

have an impact on future operations and have not had an 

impact in the past, and (B) matters that have had an 

impact on reported operations and are not expected to 

have an impact upon future operations. 

145. The Officer Defendants had knowledge of material adverse information 

concerning the recoverability of the carrying values of certain real estate projects in 

development, and the effects that the lack of recoverability of those carrying values 

would m and did m have on St. Joe and its financial statements during the Class Period. 

These Defendants knew that the decrease in sales prices and sales volume, and the 

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CompanyZs decision to halt development, would necessarily negatively affect the value of 

St. JoeZs assets, yet failed to disclose this to the public. The Officer Defendants had an 

obligation to disclose the financial impact on, and concomitant risks to, St. Joe pursuant 

to Regulation S-K, Item 303. Their failure to adequately disclose this information 

renders St. JoeZs Class Period SEC filings materially incomplete, false and misleading. 

Irrespective of St. JoeZs trend and risk disclosures, the financial statements were still 

misleading because b[f]inancial statements not in conformity with GAAP are presumed 

to be inaccurate or misleading, notwithstanding explanatory disclosures in footnotes or in 

the accountantZs report.c SEC Division of Corporate Finance Accounting Disclosure 

Rules And Practices training material March 31, 2000 and December 2010-Topic Four. 

2. Failure to Comply With Regulation S-X and GAAP.

146. At all relevant times during the Class Period, St. Joe represented that its 

financial statements were prepared in conformity with GAAP. GAAP are those 

principles recognized by the accounting profession as the conventions, rules and 

procedures necessary to define accepted accounting practice at a particular time. 

147. Prior to September 15, 2009 the hierarchy of authoritative GAAP 

literature was as follows. The highest authority was comprised of Financial Accounting 

Standards Board (bFASBc) Statements of Financial Accounting Statements (bSFASc), 

FASB Interpretations (bFINc), APB Opinions (bAPBc), and AICPA Accounting 

Research Bulletins (bARBc). GAAP provided other authoritative pronouncements 

including, among others, AICPA Statements of Position (bSOPc), Consensus Positions of 

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the FASB Emerging Issues Task Force (bEITFc), and the FASB Concept Statements 

(bSFACc). 

148. On July 1, 2009 the Financial Accounting Standards Board launched the 

FASB Accounting Standards Codification as the single source of authoritative 

nongovernmental U.S. generally accepted accounting principles. The Codification 

became effective for interim and annual periods ending after September 15, 2009. As a 

result of the Codification all existing standards documents are superseded as described in 

SFAS No. 168, bThe FASB Accounting Standards Codification and the Hierarchy of 

Generally Accepted Accounting Principles.c Instead of issuing new FASB standards, the 

FASB now issues FASB Accounting Standards Updates (bASUc). The Codification did 

not change existing GAAP, it only introduced a newly organized structure. 

149. St. JoeZs annual and interim (e.g., quarterly) financial statements must be 

prepared in accordance with GAAP. The SEC requires GAAP presentation in Regulation 

S-X, 17 C.F.R. §210.4-01(a)(1), which provides that financial statements filed both 

annually and quarterly with the SEC must comply with GAAP, except quarterly 

statements are not required to have the same level of footnote disclosure. If the filings do 

not comply with GAAP, they are bpresumed to be misleading and inaccurate,c despite 

footnote or other disclosure. See Regulation S-X, 17 C.F.R. §210.4-01(a)(1). 

150. Moreover, as set forth in SFAC No. 1, bObjective of Financial Reporting 

by Business Enterprises,c one of the fundamental objectives of financial reporting is to 

provide accurate and reliable information concerning an entityZs financial performance 

during the period being presented. For example, SFAC No. 1, ¶ 42 states: 

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Financial reporting should provide information about an 

enterpriseZs financial performance during a period. 

Investors and creditors often use information about the past 

to help in assessing the prospects of an enterprise. Thus, 

although investment and credit decisions reflect investorsZ 

and creditorsZ expectations about future enterprise 

performance, those expectations are commonly based at 

least partly on evaluations of past enterprise performance. 

151. Management is responsible for preparing financial statements that 

conform to GAAP. As noted by Public Company Accounting Oversight Board (PCAOB) 

professional standards, AU Section 110, bResponsibilities and Functions of the 

Independent Auditorc: 

Financial statements are managementZs responsibilityu 

Management is responsible for adopting sound accounting 

policies and for establishing and maintaining internal 

controls that will, among other things, record, process, 

summarize, and report transactions consistent with 

managementZs assertions embodied in the financial 

statements. The entityZs transactions and the related assets, 

liabilities and equity are within the direct knowledge and 

control of managementu Thus, the fair presentation of 

financial statements in conformity with Generally Accepted 

Accounting Principles is an implicit and integral part of 

managementZs responsibility. 

152. In Securities Act Release No. 6349 (September 8, 1981), the SEC stated 

that: 

[I]t is the responsibility of management to identify and 

address those key variables and other qualitative and 

quantitative factors which are peculiar to and necessary for 

an understanding and evaluation of the individual company. 

153. In Accounting Series Release 173, the SEC reiterated the duty of 

management to present a true representation of a companyZs operations: 

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[I]t is important that the overall impression created by the 

financial statements be consistent with the business realities 

of the companyZs financial position and operations. 

154. As such, GAAP imposes upon public companies, such as St. Joe, a duty 

to: 

(i) disclose in periodic reports filed with the SEC bknown 

trends or any known demands, commitments, events or 

uncertaintiesc that are reasonably likely to have a material 

impact on a companyZs sales revenues, income or liquidity, 

or cause previously reported financial information bnot to 

be necessarily indicative of future operating results or 

future financial condition.c 17 C.F.R. § 229.303(a)(1)-3(3) 

and Instruction 3; and 

(ii) bmake full and prompt announcements of material 

facts regarding the companyZs financial condition,c as 

b[i]nvestors have legitimate expectations that public 

companies are making, and will continue to make, prompt 

disclosure of significant corporate developments.c SEC 

Release No. 34-8995, 3 Fed. Sec. L. Rep. (CCH) ¶ 

23,120A, at 17,095 17 C.F.R. § 241.8995 (October 15, 

1970); SEC Release No. 18271, [1981-1982 Transfer 

Binder] Fed. Sec. L. Rep. (CCH) ¶ 83,049, at 84,618 

(November 19, 1981). 

155. Pursuant to these requirements, and as detailed herein, the Defendants 

caused St. Joe to represent that the CompanyZs financial statements complied with SEC 

regulations and were prepared in conformity with GAAP in all material respects, when, 

in reality, they did not. As a result, St. JoeZs financial statements were materially false 

and misleading. See Regulation S-X, 17 C.F.R. § 210.4-01(a)(1). 

156. The CompanyZs financial statements during the Class Period were 

materially false and misleading because the Company overstated the value of its 

residential real estate assets due to its failure to timely and adequately record impairment 

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charges for its assets under development. St. Joe falsely and fraudulently reported 

prospects for future cash inflows and its ability to recover its capitalized costs. As a 

result, St. Joe failed to adequately disclose material facts regarding the extent to which 

income was affected throughout the Class Period. 

157. In accordance with Codification Subtopic 360-10 (formerly SFAS No. 144 

Accounting for the Impairment or Disposal of Long-Lived Assets) there is essentially a 

three-step process for recording an impairment loss for assets that are held and used. St. 

Joe had significant assets under development throughout the Class Period, which were 

classified as held for use. 

158. The first step in the process is to determine when to evaluate an asset for 

recoverability. According to ASU 360-10-35-21 ba long-lived asset shall be tested for 

recoverability whenever events or changes in circumstances indicate that its carrying 

amount may not be recoverable.c Examples of changes in events or circumstances 

include the following: 

a. A significant decrease in the market price of a longlived asset (asset group) 

b. A significant adverse change in the extent or manner in 

which a long-lived asset (asset group) is being used or 

in its physical condition 

c. A significant adverse change in legal factors or in the 

business climate that could affect the value of a longlived asset (asset group), including an adverse action or 

assessment by a regulator 

d. A accumulation of costs significantly in excess of the 

amount originally expected for the acquisition or 

construction of a long-lived asset (asset group) 

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e. A current-period operating or cash flow loss combined 

with a history of operating cash flow losses or a 

projection or forecast that demonstrates continuing 

losses associated with the use of a long-term lived asset 

(asset group) 

f. A current expectation that, more likely than not, a longlived asset (asset group) will be sold or otherwise 

disposed of significantly before the end of its previously 

estimated useful life. The term more likely than not

refers to a level of likelihood that is more than 50 

percent. 

159. Once it is determined to evaluate a long-lived asset for recoverability, 

which the Company has acknowledged was necessary by purportedly performing an 

impairment analysis for every quarter during the Class Period, the next two steps are to 

perform a recoverability test to determine if there is any impairment and, if necessary, 

record an impairment loss based on the fair value of the particular long-lived asset. This 

process is described in the following paragraph: 

An impairment loss shall be recognized only if the carrying 

of a long-lived asset (asset group) is not recoverable and 

exceeds its fair value. [Step two;] The carrying amount of 

a long-lived asset (asset group) is not recoverable if it 

exceeds the sum of the undiscounted cash flows expected 

to result from the use and eventual disposition of the asset 

(asset group). That assessment shall be based on the 

carrying amount of the asset (asset group) at the date it is 

tested for recoverability, whether in useuor under 

developmentu.[Step three;] An impairment loss shall be 

measured as the amount by which the carrying amount of a 

long-lived asset (asset group) exceeds its fair value. [ASU 

360-10-35-17] 

160. Once an asset is impaired, the adjusted carrying amount becomes the new 

cost basis and restoration of a previously recognized impairment loss is prohibited. [ASU 

360-10-35-20] 

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161. GAAP requires that the estimates used by management to test for 

recoverability must be reasonable. Paragraph 35-30 of ASU 360-10 states b[e]stimates 

of future cash flows used to test the recoverability of a long-lived asset (asset group) shall 

incorporate the entityZs own assumptions about its use of the asset (asset group) and shall 

consider all available evidence. The assumptions used in developing those estimates 

shall be reasonable in relation to the assumptions used in developing other information 

used by the entity for comparable periods, such as internal budgets and projections, 

accruals related to incentive compensation plans, or information communicated to 

others...c [emphasis added]. 

162. GAAP addresses timing of cash flows as follows: bEstimates of future 

cash flows used to test the recoverability of a long-lived asset (asset group) shall be made 

for the remaining useful life of the asset (asset group) to the entityuc [ASU 360-10-35-

31 ] 

163. GAAP also specifically addresses estimates of future cash flows for assets 

under development and for assets under development that are part of an asset group that 

is in use: 

Estimates of future cash flows used to test the 

recoverability of a long-lived asset (asset group) that is 

under development shall be based on the expected service 

potential of the asset (group) when development is 

substantially complete. Those estimates shall include cash 

flows associated with all future expenditures necessary to 

develop a long-lived asset (asset group), including interest 

payments that will be capitalized as part of the cost of the 

asset (asset group)u [ASU 360-10-35-34 ]. 

If a long-lived asset that is under development is part of an 

asset group that is in use, estimates of future cash flow used 

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to test the recoverability of that group shall include the cash 

flows associated with future expenditures necessary to 

maintain the existing service potential of the groupuas 

well as the cash flows associated with all future 

expenditures necessary to substantially complete the asset 

that is under development (see the preceding paragraph)u

[ASU 360-10-35-35 ] 

164. The guidance for assets held for sale is different than for long-lived assets 

to be held and used. For long-lived assets classified as held for sale GAAP requires that 

blong-lived assets shall be measured at the lower of its carrying amount or fair value less 

cost to sellu.c [ASU 360-10-35-43] The expected gain or loss on sale bshall be 

recognized for any initial or subsequent write-down to fair value less cost to sell. A gain 

shall be recognized for any subsequent increase in fair value less cost to sell, but not in 

excess of the cumulative loss previously recognized (for a write-down to fair value less 

cost to sell).c [ASU 360-10-35-40] 

165. Prior to 2008, in measuring the fair value of an asset (Step 3) SFAS No. 

144 provided the following guidance: 

The fair value of an assetuis the amount at which that 

assetucould be bought (incurred) or sold (settled) in a 

current transaction between willing parties, that is, other 

than in a forced or liquidation sale. Quoted market prices 

in active markets are the best evidence of fair value and 

shall be used as the basis for the measurement, if available. 

However, in many instances, quoted market prices in active 

markets will not be available for the long-lived assets (asset 

groups) covered by this Statement. In those instances, the 

estimate of fair value shall be based on the best information 

available, including prices for similar assets (groups) and 

the results of using other valuation techniques. [FAS 144 § 

22] 

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A present value technique is often the best available 

valuation technique with which to estimate the fair value of 

a long-lived asset (asset group)u [FAS 144 § 23] 

If a present value technique is used, estimates of future 

cash flows shall be consistent with the objective of 

measuring fair value. Assumptions that marketplace 

participants would use in their estimates of fair value shall 

be incorporated whenever that information is available 

without undue cost and effortuOtherwise, the entity may 

use its own assumptions. [FAS 144 § 24] 

166. Beginning in 2008, St. Joe was required to follow the guidance of SFAS 

157, bFair Value Measurementsc to measure the fair value of its assets. SFAS 157 

defines fair value as bthe price that would be received to sell an asset or paid to transfer a 

liability in an orderly transaction between market participants at the measurement date.c 

The definition focuses on the price that would be received to sell the asset (an exit price), 

not the price that would be paid to acquire the asset (an entry price). Fair value is 

intended to be a market-based measurement, not an entity-specific measurement. 

167. To make these measurements market-based, paragraphs 22-30 of FAS 157 

create a bfair value hierarchyc that distinguishes among three levels of value: 

(1) Level One: Observable inputs based on market data 

obtained from sources independent of the reporting entity, 

including most frequently the quoted prices (unadjusted) in 

active markets for identical assets or liabilities at the 

measurement date; 

(2) Level Two: Observable inputs other than quoted prices 

for the asset or liability, either direct or indirect, including: 

(a) Quoted prices for similar assets or liabilities in 

active markets. 

(b) Quoted prices for identical/similar assets or 

liabilities in markets that are not active; i.e., in 

which there are few transactions for the asset or 

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liability, the prices are not current, or price 

quotations vary over time or among market makers 

(some brokered markets), or in which little 

information is released publicly (a principal-toprincipal market). 

(c) Observable inputs other than quoted prices for 

the asset or liability (e.g., interest rates and yield 

curves observable at commonly quoted intervals, 

volatilities, prepayment speeds, loss severities, 

credit risks, and default rates). 

(d) Inputs that are derived principally from or 

corroborated by observable market data by 

correlation or other means (market-corroborated 

inputs); and 

(3) Level Three: Unobservable inputs, developed from the 

reporting entityZs assessment of market participant 

assumptions, based on the best information available under 

the circumstances. 

168. In particular, the notion of unobservable or Level 3 inputs applies when 

there is little, if any, market activity for the asset or liability at the measurement date. As 

the Summary to FAS 157 explains: bIn those situations, the reporting entity need not 

undertake all possible efforts to obtain information about market participant assumptions. 

However, the reporting entity must not ignore information about market participant 

assumptions that is reasonably available without undue cost and effort.c 

169. Additionally, SFAS 157 preserved SFAS 144 ¶23, but amended it to state, 

bFor long-lived assets (asset groups) that have uncertainties both in timing and amount, 

an expected present value technique will often be the appropriate technique with which to 

estimate fair value.c 

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170. Thus, in assessing the recoverability of its real estate, St. Joe should have 

considered certain core factors when estimating its future cash flows, including (1) the 

impact of market supply and demand; (2) the rate of sales and inventory on the market; 

(3) selling prices including sales incentives; (4) current sales; (5) anticipated land 

development and future development costs to be incurred including interest and overhead 

costs; (6) price erosion; (7) the time to complete the project and sell its units; and (8) 

risks specific to each land parcel or community. 

J. Additional Indicia of Scienter

1. DefendantsS Knowledge of Average 

Sales Prices on St. JoeSs Properties

171. The Officer DefendantsZ knowledge of the falsity of St. JoeZs public 

statements regarding the carrying values of its residential real estate investments is 

established by the CompanyZs public filings42 and public records. In 2007, St. Joe took a 

$7.8 million impairment charge for all of its residential real estate home and homesites. 

RiverTown alone had a carrying value of $65,615,000. In 2007, St. Joe sold six lots in 

RiverTown at an average sales price of $72,133. Based on this average price, the 185 

remaining lots would have a value of $13,344,605, in stark contrast to the stated carrying 

 42 Carrying values are only provided in the CompanyZs year-end filings, and then 

only on a per county basis, making it almost impossible to determine the carrying values 

for lots and properties in counties containing multiple residential real estate projects. 

Similarly, in the periods when St. Joe did take impairment charges for residential real 

estate, the Company did not specifically identify the properties that were impaired. 

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value of more than $65 million, in the same year the Company took only $7.8 million in 

impairment charges for all of its homes and homesites.43 

172. In 2008, St. Joe took an impairment charge of $12 million for all

residential real estate. At RiverTown alone, the carrying value was $77,143,00044 in 

2008 and $74,491,000 in 2009. Defendants knew of the complete real estate market 

crash at the time. St. Joe sold three RiverTown homesites in the first quarter of 2008 for 

an average price of $72,500 and none for the rest of the year. Based on these comparable 

sales, the fair value for the 185 remaining developed RiverTown lots in 2008 was only 

$13,412,500 (an average price of $72,500 x 185 developed lots), while St. Joe was 

carrying the project for over $77 million. However, the Company took just $12 million 

in impairment charges for all of its residential real estate homes and homesites in that 

year. Defendants, therefore, materially, falsely and fraudulently misrepresented the 

carrying values of the CompanyZs assets, failed to take appropriate impairment charges in 

violation of GAAP and materially overstated the CompanyZs earnings. 

173. St. Joe did not sell another lot in RiverTown until the third quarter of 

2009, when it sold two lots for an average sales price of just $31,250. Thus, in 2009 the 

fair value of the 185 remaining developed lots at RiverTown had decreased to 

 43 In 2007, St. Joe took another $5.2 million of impairment charges related to 

abandoned development plans, for a total of $130 million in residential real estate 

impairment charges. 

44 St. Johns Golf & Country Club was also located in St. Johns county. However, St. 

Johns Golf & Country Club was virtually sold out, with only one unit remaining in 2008, 

and therefore had a negligible effect on the CompanyZs financial statements. 

Accordingly, the entire residential real estate carrying value for St. Johns County in 2008 

is attributable to RiverTown. St. JohnZs Golf & Country Club was not listed as a project 

in development in the CompanyZs 2009 Form 10-K. 

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$5,781,250, in contrast to the reported carrying value of $75 million in 2009. For all of 

its homes and homesites, the Company took an impairment charge of just $7.3 million.45 

The Officer Defendants, therefore, materially, falsely and fraudulently misrepresented the 

carrying values of the CompanyZs assets, failed to take appropriate impairment charges in 

violation of GAAP and materially overstated the CompanyZs earnings. 

174. Defendants also possessed knowledge that the reported carrying value for 

SummerCamp Beach was overstated. St. Joe did not sell any homes or homesites in 

SummerCamp Beach in 2008. It sold only two homesites in 2009 for an average sales 

price of $184,450, and then only four more beachfront lots in the third quarter of 2010 for 

an average sales price of $330,000. St. Joe also listed interior lots for a high price of only 

$59,000.46 In 2008, however, St. Joe reported a carrying value of $41,218,000 for 

SummerCamp Beach, and a carrying value of $41,768,000 in 2009. There were 23 

remaining developed beachfront lots and 121 remaining developed interior lots.47 Even 

assuming the highest average sales price numbers, the value of those remaining lots 

would have been $14,850,000 m over $26 million less than the assigned carrying values in 

2008 and 2009. Notwithstanding this evidence, the Company took just $12 million and 

$7.3 million in impairment charges for all residential real estate homes and homesites in 

2008 and 2009, respectively. Accordingly, the Officer Defendants materially, falsely and 

 45 In 2009, St. Joe took another $7.2 million impairment charges in residential real 

estate related to abandoned development plans for a total of $14.5 million in residential 

real estate impairment charges. 

46 Einhorn Presentation, bField of Schemes: If You Build It, They WonZt Come,c 

citing listing for exclusive SummerCamp Beach agent. 

47 Einhorn Presentation, bField of Schemes: If You Build It, They WonZt Come,c 

citing Franklin County Tax Appraiser Office. 

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95 

fraudulently misrepresented the carrying value of the CompanyZs residential real estate 

assets, failed to take the appropriate impairment charges as required by GAAP and 

materially overstated its earnings. 

175. CW4 further confirmed that the 2007 carrying value of $48,201,000 for 

the SouthWood project in Leon County was overstated. According to CW4, St. Joe 

developed about 50 to 75 SouthWood lots at a time, so the Company would have about 

that many lots on the books at any given time. Thus, the 2007 carrying value of 

approximately $48 million, spread over 50 to 75 lots, suggests that St. Joe would be able 

to recover between $960,000 and $640,000 per lot m a highly unrealistic number 

according to CW4, given market conditions and recent sales history. CW4 explained 

that, in 2007, SouthWood did not have many lots for sale, but had approximately 2000 

entitlements. However, those entitlements were of only nominal value, because of the 

difficulty in obtaining permits in Tallahassee, where SummerCamp Beach is located, and 

because costs of infrastructure were high. CW4 explained that St. Joe and the Officer 

Defendants could not realistically expect any significant profit when the development 

costs exceeded the price that St. Joe could obtain for developed lots. 

176. In addition to its quarterly meetings described in ¶ 66, the 

Management Committee had weekly calls in which Greene, Rummell and McCalmont 

also participated. On these calls the regional general managers provided updates on each 

of the projects in their regions. Thus, Greene and Rummell and McCalmont were 

constantly updated on the status of each of St. JoeZs residential real estate projects. 

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2. DefendantsS Fair Value Analyses Grossly Differ 

From Their Undiscounted Future Cash Flow Analyses

177. The sale of St. JoeZs Victoria Park property further demonstrates 

DefendantsZ knowledge that the Company was overstating the value of its residential real 

estate assets. Victoria Park was a residential real estate development project in Volusia 

County. In 2009, St. Joe sold all of its remaining assets in the Victoria Park development 

for $11 million. The carrying value just before the sale, by contrast, was $78.8 million. 

The Company announced in a December 18, 2009 press release that on December 15, 

2009, the Company determined that material conditions for the $11 million sale had been 

met, and that St. Joe had taken an impairment charge of $67.8 million just two days

before the sale closed. 

178. Prior to the Victoria Park sale, the Company had not taken any impairment 

charges to the property, falsely and fraudulently leading the market to believe that the 

value of the property was completely recoverable. When forced to categorize the project 

as bheld for sale,c however, which mandates a fair value analysis based on current market 

conditions, the Company took an impairment charge for over 80% of the projectZs 

purported carrying value. The huge discrepancy between the undiscounted cash flow 

analysis used to evaluate impairment and the fair value analysis mandated by the sale 

supports the notion that Defendants knew the value of the CompanyZs residential real 

estate assets were materially overstated. 

179. In late 2007, Defendant Greene asked CW4 to become familiar with the 

values of all of St. JoeZs residential real estate developments because St. Joe planned 

either to sell or to engage in strategic joint venture deals for certain of its properties. 

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Greene asked CW4 to participate in negotiating with potential buyers or partners. As part 

of this process, CW4 produced a 15-20 tab spreadsheet setting forth the revenue, cost and 

income of the respective projects he reviewed. CW4 determined the business plans that 

St. Joe had for properties including Seven Shores, Victoria Park and RiverTown, did not 

make any sense because they were using sales and absorption rates that were 

unrealistically high. CW4 also created versions of these spreadsheets to provide to 

potential buyers or partners, using realistic sales prices and absorption rates. CW4 

derived materially lower values than those reported in the CompanyZs fraudulently 

misleading SEC filings. 

180. CW4 confirmed that the Officer Defendants knew the 2007 carrying vale 

for Victoria Park, a property CW4 analyzed in his spreadsheets, was overstated. 

According to CW4, St. Joe recorded a much higher book value for Victoria Park than its 

true value. CW4 explained that builders were selling homes for approximately $250,000 

to $300,000, and that sophisticated national builders would not pay more than 20% of the 

projected gross sales price for the land. Thus, the lots were only worth $40,000 to 

$60,000. CW4 further stated the undeveloped land at Victoria Park had a negative value 

because the prices builders were willing to pay for undeveloped lots were lower than the 

cost of developing the land. CW4 prepared an excel spreadsheet model of Victoria Park 

analyzing its value, and sent it to Defendants Greene and McCalmont, and a financial 

analyst at the Company. CW4 learned through conversations with Greene and 

McCalmont that both knew in late 2007 they were not going to be able to recoup the 

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book value for Victoria Park, and that bit was known that Victoria Park was a loser and 

they [Greene and McCalmont] wanted to get out.c 

181. The Seven Shores development project was similarly written down when 

it was sold for significantly less than the carrying value on St. JoeZs books. St. Joe 

carried the project for nearly $45 million and sold it in 2009 for only $7 million. 

182. In April 2008, CW4 wrote a memo to Greene that summarized the status 

of the troubling asset valuations that CW4 had uncovered at Seven Shores, Victoria Park, 

and RiverTown. CW4 was dealing with potential partners offering prices that were 

significantly lower than the values reflected in St. JoeZs business plans for these 

properties. CW4 met with the potential partners, but they bwere all talking prices that 

were a fraction of JoeZs 2008 business plan.c CW4 concluded that St. JoeZs valuations 

made no sense, as later evidenced by the sales prices of Victoria Park and Seven Shores. 

CW4 further stated that RiverTown remains highly overvalued, along with the remainder 

of St. JoeZs unsold developments. 

3. The February 2008 Stock Offering

183. The February 2008 stock offering provided Defendants with a significant 

incentive to underreport necessary impairments and thereby overstate the CompanyZs 

assets and earnings, to maintain the value of St. Joe stock. According to CW4, when 

McCalmont joined the Company, St. Joe had $300 to $400 million in debt and was in 

jeopardy of violating debt covenants. To eliminate the debt, the Company offered 

17,145,000 shares of common stock for $35.00 a share. The Company used the proceeds 

of the offering to pay off substantially all of its outstanding debt. Had the Company 

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99 

taken significant impairment charges, it is highly unlikely that it would have received the 

same high price per share for the offering. 

4. Defendants Knew the Airport Could 

Not Justify Carrying Values 

184. The new international Panama City airport that the Company repeatedly 

touted to investors was not a reasonable factor to justify the carrying values of the 

residential real estate properties discussed above. St. Joe dedicated significant resources 

to bringing the new airport to Panama City, securing entitlements and permits, and 

engaging in litigation to secure the airportZs re-location. St. Joe also donated 4,000 acres 

of its land to the Airport Authority for the airportZs new location. However, it was 

unreasonable for St. Joe to rely on the arrival of the airport to substantiate its inflated 

carrying values. In reality, the new binternationalc airport is miniscule. Only two 

airlines, Delta and Southwest, serve the airport with limited flight options. Additionally, 

in order to convince Southwest to serve the airport, St. Joe had to agree to cover any 

losses suffered by Southwest in the first three years as result of its business with the new 

airport. 

185. Both the small size of the airport and its location render unreasonable any 

assessment of the airportZs purported effects on its asset values. The airport is in the 

middle of a pine forest. There are no colleges, commercial districts or dense populations 

in the area. St. JoeZs assumption that the addition of a tiny and limited airport would 

drive up demand for its real estate, and to use that to justify fraudulently high carrying 

values, was therefore misleading. 

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5. The Officer Defendants Were Highly 

Compensated During the Class Period

186. Throughout the Class Period, the Officer Defendants profited from their 

false portrayal of the CompanyZs financial health, as St. Joe maintained grossly inflated 

carrying values on its books. According to the CompanyZs 2010 proxy, filed on March 

29, 2010, Defendant Greene received total compensation of $2,808,270 in 2007, 

$6,697,540 in 2008 and $2,085,941 in 2009. He received grant of stock and options that 

were worth $625,024, $5,423,650 and $1,109,737 on the grant dates in 2007, 2008 and 

2009, respectively.48 Greene also sold shares of St. Joe stock or exercised his option for a 

total profit of $1,513,902.85 during the Class Period. 

187. According to the CompanyZs 2009 Proxy, filed on March 31, 2009, 

Defendant Rummell received total compensation of $2,836,798 in 2007 and $1,400,197 

in 2008. According to his most recent Form 4, filed on October 12, 2007, Rummell 

owned 1,013,17 St. Joe shares directly and 920,695 shares through an LLC and limited 

partnerships. 

188. According to the CompanyZs 2010 Proxy, filed on March 29, 2010, 

Defendant McCalmont received total compensation of $1,256,531 in 2007, $1,593,077 in 

2008 and $1,2085,941 in 2009. He received grant of stock and options that were worth 

$2,364,415, $986,929 and $428,409 on the grant dates in 2007, 2008 and 2009, 

respectively. McCalmont also sold shares of St. JoeZs stock or exercised his options for a 

 48 2007 Proxy filed on April 13, 2007; 2008 Proxy, filed on March 28 2008; 2009 

Proxy filed on March 31, 2009. 

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total profit of $773,026.52 during the Class Period. Defendant Connolly also sold shares 

or exercised options for a total profit of $297,399.83 during the Class Period. 

K. Loss Causation/Economic Loss

189. DefendantsZ wrongful conduct, as alleged herein, directly and proximately 

caused the damages suffered by Plaintiff and the Class. 

190. During the Class Period, as detailed herein, St. Joe and the Officer 

Defendants engaged in a scheme to deceive the market and a course of conduct which 

artificially inflated the prices of St. JoeZs common stock by improperly and fraudulently 

understating the required impairment charges for the CompanyZs residential real estate 

projects in development. 

191. When the Officer DefendantsZ prior misrepresentations and fraudulent 

conduct were disclosed, St. JoeZs common stock plummeted as the prior inflation was 

released. As a result of their purchases of St. JoeZs common stock during the Class 

Period, Plaintiff and other Class members suffered economic loss, i.e., damages, under 

the federal securities laws. 

192. By failing to disclose the true impairment charges that were required in its 

residential real estate projects, St. Joe and the Officer Defendants presented a misleading 

picture of St. JoeZs business and prospects. These false and misleading statements had 

the intended effect and caused St. JoeZs common stock to trade at artificially inflated 

levels throughout the Class Period. 

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L. Control Person Allegations

193. The Officer Defendants, because of their positions of control and authority 

as senior executive officers and/or directors of the Company, had access to the adverse 

undisclosed information about the CompanyZs understated impairment charges for the 

residential real estate sector, and the CompanyZs financials as a whole (including its 

undiscounted cash flow analyses and the assumptions incorporated for each of the 

residential real estate properties in development), through their access to internal 

corporate documents and information, conversations and associations with other 

corporate officers and employees, attendance at management and Board of Directors 

meetings and committees thereof, and reports and other information provided to them in 

connection therewith with St. JoeZs business. 

194. Each of the above officers of St. JoeZs, by virtue of their high-level 

positions with the Company, directly participated in the management of the Company, 

was directly involved in the day-to-day operations of the Company at the highest levels 

and was privy to confidential proprietary information concerning each of St. JoeZs 

residential real estate properties in development, including its economic models and 

assumptions and cash flow analyses, financial statements, and financial condition, as 

alleged herein. 

195. The Officer Defendants participated in drafting, preparing, and/or 

approving the public statements and communications complained of herein and were 

aware of, or recklessly disregarded, the material misstatements contained therein and 

omissions therefrom, and were aware of their materially false and misleading nature. 

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196. The Officer Defendants, as senior executive officers and/or directors of 

the Company, were able to and did control the content of the various SEC filings, press 

releases, and other public statements pertaining to the Company during the Class Period. 

The Officer Defendants were provided with copies of the documents and statements 

alleged herein to be materially false and misleading prior to or shortly after their issuance 

or had the ability and opportunity to prevent their issuance or cause them to be corrected. 

Accordingly, the Officer Defendants are responsible for the accuracy of the public 

reports, releases, and other statements detailed herein and are primarily liable for the 

misrepresentations and omissions contained therein. 

197. As senior officers and controlling persons of a publicly-held company 

whose securities were, during the relevant time, registered with the SEC pursuant to the 

Exchange Act, traded on the New York Stock Exchange and governed by the provisions 

of the federal securities laws, the Officer Defendants each had a duty to promptly 

disseminate accurate and truthful information with respect to the CompanyZs 

performance, operations, business, and financial condition and to correct any previously 

issued statements that were or had become materially misleading or untrue, so that the 

market price of the CompanyZs publicly-traded securities would be based upon truthful 

and accurate information. The Officer DefendantsZ wrongdoing during the Class Period 

violated these specific requirements and obligations. 

198. Each of the Officer Defendants, as well as St. Joe, is liable as a primary 

participant in a wrongful scheme and course of business that operated as a fraud and 

deceit on purchasers of St. JoeZs securities during the Class Period, which included the 

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dissemination of materially false and misleading statements and concealment or omission 

of material adverse facts. The scheme: (i) deceived the investing public regarding St. 

JoeZs core financial statements by improperly accounting for and understating the 

impairment charges for the carrying values of its residential real estate properties in 

development; (ii) deceived the investing public regarding the true value of the 

CompanyZs residential real estate properties; and (iii) caused Plaintiff and other members 

of the Class to purchase St. JoeZs securities at artificially inflated prices, which fell as the 

truth concerning the true value of the residential real estate properties ultimately became 

known. 

199. In making the statements complained of herein, the Officer Defendants, 

who were all senior officers and controlling persons of St. JoeZs, were acting on behalf of 

the Company in the regular course of business. Therefore, each of the statements made 

by the Officer Defendants is attributable to the Company. 

M. No Safe Harbor

200. The statutory safe harbor provided for forward-looking statements under 

certain circumstances does not apply to any of the allegedly false statements pleaded in 

this Complaint. Many of the specific statements pleaded herein were not identified as 

bforward-looking statementsc when made. To the extent there were any forward-looking 

statements, there were no meaningful cautionary statements identifying important factors 

that could cause actual results to differ materially from those in the purportedly forwardlooking statements. Alternatively, to the extent that the statutory safe harbor does apply 

to any forward-looking statements pleaded herein, Defendants are liable for those false 

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forward-looking statements because at the time each of those forward-looking statements 

was made, the particular speaker knew that the particular forward-looking statement was 

false, and/or the forward-looking statement was authorized and/or approved by an 

executive officer of St. JoeZs who knew that those statements were false when made. 

N. Applicability Of Presumption Of Reliance Under 

The Affiliate Ute Doctrine And/Or, In The Alternative, 

The Fraud On The Market Doctrine 

201. Plaintiff is entitled to a presumption of reliance under Affiliated Ute v. 

United States, 406 U.S. 128 (1972), because the claims asserted herein are primarily 

predicated upon omissions of material fact which there was a duty to disclose. 

202. Plaintiff is entitled to a presumption of reliance because, as more fully 

alleged above, the Defendants failed to disclose material information regarding the 

CompanyZs understated impairment charges and the assumptions that formed the basis of 

its undiscounted cash flow analyses for residential real estate projects in development, as 

well as the resulting false financial information reported by St. JoeZs throughout the Class 

Period. 

203. In the alternative, Plaintiff is entitled to a presumption of reliance under 

the fraud on the market doctrine of the DefendantsZ material misrepresentations and 

omissions, because at all relevant times, the market for St. JoeZs common stock was an 

efficient market for the following reasons, among others: 

(a) St. JoeZs stock met the requirements for listing, and was listed 

and actively traded on the New York Stock Exchange, a highly efficient and 

automated market; 

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106 

(b) As a regulated issuer, St. Joe filed periodic public reports with 

the SEC (and was eligible to file SEC Forms S-1) and the New York Stock 

Exchange; 

(c) St. Joe regularly communicated with public investors via 

established market communication mechanisms, including through regular 

disseminations of press releases on the national circuits of major newswire services 

and through other wide-ranging public disclosures, such as communications with the 

financial press and other similar reporting services; and 

(d) St. Joe was followed by numerous investor research services 

that published publicly available reports, as well as by numerous securities analysts 

(including Buck Horne of Raymond James & Associates; Sheila McGrath of Keefe 

Bruyette & Woods; David Cohen of Morgan Stanley; Eric Landry of Morningstar; 

and Chris Haley of Wachovia Securities) employed by major brokerage firms who 

wrote reports which were distributed to the sales force and certain customers of their 

respective brokerage firms. Each of these reports was publicly available and entered 

the public marketplace. 

204. As a result of the foregoing, the market for St. JoeZs common stock 

promptly digested current information regarding St. Joe from all publicly available 

sources and reflected such information in St. JoeZs stock price. Under these 

circumstances, all purchasers of St. JoeZs common stock during the Class Period suffered 

similar injury through their purchase of St. JoeZs common stock at artificially inflated 

prices and a presumption of reliance applies. 

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III. CLASS ACTION ALLEGATION RELEVANT TO ALL CLAIMS

205. Plaintiff brings this action as a class action pursuant to Federal Rule of 

Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all purchasers of the 

securities of St. JoeZs (the bClassc) between February 19, 2008 and October 12, 2010, 

inclusive (the bClass Periodc), including purchasers of the CompanyZs securities pursuant 

or traceable to the CompanyZs public offering on or about February 27, 2008, and who 

were damaged when the truth about St. JoeZs business was disclosed. Excluded from the 

Class are Defendants, the officers and directors of the Company, at all relevant times, 

members of their immediate families and their legal representatives, heirs, successors or 

assigns and any entity in which Defendants have or had a controlling interest. 

206. The members of the Class are so numerous that joinder of all members is 

impracticable. According to the CompanyZs Form 10-Q filed with the SEC on August 5, 

2010, St. Joe had over 92 million shares of stock outstanding, owned by thousands of 

persons. While the exact number of Class members is unknown to Plaintiff at this time 

and can only be ascertained through appropriate discovery, Plaintiff believes that there 

are hundreds or thousands of members in the proposed Class. Record owners and other 

members of the Class may be identified from records maintained by St. Joe or its transfer 

agent and may be notified of the pendency of this action by mail, using the form of notice 

similar to that customarily used in securities class actions. 

207. PlaintiffZs claims are typical of the claims of the members of the Class as 

all members of the Class are similarly affected by DefendantsZ wrongful conduct in 

violation of federal law that is complained of herein. 

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108 

208. Plaintiff will fairly and adequately protect the interests of the members of 

the Class and has retained counsel competent and experienced in class and securities 

litigation. 

209. Common questions of law and fact exist as to all members of the Class 

and predominate over any questions solely affecting individual members of the Class. 

Among the questions of law and fact common to the Class are: 

(a) whether the federal securities laws were violated by 

DefendantsZ acts as alleged herein; 

(b) whether and to what extent the CompanyZs financial 

statements failed to comply with GAAP during the Class Period; 

(c) whether statements made (or omissions) by Defendants to the 

investing public during the Class Period misrepresented (or omitted) to state material 

facts about the business, operations and management of St. Joe; and 

(d) to what extent the members of the Class have sustained 

damages and the proper measure of damages. 

210. A class action is superior to all other available methods for the fair and 

efficient adjudication of this controversy since joinder of all members is impracticable. 

Furthermore, as the damages suffered by individual Class members may be relatively 

small, the expense and burden of individual litigation make it impossible for members of 

the Class to individually redress the wrongs done to them. There will be no difficulty in 

the management of this action as a class action. 

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IV. EXCHANGE ACT COUNTS

COUNT I 

Violation Of Section 10(b) Of The Exchange Act 

And Rule 10b-5(b) Promulgated Thereunder Against 

St. Joe and The Officer Defendants

211. Plaintiff repeats and realleges each and every allegation contained above 

as if fully set forth herein. This claim is asserted against St. Joe and the Officer 

Defendants. 

212. During the Class Period, St. Joe and the Officer Defendants carried out a 

plan, scheme and course of conduct which was intended to and, throughout the Class 

Period, did: (i) deceive the investing public regarding St. JoeZs business, operations, 

management and the intrinsic value of St. JoeZs common stock; and (ii) cause Plaintiff 

and other members of the Class to purchase St. JoeZs common stock at artificially inflated 

prices. In furtherance of this unlawful scheme, plan and course of conduct, these 

Defendants, and each of them, took the actions set forth herein. 

213. St. Joe and the Officer Defendants (a) employed devices, schemes, and 

artifices to defraud; (b) made untrue statements of material fact and/or omitted to state 

material facts necessary to make the statements not misleading; and (c) engaged in acts, 

practices, and a course of business which operated as a fraud and deceit upon the 

purchasers of the CompanyZs common stock in an effort to maintain artificially high 

market prices for St. JoeZs securities in violation of Section 10(b) of the Exchange Act 

and Rule 10b-5. All of these Defendants are sued either as primary participants in the 

wrongful and illegal conduct charged herein or as controlling persons as alleged below. 

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214. St. Joe and the Officer Defendants, individually and in concert, directly 

and indirectly, by the use, means or instrumentalities of interstate commerce and/or of the 

mails, engaged and participated in a continuous course of conduct to conceal the 

improper accounting for impairment of residential real estate, in order to manipulate St. 

JoeZs reported financials, as specified herein. 

215. St. Joe and the Officer Defendants employed devices, schemes and 

artifices to defraud, while in possession of material adverse non-public information, and 

engaged in acts, practices, and a course of conduct as alleged herein in an effort to assure 

investors of St. JoeZs value and performance and continued substantial growth, which 

included the making of, or the participation in the making of, untrue statements of 

material facts and omitting to state material facts necessary in order to make the 

statements made about St. JoeZs and its business operations in the light of the 

circumstances under which they were made, not misleading, as set forth more particularly 

herein, and engaged in transactions, practices and a course of business which operated as 

a fraud and deceit upon the purchasers of St. JoeZs common stock during the Class 

Period. 

216. Each of these DefendantsZ primary liability, and controlling person 

liability, arises from the following facts: (i) the Officer Defendants were high-level 

executives and/or directors at the Company during the Class Period and members of the 

CompanyZs management team or had control thereof; (ii) each of these Defendants, by 

virtue of his responsibilities and activities as a senior officer and/or director of the 

Company was privy to and participated in the creation, development and reporting of the 

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111 

CompanyZs internal budgets, plans, projections and/or reports; (iii) each of these 

Defendants enjoyed significant personal contact and familiarity with the other Defendants 

and was advised of and had access to other members of the CompanyZs management 

team, internal reports and other data and information about the CompanyZs finances, 

operations, and sales at all relevant times; and (iv) each of these Defendants was aware of 

the CompanyZs dissemination of information to the investing public which they knew or 

recklessly disregarded was materially false and misleading. 

217. St. Joe and the Officer Defendants had actual knowledge of the 

misrepresentations and omissions of material facts set forth herein, or acted with reckless 

disregard for the truth in that they failed to ascertain and to disclose such facts, even 

though such facts were available to them. Such DefendantsZ material misrepresentations 

and/or omissions were done knowingly or recklessly and for the purpose and effect of 

concealing St. JoeZs operating condition from the investing public and supporting the 

artificially inflated price of its common stock. As demonstrated by these DefendantsZ 

overstatements and misstatements of the CompanyZs business, operations and earnings 

throughout the Class Period, these Defendants, if they did not have actual knowledge of 

the misrepresentations and omissions alleged, were reckless in failing to obtain such 

knowledge by deliberately refraining from taking those steps necessary to discover 

whether those statements were false or misleading. 

218. As a result of the dissemination of the materially false and misleading 

information and failure to disclose material facts regarding the materially understated 

impairment charges, as set forth above, the market price of St. JoeZs securities was 

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artificially inflated during the Class Period. In ignorance of the fact that market prices of 

St. JoeZs publicly-traded securities were artificially inflated, and relying directly or 

indirectly on the false and misleading statements made by these Defendants, or upon the 

integrity of the market in which the common stock trades, and/or on the absence of 

material adverse information that was known to or recklessly disregarded by these 

Defendants but not disclosed in public statements during the Class Period, Plaintiff and 

the other members of the Class acquired St. JoeZs securities during the Class Period at 

artificially high prices and were damaged when the value of their securities declined upon 

disclosure of the truth about the CompanyZs false and misleading statements and 

omissions. 

219. At the time of said misrepresentations and omissions, Plaintiff and other 

members of the Class were ignorant of their falsity, and believed them to be true. Had 

Plaintiff and the other members of the Class and the marketplace known the truth 

regarding St. JoeZs financial results, which were not disclosed by St. Joe and the Officer 

Defendants, Plaintiff and other members of the Class would not have purchased or 

otherwise acquired their St. Joe securities, or, if they had acquired such common stock 

during the Class Period, they would not have done so at the artificially inflated prices 

which they paid. 

220. By virtue of the foregoing, St. Joe and the Officer Defendants have 

violated Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder. 

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221. As a direct and proximate result of such wrongful conduct, Plaintiff and 

the other members of the Class suffered damages in connection with their respective 

purchases and sales of the CompanyZs securities during the Class Period. 

COUNT II 

Violation Of Section 20(a) Of The Exchange 

Act Against the Officer Defendants

222. Plaintiff repeats and realleges each and every allegation contained above 

as if fully set forth herein. This claim is asserted against Greene, McCalmont, Rummell 

and Connolly. 

223. The Officer Defendants acted as controlling persons of St. JoeZs within the 

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their highlevel positions, and their ownership and contractual rights, participation in and/or 

awareness of the CompanyZs operations and/or intimate knowledge of the false financial 

statements filed by the Company with the SEC and disseminated to the investing public, 

the Officer Defendants had the power to influence and control and did influence and 

control, directly or indirectly, the decision-making of the Company, including the content 

and dissemination of the various statements which Plaintiff contends are false and 

misleading. The Officer Defendants were provided with or had unlimited access to 

copies of the CompanyZs reports, press releases, public filings and other statements 

regarding St. JoeZs core financials, which were materially misstated as set forth above, 

prior to and/or shortly after these statements were issued and had the ability to prevent 

the issuance of the statements or cause the statements to be corrected. 

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224. In particular, each of these Defendants had direct and supervisory 

involvement in the day-to-day operations of the Company and, therefore, is presumed to 

have had the power to control or influence the particular transactions giving rise to the 

securities violations as alleged herein, and exercised the same. 

225. As set forth above, St. Joe violated Section 10(b) and Rule 10b-5 by their 

acts and omissions as alleged in this Complaint. By virtue of their positions as 

controlling persons, the Officer Defendants are liable pursuant to Section 20(a) of the 

Exchange Act. As a direct and proximate result of these DefendantsZ wrongful conduct, 

Plaintiff and other members of the Class suffered damages in connection with their 

purchases of the CompanyZs securities during the Class Period. 

V. THE SECURITIES ACT CLAIMS

226. PlaintiffZs claims for relief under the Securities Act do not incorporate by 

reference the paragraphs above, unless specifically noted by paragraph number. 

227. Plaintiff asserts these claims against certain of the CompanyZs officers and 

directors, as well as Deutsche Bank Securities Inc. (bDeutsche Bankc), for violations of 

§§ 11, 12(a)(2) and/or 15 of the Securities Act of 1933 (the b1933 Actc), 15 U.S.C. §§ 

77k, 771(a)(2) and 77(o), on behalf of all persons and entities, other than the Offering 

Defendants (defined below) and certain related persons and entities, who, purchased or 

acquired the CompanyZs securities pursuant or traceable to St. JoeZs Form S-3ASR Shelf 

Registration Statement No. 333-149371 dated February 25, 2008, Prospectus dated 

February 25, 2008, and Prospectus Supplement filed February 27, 2008 (collectively, the 

bOffering Materialsc), and were damaged thereby. Plaintiff does not allege or intend to 

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allege any claims or assertions of fraud, and the claims in this section of the Complaint 

are rooted exclusively in theories of innocent and/or negligent conduct to which the strict 

liability provisions of the foregoing statutes apply 

A. Nature Of The Securities Act Claims

228. St. Joe is one of largest real estate development companies in Florida 

owning approximately 577,000 acres of land concentrated primarily in Northwest 

Florida. Approximately 405,000 acres, or approximately 70 percent of St. JoeZs total 

land holdings, are within 15 miles of the coast of the Gulf of Mexico. The Company 

operates through four segments: (1) residential real estate; (2) commercial real estate; (3) 

rural land sales; and (4) forestry. St. Joe trades its securities on the New York Stock 

Exchange under the ticker symbol bJOEc. 

229. For more than two years, St. Joe did not take the necessary impairments 

on its development projects, even though sales of lots in these projects have plummeted, 

and St. Joe itself has virtually halted development spending in partially developed 

projects. 

230. Many of St. JoeZs residential real estate projects remain largely unfinished 

and undeveloped, though it reports the projects as bin development.c For example, 

RiverTown, in St. JohnZs County m one of St. JoeZs largest projects m is less than 5% 

developed, with only 215 lots developed out of a planned 4,500. Similarly, St. JoeZs 

WindMark project in Gulf County is only 15% developed with 224 lots developed out of 

a planned 1,516. The WaterSound and SummerCamp Beach projects in Walton and 

Franklin counties, respectively, are both less than 50% developed. Despite these 

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extremely low development rates in some of the CompanyZs largest residential real estate 

projects, St. Joe has almost stopped investing money in these projects, and development 

activity has virtually ceased. 

B. Jurisdiction And Venue

231. The claims asserted herein arise under and pursuant to §§ 11, 12(a)(2) and 

15 of the Securities Act of 1933 (bSecurities Actc), 15 U.S.C. § 77k, 77l(a)(2), and 77o. 

232. This Court has jurisdiction over the subject matter of this action pursuant 

to § 22 of the Securities Act, 15 U.S.C. § 77v. 

233. Venue is proper in this District pursuant to § 22 of the Securities Act, 15 

U.S.C. § 77v; St. JoeZs principal executive offices are located within this District. 

234. Many of the acts and omissions giving rise to the violations of law 

complained of herein, including the preparation and dissemination to the investing public 

of the materially untrue and misleading Offering Materials, took place in this District. 

235. In connection with the allegations herein, the Defendants named herein, 

directly or indirectly, used the means and instrumentalities of interstate commerce, 

including, but not limited to, the mails, interstate telephone communications and the 

facilities of the national securities markets. 

C. Parties

236. Lead Plaintiff is defined in ¶ 23 above, which is incorporated by reference. 

237. Lead Plaintiff asserts the claims in this Section of the Complaint on behalf 

of members of the Class who purchased or acquired St. Joe securities pursuant or 

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traceable to the CompanyZs public offering of over 17 millions shares of common stock 

on or about February 27, 2008 (collectively, bPlaintiffs.c) 

238. Defendant St. Joe is defined in ¶ 24 above, which is incorporated by 

reference. 

239. Defendants Rummell, Greene, McCalmont and Connolly are defined in ¶¶ 

25-28 above, which are incorporated by reference. 

240. On February 25, 2008, Rummell, Greene, McCalmont and Connolly 

signed the Registration Statement on Form S-3ASR (Registrant No. 333-149371), 

pursuant to which the shares in the February 27, 2008 offering were issued. 

241. Rummell, Greene, McCalmont and Connolly signed the 2007 10-K that 

was incorporated by reference in the Offering Materials. 

242. Defendant Deutsche Bank is an investment bank and acted as an 

underwriter with respect to the CompanyZs February 27, 2008 public stock offering. 

Deutsche BankZs US headquarters are located at 60 Wall Street, New York, New York. 

Deutsche Bank served as a financial advisor and assisted in the preparation and 

dissemination of the Offering Materials. 

243. The following Defendants are collectively referred to as the bDirector 

Defendantsc: 

(a) Defendant Michael L. Ainslie (bAinsliec) has served as a 

member of the CompanyZs Board of Directors since 1998. He is a member of the 

BoardZs Audit and Finance Committee and the Governance and Nominating 

Committee. Ainslie signed the 2007 10-K that was incorporated into the Offering 

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Materials. Ainslie also signed the CompanyZs February 25, 2008 registration 

statement, pursuant to which the shares in the February 27, 2008 public offering were 

issued. 

(b) Defendant Hugh M. Durden (bDurdenc) has served as 

Chairman of the CompanyZs Board of Directors since August 2008 and was Lead 

Director from 2003 to 2008. He is a member of the BoardZs Compensation 

Committee and Chair of the Governance and Nominating Committee. Durden 

signed the 2007 10-K that was incorporated into the Offering Materials. Durden also 

signed the CompanyZs February 25, 2008 registration statement, pursuant to which 

the shares in the February 27, 2008 public offering were issued. 

(c) Defendant Thomas A. Fanning (bFanningc) has served as a 

member of the CompanyZs Board of Directors since 2005. He is Chair of the 

BoardZs Audit and Finance Committee and a member of the Compensation 

Committee. Fanning signed the 2007 10-K that was incorporated into the Offering 

Materials. Fanning also signed the CompanyZs February 25, 2008 registration 

statement, pursuant to which the shares in the February 27, 2008 public offering were 

issued. 

(d) Defendant Harry H. Frampton, III (bFramptonc) was a 

member of the CompanyZs Board of Directors from August 2005 to November 2008. 

Frampton signed the 2007 10-K that was incorporated into the Offering Materials. 

Frampton also signed the CompanyZs February 25, 2008 registration statement, 

pursuant to which the shares in the February 27, 2008 public offering were issued. 

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(e) Defendant Adam W. Herbert, Jr. (bHerbertc) was a member of 

the CompanyZs Board of Directors from 2004 to 2010. Herbert signed the 2007 10-K 

that was incorporated into the Offering Materials. Herbert also signed the 

CompanyZs February 25, 2008 registration statement, pursuant to which the shares in 

the February 27, 2008 public offering were issued. 

(f) Defendant Delores M. Kesler (bKeslerc) has served as a 

member of the CompanyZs Board of Directors since 2004. She is a member of the 

BoardZs Audit and Finance Committee and the Compensation Committee. Kesler 

signed the 2007 10-K that was incorporated into the Offering Materials. Kesler also 

signed the CompanyZs February 25, 2008 registration statement, pursuant to which 

the shares in the February 27, 2008 public offering were issued. 

(g) Defendant John S. Lord (bLordc) has served as a member of 

the CompanyZs Board of Directors since 2000. He is a member of the BoardZs Audit 

and Finance Committee, Chair of the Compensation Committee, and a member of 

the Governance and Nominating Committee. Lord signed the 2007 10-K that was 

incorporated into the Offering Materials. Lord also signed the CompanyZs February 

25, 2008 registration statement, pursuant to which the shares in the February 27, 

2008 public offering were issued. 

(h) Defendant Walter L. Revell (bRevellc) has served as a 

member of the CompanyZs Board of Directors since 1994. He is a member of the 

BoardZs Audit and Finance Committee and the Governance and Nominating 

Committee. Revell signed the 2007 10-K that was incorporated into the Offering 

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Materials. Revell also signed the CompanyZs February 25, 2008 registration 

statement, pursuant to which the shares in the February 27, 2008 public offering were 

issued. 

(i) Defendant William H. Walton, III (bWaltonc) was a member 

of the CompanyZs Board of Directors from 2004 to May 2008. Walton signed the 

2007 10-K that was incorporated into the Offering Materials. Walton also signed the 

CompanyZs February 25, 2008 registration statement, pursuant to which the shares in 

the February 27, 2008 public offering were issued. 

244. St. Joe, Rummell, Greene, McCalmont, Connolly, the Director 

Defendants, and Deutsche Bank are collectively referred to herein as the bOffering 

Defendants.c 

D. Substantive Allegations

245. Around the time of the February 27, 2008 offering, residential real estate 

development made up the overwhelming majority of St. JoeZs business. In 2007, St. 

JoeZs investment in residential operating and development properties comprised almost 

85% of its entire investment in real estate. Correspondingly, residential real estate made 

up 67.1% of St. JoeZs total assets in 2007. 

246. Also around the time of the February 27, 2008 offering, Florida was 

experiencing one of the largest real estate crashes in decades. Empirical evidence, as 

well as the CompanyZs disclosures, reveal the devastation of the real estate market in 

Florida m one of the first states affected by the deteriorating real estate market nationwide. 

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247. St. Joe reported a loss in revenues from its residential real estate segment m 

its largest asset m of over $43 million in 2007, down from positive revenues of $24 

million in 2006. In 2008, the trend worsened, in a reflection of the deteriorating real 

estate market, with St. Joe reporting a loss of over $115 million. Similarly, St. JoeZs sales 

of home and homesites decreased from 1,260 in 2006 to 478 in 2007, to 122 in 2008. 

From 2006 to 2007 alone, St. JoeZs sales dropped by over $200 million. 

248. In 2006, St. Joe spent $570,925,000 on its operating properties. In 2007, 

that amount plummeted almost 60% to $227,675,000. St. Joe has since virtually ceased 

development activity on its residential real estate projects. 

249. At the same time the Company was essentially halting its development 

activities, however, it failed to take any significant impairment charges to its residential 

real estate properties, even though (1) plummeting real estate values in the Florida 

market; and (2) lack of further development. 

250. As a result, the Offering Materials contained materially false carrying 

values for St. JoeZs projects, which remained unimpaired, even as the real estate market 

was imploding and St. Joe halted development. 

251. As further evidence that St. JoeZs values were overstated, St. Joe 

recognized a $68 million impairment on its Victoria Park property under a fair value 

analysis, which it was compelled to perform in order to effectuate the sale of that 

property, even though it had reported under the preceding quarter that Victoria Park, with 

a stated carrying value of $79 million, did not require an impairment. 

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252. On February 27, 2008, St. Joe conducted a public offering of 17,145,000 

shares of common stock. The shares were issued pursuant to a Registration Statement on 

Form S-3ASR (Registrant No. 333-149371), dated February 25, 2008 and underwritten 

by Deutsche Bank, who offered shares for sale to the investing public. The Offering 

Defendants issued a Prospectus dated February 25, 2008 that was part of the Registration 

Statement, which described the securities St. Joe was able to offer generally under the 

CompanyZs shelf registration statement. The Defendants charged in this section of the 

complaint also filed a Prospectus Supplement on February 27, 2008 that specifically 

described the February 27, 2008 offering. The Prospectus incorporated by reference St. 

JoeZs 2007 annual report, filed with the SEC as its 2007 10-K. The shares were traded on 

the NYSE. 

253. The February 27, 2008 Prospectus Supplement stated that b[a] prospectus 

supplement and the accompanying prospectus in electronic format are being made 

available on an Internet web site maintained by the underwriter [Deutsche Bank].c Thus, 

Deutsche Bank distributed the prospectus to the investing public, through its web site. 

254. The 2007 10-K that was incorporated by reference in the February 25, 

2008 Prospectus contained the following materially false and misleading statements: 

255. On February 25, 2008, the Company filed its 2007 Annual Report with the 

SEC on Form 10-K. The CompanyZs Form 10-K reaffirmed the CompanyZs 2007 

financial results, financial position, and the reported value of the CompanyZs investment 

in real estate as previously announced on February 19, 2008. With respect to the 

CompanyZs asset impairment costs, St. JoeZs 2007 Annual Report stated: 

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During 2007, we recorded total asset impairment costs of 

$23.2 million, $13.0 million of which related to the write 

down of capitalized costs at certain projects due to changes 

in development plans and the impairment of completed 

homes in several of our communities due to current market 

conditions. If market conditions were to continue to 

deteriorate, and the market values for our home sites, 

remaining homes held in inventory and other project land 

were to fall below the book value of these assets, we would 

need to take additional write-downs of the book value of 

these assets. Any such write-downs would decrease the 

value of these assets on our balance sheet and would reduce 

our net income. 

* * * 

Impairment Losses. We review our long-lived assets for 

impairment whenever events or changes in circumstances 

indicate that the carrying amount of an asset may not be 

recoverable. Homes and home-sites substantially 

completed and ready for sale are measured at the lower of 

carrying value or fair value less costs to sell. For projects 

under development, an estimate of future cash flows on an 

undiscounted basis is performed using estimated future 

expenditures necessary to maintain the existing service 

potential of the project and using managementPs best 

estimates about future sales prices and holding periods. 

The decline in demand and market prices for residential 

real estate caused us to conclude that carrying amounts 

within our residential real estate segment may not be 

recoverable, and we performed an impairment analysis. As 

a result of our impairment analyses, we recorded an 

impairment charge of $13.6 million in the residential real 

estate segment. 

* * * 

In 2007 we recorded impairments totaling $13.6 million 

primarily due to current adverse market conditions for 

residential real estate. Approximately $5.2 million of the 

impairments related to capitalized costs at certain projects 

due to changes in development plans, approximately $7.8 

million related primarily to completed spec homes in 

several communities and approximately $0.6 million 

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related to the modified terms of certain promissory notes. 

[Emphasis added]. 

* * * 

Consolidated Results 

 Year End Dec. 31 

 2007 2006 

Impairment Losses $13,609,000 -- 

Pre-tax Income from 

Continuing Operations 

$18,406,000 $53,046,000 

Net Income $39,207,000 $51,020,000 

Net Income Per Share $0.53 $0.69 

* * * 

Balance Sheet 

 December 31, 2007 December 31, 2006 

Assets 

Investments in real estate $943,540,000 $1,213,500,000 

256. These statements were false and misleading because they overstated the 

true carrying value of St. JoeZs residential real estate properties, understated the 

CompanyZs impairment losses and overstated its earnings and earnings per share. 

257. It was not until the October 13, 2010 Einhorn presentation that the truth 

about the actual impaired values of St. JoeZs properties was disclosed. Plaintiff could not 

have discovered the truth about the CompanyZs carrying values until EinhornZs 

presentation because that compilation of information was not reasonably available to 

investors. 

258. In response, St. JoeZs stock plummeted 9.7%, with 12,828,900 shares 

traded on unusually heavy volume (compared with an average daily volume over the 

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Class Period of 1,093,197 shares), causing Plaintiffs to suffer economic damages as the 

prior inflation in their shares was released. 

VI. SECURITIES ACT COUNTS

COUNT III 

For Violations Of § 11 Of The Securities Act 

Against St. Joe, Rummell, Greene, McCalmont, 

Connolly, the Director Defendants and Deutsche Bank

259. Plaintiffs repeat and reallege each of the foregoing paragraphs in Section 

V as if fully set forth herein. 

260. This Count is brought by Plaintiffs on behalf of the Class, pursuant to § 11 

of the Securities Act, 15 U.S.C. § 77k, against the Offering Defendants. Plaintiffs do not 

intend to allege, and have not alleged, fraud on the part of any Offering Defendant. 

261. The Offering Materials were inaccurate and misleading, contained untrue 

statements of material facts regarding the CompanyZs impairment of its real estate 

development projects, omitted to state other facts necessary to make the statements made 

not misleading, and concealed and failed adequately to disclose material facts as 

described above. 

262. The Offering Defendants were responsible for the contents and 

dissemination of the Offering Materials issued in connection with the February 27, 2008 

offering of common stock described above, and caused them to be filed with the SEC. 

With the exception of the Deutsche Bank, each of the Offering Defendants signed the 

Registration Statement pursuant to which the stock for the February 27, 2008 offering 

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were issued and/or the 2007 10-K that was incorporated by reference into the Offering 

Materials, or audited the 2007 10-K consolidated financial statements. 

263. By incorporating the 2007 10-K into the Offering Materials, the Offering 

Defendants assumed the duty to provide all material information about St. JoeZs 

impairment of its real estate development projects. 

264. As the issuer of the common stock in the February 27, 2008 public 

offering, St. Joe is liable to the Plaintiffs, who acquired the common stock pursuant to the 

false and misleading Offering Materials, under § 11 of the Securities Act. 

265. Plaintiffs acquired the common stock described above pursuant to the 

Offering Materials without knowledge of the truth of any misrepresented fact or 

omission. 

266. None of the Offering Defendants made a reasonable investigation or 

possessed reasonable grounds for the belief that the statements contained in the Offering 

Materials were true and without omissions of any material facts and were not misleading. 

Each of the Offering Defendants named in this Count acted negligently in issuing the 

Offering Materials. 

267. The Offering Defendants issued, caused to be issued and participated in 

the issuance of materially false and misleading written statements to the investing public 

which were contained in the Offering Materials, which misrepresented or failed to 

disclose, inter alia, the facts set forth above. By reasons of the conduct herein alleged, 

each Offering Defendant violated § 11 of the Securities Act. 

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268. At the times they acquired the common stock described above, Plaintiffs 

were without knowledge of the facts concerning the wrongful conduct alleged herein and 

could not have reasonably discovered those facts. 

269. This Count has been brought within one year after the discovery of the 

untrue statements or omissions, or after such discovery could have been made by the 

exercise of reasonable diligence, and within three years after the security was bona fide 

offered to the public. 

COUNT IV 

For Violations Of § 12(a)(2) Of The Securities Act 

Against St. Joe, Rummell, Greene, McCalmont, Connolly And Deutsche Bank

270. Plaintiffs repeat and reallege each of the foregoing paragraphs in ¶¶ 226-

69 as if fully set forth herein. 

271. This Count is brought by Plaintiffs pursuant to § 12(a)(2) of the Securities 

Act, 15 U.S.C. § 77l, on behalf of themselves and all other members of the Class who 

acquired the common stock in the February 27, 2008 public offering described above, 

pursuant to the Offering Materials, against the Defendants named above in this Count 

(the b§ 12 Offering Defendantsc). This claim does not sound in fraud and should be read 

to exclude any reference in the preceding paragraphs to recklessness, fraud, or intentional 

acts by the § 12 Offering Defendants. 

272. The § 12 Offering Defendants were sellers and/or offerors of the common 

stock offered pursuant to the Offering Materials. 

273. The Offering Materials contained untrue statements of material facts, 

omitted to state other facts necessary to make the statements made not misleading, and 

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concealed but failed to disclose material facts. The § 12 Offering DefendantsZ actions of 

solicitation included participating in the preparation of the false and misleading Offering 

Materials. 

274. The § 12 Offering Defendants were obligated to make a reasonable and 

diligent investigation of the statements contained in the Offering Materials, to ensure that 

such statements were true and that there was no omission to state a material fact required 

to be stated in order to make the statements contained therein not misleading. The § 12 

Offering Defendants, in the exercise of reasonable care, should have known of the 

misstatements and omissions contained in the Offering Materials as set forth above. 

275. Plaintiffs acquired the common stock from the February 27, 2008 offering 

pursuant to the defective Offering Materials. Plaintiffs did not know, or in the exercise of 

reasonable diligence could not have known, of the untruths and omissions contained in 

the Offering Materials. 

276. By reason of the conduct alleged herein, the § 12 Offering Defendants 

violated, and/or controlled a person who violated, § 12(a)(2) of the Securities Act. 

Accordingly, Plaintiffs are entitled to damages pursuant to § 12(a)(2). 

277. This Count has been brought within one year after the discovery of the 

untrue statements or omissions, or after such discovery could have been made by the 

exercise of reasonable diligence, and within three years after the security was bona fide 

offered to the public. 

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COUNT V 

For Violations Of § 15 Of The Securities Act 

Against Rummell, Greene, McCalmont, And Connolly

278. Plaintiffs repeat and reallege each of the foregoing paragraphs in ¶¶ 226-

77 as if fully set forth herein. 

279. This Count is brought pursuant to § 15 of the Securities Act, 15 U.S.C. § 

77o against Defendants Rummell, Greene, McCalmont, and Connolly. 

280. Defendants Rummell, Greene, McCalmont, and Connolly exercised direct 

control over St. Joe, acting as day-to-day managers of St. Joe, and by virtue of their 

positions as Officers and/or Directors of St. Joe. As a result of RummellZs, GreeneZs, 

McCalmontZs, and ConnollyZs actual control over the CompanyZs day-to-day operations, 

financial statements, public filings and their intimate involvement and control over the 

Offering Materials, Rummell, Greene, McCalmont, and Connolly had the power, and 

exercised the same, to cause St. Joe to engage in the violations of law complained of 

herein and were able to and did control the contents of the Offering Materials. 

281. As a result of their control over St. Joe, Defendants Rummell, Greene, 

McCalmont, and Connolly are jointly and severally liable with and to the same extent as 

St. Joe to Plaintiffs. 

WHEREFORE, Plaintiff prays for relief and judgment, as follows: 

(a) Determining that this action is a proper class action, designating Plaintiff 

as Lead Plaintiff and certifying Plaintiff as a class representative under Rule 23 of the 

Federal Rules of Civil Procedure and Robbins Geller Rudman & Dowd LLP and Labaton 

Sucharow LLP as Lead Counsel; 

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(b) Awarding compensatory damages in favor of Plaintiff and the other Class 

members against all Defendants, jointly and severally, for all damages sustained as a 

result of DefendantsZ wrongdoing, in an amount to be proven at trial, including interest 

thereon; 

(c) Awarding rescissionary damages under §12(a)(2); 

(c) Awarding Plaintiff and the Class their reasonable costs and expenses 

incurred in this action, including counsel fees and expert fees; and 

(d) Such other and further relief as the Court may deem just and proper. 

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury. 

DATED: February 24, 2011 LABATON SUCHAROW LLP 

By:/s/ Jonathan Gardner

MARK S. ARISOHN 

JONATHAN GARDNER 

MINDY S. DOLGOFF 

140 Broadway, 34th Floor 

New York, NY 10005 

Telephone: 212/907-0700 

212/818-0477 (fax) 

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ROBBINS GELLER RUDMAN 

 & DOWD LLP 

PAUL J. GELLER 

Florida Bar No. 984795 

JACK REISE 

Florida Bar No. 58149 

STEPHEN R. ASTLEY 

Florida Bar No. 139254 

120 East Palmetto Park Road, Suite 500 

Boca Raton, FL 33432 

Telephone: 561/750-3000 

561/750-3364 (fax) 

pgeller@rgrdlaw.com 

jreise@rgrdlaw.com

sastley@rgrdlaw.com 

Co-Lead Counsel for Plaintiff 

VANOVERBEKE MICHAUD & 

 TIMMONY, P.C. 

THOMAS C. MICHAUD 

79 Alfred Street 

Detroit, MI 48201 

Telephone: 313/578-1200 

313/578-1201 (fax) 

Additional Counsel for Plaintiff 

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CERTIFICATE OF SERVICE 

I HEREBY CERTIFY that on February 24, 2011, I electronically filed the 

foregoing document with the Clerk of the Court using CM/ECF. I also certify that the 

foregoing document is being served this day on all counsel of record or pro se parties 

identified on the attached Electronic Mail Notice List in the manner specified, either via 

transmission of Notices of Electronic Filing generated by CM/ECF or in some other 

authorized manner for those counsel or parties who are not authorized to receive 

electronically Notices of Electronic Filing. 

/s/ Jonathan Gardner

JONATHAN GARDNER

Case 5:11-cv-00027-RS -EMT Document 52 Filed 02/24/11 Page 136 of 138
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Electronic Mail Notice List 

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case. 

x JOHN PATTERSON BRUMBAUGH 

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x JASON RICHARD EDGECOMBE 

jedgecombe@kslaw.com,tkirillova@kslaw.com 

x JOHN W FOREHAND 

jforehand@kfb-law.com,jhelms@kfb-law.com,awylie@kfb-law.com 

x JONATHAN GARDNER 

jgardner@labaton.com,fmalonzo@labaton.com,anguyen@labaton.com,electronic

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x CHARLES ALAN GILMAN 

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x JAYNE ARNOLD GOLDSTEIN 

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x CLIFFORD CARLTON HIGBY 

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x DAVID G JANUSZEWSKI 

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x AMY DESMOND LAMBERTI 

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x DENNIS K LARRY 

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x SCOTT RHEAD SHEPHERD 

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x DOUGLAS SCOTT WILENS 

dwilens@rgrdlaw.com,e_file_fl@rgrdlaw.com 

x NATHAN CURTIS ZIPPERIAN 

nzipperian@sfmslaw.com 

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Manual Notice List 

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