Dynasties with humble beginnings often rule the real estate industry. The Dursts founded their empire when Joseph Durst came to the U.S. in 1902 from Austria with three dollars to his name. Russian-born Harry Lefrak bought his first property in Brooklyn in 1919 after his glass-manufacturing business failed. Fred Trump started out with just one property in Brooklyn in the Depression year of 1934.

Of more dubious distinction are the Meruelos. Belinda and Homero Meruelo fled Fidel Castro's Cuba, came to New York and, hating the winters, moved to Los Angeles where they bought their first property at Third Street and Broadway in 1972. Their three sons -- Homero Jr., Alex and Richard -- became real estate moguls in their own right; at one point, Richard was the second-largest landowner in downtown Los Angeles behind only the city government.

Instead of expanding their legacy, however, the Meruelos find themselves trying to repair it. All three boys have suffered real estate problems. The eldest, Homero Jr., now 50 and called Homer by the family, lost several Miami properties to foreclosure. Alex, 49, has thrived in several businesses, including his ownership of a Reno, Nev., casino, but serves on the board of directors of William Lyon Homes, which only recently emerged from bankruptcy. But it's the flameout of Richard, 47, that's most epic. Once the largest financial backer of Los Angeles Mayor Antonio Villaraigosa, Richard developed residential properties in his hometown, took his company public in a $400 million offering and then put it into bankruptcy two years later, losing it to two large shareholders after a reorganization fight last summer.

Can the Meruelos rise again? Real estate is nororiously volatile. But it's not the first time the family has had it rough. With a heavy accent, Belinda, now 75, recounts how she constantly reminded her boys to "work hard and never give up." There was force behind the words, too. Homero Sr., who died in 2008 at 73, arrived in Miami in 1961 after fleeing Cuba because, Belinda says, Castro and "his thugs" threatened his life. She had met Homero when she was 16. At 25, she was carrying their first child and joined him in Miami soon after he left Cuba.

A trained accountant, Homero could only find work selling encyclopedias door-to-door, so he moved his young family to New York. The couple worked odd jobs to save enough money to help the rest of their families escape Cuba -- which they did by 1964. But the cold winters were a shock. The couple set out for Los Angeles after a few years in New York and quickly started several small businesses, including a bridal shop located downtown in the sprawling city.

By the time they moved to the West Coast, Homero Jr. and Alex had been born. Richard was born in Los Angeles. All three boys spent their formative years witnessing their parents work long hours to make the shop, which they purchased in 1972, flourish and then spent the rest of the decade gathering residential properties in Los Angeles that they rented out.

The Meruelos then trained their sights on Florida. In the 1980s, they bought their first properties in Miami. Belinda says she doesn't know how many properties the family owns there now, but the holdings soon grew to include numerous residential and commercial properties in Miami Beach, such as the luxury apartment building Sea Coast Towers and the Deauville Beach Resort, which once catered to members of the Rat Pack -- Frank Sinatra, Dean Martin, Sammy Davis Jr. -- and the Beatles.

Homer took to Miami, starting a real estate development firm, Merco Group Inc., there with his mother after graduating from college. In 2004, Merco completed the Akoya, Miami Beach's tallest building, which boasted 386 luxury condominiums in its 47 stories. Merco continued to expand and, the following year Homer purchased the Grand Bay Hotel in Coconut Grove, formerly known as the five-star Wyndham Grand Bay Hotel.

Alex proved to be entrepreneurial even earlier than Homer. At the age of 16, he rented a section of his parents' bridal shop to run a tuxedo business. After graduating from California State University, Long Beach, Alex in 1986 started La Pizza Loca, a quick-service restaurant catering to the Latino community, eventually expanding the chain to 50 franchises.

And then there was the youngest, Richard. His brothers had set as high a bar as his parents, and after graduating from the University of Southern California with a bachelor's degree in business administration in 1987, he went into the family real estate business in Los Angeles.

With the help of real estate lawyer John Charles Maddux, Richard quickly acquired 19 developed and 34 ongoing projects. He proved quite capable of navigating the dense, urban, multi-ethnic downtown area that spread out over roughly 350 blocks, or 2,500 acres, surrounded by U.S. Highway 101.

Richard focused on underserved, economically troubled areas that he believed had alternate and more profitable uses. Many of the properties he purchased were located near public-transit systems, and he hoped that their development would encourage the city to upgrade existing infrastructure. He wasn't a penthouse owner, either: He served on boards of several neighborhood associations, including the Central City Association, the Central City East Association and the Los Angeles Central Industrial Redevelopment Project.

Richard even secured funding from the California Public Employees' Retirement System's California Urban Real Estate, or CURE, program, as one of 11 designated developers to rehabilitate the local market. And he didn't just walk the streets of Los Angeles. He ran them, too, taking on the Los Angeles Marathon four times between 2000 and 2003.

In 2006, he incorporated the company in Delaware, calling it Meruelo Maddux Properties Inc., in anticipation of launching an initial public offering the following year. By that time, the company owned 80 acres of land in downtown Los Angeles, having poured about $700 million into more than 50 properties, including a 20.2-acre factory space rented by American Apparel Inc. and a 35-story apartment complex located a few blocks northeast of the Staples Center.

MMPI's growing influence in the Los Angeles real estate market seemed unstoppable when its IPO launched on Jan. 24, 2007. The company sold more than 45.5 million shares for $10 each, raising over $400 million.

At the time, the company seemed to be gaining velocity. But less than two years after the IPO, after a nationwide real estate collapse and recession, it filed for Chapter 11 in the U.S. Bankruptcy Court for the Central District of California in Woodland Hills on March 27, 2009. The company struggled under $96 million in debt. Moreover, in two years as a public company, MMPI failed to turn a profit. On the eve of its petition, its stock closed at 20 cents per share.

In filings, MMPI said it had experienced significant, recurring cash shortfalls due to the recession and despite efforts to improve its finances. Forbes magazine called it one of the top 10 corporate downfalls of all time.

Of course, MMPI was not the only real estate company struggling in 2009. That year alone, 782 real estate companies filed for bankruptcy, more than double the number in 2008, according to The Deal Pipeline. But in the case of MMPI, creditors didn't buy the recession excuse and instead began questioning Richard's management and his integrity.

"There's an old saying that 'character is doing the right thing when nobody is watching,'" said counsel to the equity committee Kenneth K. Lee of Jenner & Block LLP one day in court. "Mr. Meruelo apparently practices the converse corollary. He will do the wrong thing even when everybody is watching."

Was MMPI's meteoric rise and sudden fall a case of overreaching, or an attempt by Richard to outdo his older brothers?

Like his little brother, Homer, too, got overextended. Merco Group was hit hard when the real estate market crashed; the company shuttered the Grand Bay Hotel for renovations in 2008 and halted construction altogether six months later. The hotel fell into disrepair and became the subject of a $42.5 million foreclosure suit. Spanish bank Caixa de Aforros de Galicia, Vigo, Ourense e Pontevedra took over the hotel last March. Merco subsequently lost other properties to foreclosures, including Miami Beach's NoBe Bay condos and the 267-unit Tree Top Apartments in Kendall, Fla.

Alex's Meruelo Group, on the hand, not only survived the recession, but seemed to thrive. The kid who started i the tuxedo business (he paid rent to run it out of his parents' shop) built a diverse portfolio comprising real estate, construction and the Grand Sierra Resort and Casino in Reno. He shied away from making acquisitions when prices rose, says Xavier Gutierrez, Meruelo Capital Partners' president and chief investment officer, and the company never suffered a loss or overleveraged its balance sheet. "It takes a lot of patience and a lot of confidence not to invest in a run-up market," Gutierrez says.

Patience didn't appear to be a virtue of Richard's, who couldn't be reached for comment (no calls to MMPI were answered). In 2007 and 2008 -- the years leading up to recession -- MMPI took out new loans and purchased new properties. By the start of 2009, MMPI had stopped making principal or interest payments on 26 of its 30 secured loans, totaling $266 million, according to documents filed with the Securities and Exchange Commission.

After the bankruptcy filing, Richard spent two years fighting allegations of mismanagement, trying to convince the bankruptcy court that he deserved to remain in control of MMPI. But Judge Victoria Kaufman rejected the argument. "There's been this trend of trying to mislead the court into agreeing to things that management prefers, you know, even though they aren't necessary," she said in court on May 19 before handing the company over to shareholders Charlestown Capital Advisors LLC and Hartland Asset Management Corp. by confirming the reorganization plan they proposed. The order was officially signed on June 24.

Richard's tale isn't so different from others' during the real estate boom. He increasingly took on debt to expand and, then, unlike the Dursts, Lefraks and Trumps, took his real estate company public. He testified in court that he did so, in part, because he wanted to pay off $150 million in debt owed to the big public pension fund, CalPERS.

Others are more skeptical. Lee, the counsel to MMPI's equity committee, said in his closing arguments on March 23, 2011, that the youngest Meruelo "reaped huge monetary benefits by going public, but he's refused to abide by the burdens that come with running a public [company]."

Lee was not the first to question the transparency of MMPI's financial decisions. Fred Skaggs, the company's chief accounting officer, who had served as MMPI's chief financial officer until the IPO, thought Richard authorized several "questionable transactions" with company money, according to a Sept. 20, 2010, letter to auditor Ernst & Young LLP. E&Y, however, concluded that while money may have been moved around, every dollar was accounted for.

But after the bankruptcy filing, Richard's management style became only stranger. MMPI filed its first reorganization plan on Nov. 30, 2009, which canceled out common stockholders without compensation and turned the company over to a "new value investor" for $10 million. The plan did not disclose who the investor was, but hearings eventually revealed it to be Richard himself.

When two competing reorganization plans popped up, one from Charlestown and Hartland and one from creditors Legendary Investors Group No. 1 LLC and East West Bank, Richard became even more desperate to hold on to his real estate company. On Sept. 9, 2010, he issued a press release criticizing the Legendary-EWB plan as "another in a string of delays caused by [EWB]." The statement also declared that the "reorganization plan submitted by MMPI has already been approved, so there is no need to proceed with a half-baked plan that attempts to take MMPI over."

In response to the statement, EWB filed a Sept. 22, 2010, libel complaint in the Woodland Hills court because, in fact, no MMPI plan had ever been approved. The court ordered Richard to file a retraction, opining that the communiqué effectively broke Section 1125 of the U.S. Bankruptcy Code, which concerns the fair and unbiased right to solicit disclosure statements from creditors and requires debtors to allow the solicitation in good faith.

Richard settled the libel claim by agreeing to pay the bank $1 million and by issuing a letter in court "expressing his appreciation to [EWB]." Legendary and EWB, in turn, withdrew their plan.

But shareholders used the incident to galvanize their efforts to oust Richard. Lee called the libel issue an example of Richard's "stunningly bad judgment," saying it had all the "hallmarks of what is wrong with the company's management."

True to his upbringing, though, Richard didn't give up. Even when the Charlestown plan became effective on July 25, he still had an appeal of the confirmation order pending with the U.S. District Court.

Nonetheless, MMPI Acquisition LLC -- the vehicle fronting Charlestown and Hartland -- acquired 55% of the outstanding shares of MMPI's common stock, and the noninsider shareholders received 35 cents per share in exchange for 52.8% of their shares.

The reorganized MMPI is being run now by Marty Caverly, the founder of real estate consulting firm 2120 Partners LLC, who was appointed CEO upon the company's exit from bankruptcy. He declined to comment through spokeswoman Kristin Celauro of Owen Blicksilver Public Relations Inc., but on March 6, the company announced it changed its name to EVOQ Properties Inc. and began trading over the counter under the ticker symbol EVOQ. It currently owns approximately 3.5 million square feet of real estate spread over more than 35 industrial, office, retail, residential, and mixed-use properties.

Before the company's exit, Richard had retreated to Miami, where he spent six months with his family even as he ran MMPI. (He also ran the Miami Beach Half Marathon on March 6, 2011, just 2-1/2 weeks before a crucial confirmation hearing pitting his reorganization plan for MMPI against a rival one.) While he didn't get anything in its reorganization, the Woodland Hills bankruptcy court did award him $2.7 million in compensation on Nov. 23.

Belinda, who also lives in Miami, as does Homer, says she isn't sure whether Richard will ever return to the Los Angeles real estate market, but she says she knows he isn't done investing.

Alex, meanwhile, continues to expand his footprint beyond real estate. Just last year he acquired KWHY-TV, a Spanish-language television station in Los Angeles. The station will be the flagship for a new Latino network called MundoFox that Alex, on March 5, announced would be created through a partnership between Meruelo Group, News Corp.'s Fox International Channels and RCN Television Group, a Colombian broadcaster.

And while Alex had hoped to realize his dream of owning a National Basketball Association team, he rejected a chance to buy the Atlanta Hawks because certain terms and conditions made him uncomfortable, says Meruelo Group's Gutierrez. He adds that he admires Alex's "strength for walking away because the deal didn't make sense."

Belinda expects her other two sons to bounce back. Whether their misfortunes will just be a blip on their way to creating a real estate dynasty of their own remains to be seen. But she notes that her sons are still relatively young and haven't let their past setbacks interfere with their ambitions.

"Hopefully, the future will bring better things," she says. "They will come back."