Since we began covering the Carneros Inn project, the number of rats involved in the deal has multiplied, and cronies are popping up like moles at night in a Carneros pasture. But before we begin, we would like to take a moment to make two corrections to our November 7, 2001 issue “It’s Judge Newsome’s Carneros Inn” for which apologies are extended. Judge Newsom’s name is spelled Newsom, not Newsome. The A-1 Market, after further review of lot line adjustments and other records, is outside of the planned development.
On November 19 we determined that Judge Newsom was tipped off about a couple of unique parcels of land in the Carneros exempt from Measure J. Next to these small parcels that total 8.5 acres zoned commercial, a 16.43 acre parcel of land zoned for 23 mobile homes came into play by 1997 -- the Zopfi property. The Zopfi family was represented by Napa’s largest law firm, Dickenson, Peatman & Fogarty in some business matters. One of their cronies provided a loan with the Zopfi family - Loyd D. Gularte, Inc. - as joint investors and they secured a deed of trust on the subject commercial properties on April 18, 1995.
The Dickenson firm is prominent on both ends of the line, representing the Zopfi family but also representing the developer Keith Rogal/Carneros Inn LLC in a classic conflict of interest scenario. A recent revelation of this small problem forced Rogal to scamper for legal representation in San Francisco. Could it be that Willie Brown’s preferred land use firm, also prominent in Montalcino Resort Investments, Inc., Steefel, Levitt & Weiss, was hired?
As medical emergencies drained the Zopfi assets, a recommendation was made that they file a Petition in Bankruptcy -- Chapter 11-- for reorganization. By 1996, the estate fell under the jurisdiction of Judge Jaroslovsky’s court in Santa Rosa. Some reorganization, indeed. By February 1997, Gavin Newsom, now confirmed as an investor in the deal and a newly appointed San Francisco supervisor, spouted off to “San Francisco Business Times” and tipped his hand. A February 24, 1997 article reads: “Newsom’s other ventures include a proposed Napa County resort, a South of Market loft project and restaurants planned for Los Angeles and London”. (The article can be viewed online at Click.) Now the consummate political player, Gavin immediately cut himself into patronage venues in San Francisco, Napa and elsewhere that flow from the Willie Brown milieu.
Fathom that. A proposed Napa County resort and other lofty ideas, while the Zopfi estate was in reorgani- zation, while Carneros Inn developer Keith Rogal hovered around.
Financing was provided by Yosemite Mortgage Fund LLC to the Zopfi estate. This financier was conveniently created 9/26/96; it’s trustee, California Trust Deeds, filed a notice of default against the Zopfi estate 8 months later, on 5/27/97, for a missed payment of $18,900 due 5/1/97. That was fast. The next month, on 6/27/97 like clockwork to force a creditor-driven sale, California Trust Deeds filed again. Obviously, this financier came into being rather suddenly and acted rather swiftly, as though on a mission. Indeed, with the Newsoms’ clear intention to purchase the commercial properties via Carneros Inn, LLC, could they have not acted more quickly so that the Zopfis might have realized return of their investment on the note they held to otherwise forestall foreclosure by Yosemite on the residential parcel? Instead they appeared to be distracted, setting Keith Rogal up in business 3/21/97, smack dab in the middle of Gavin’s disclosure and the foreclosure.
According to Napa County records, and according to Carneros Inn developer Keith Rogal, the 8.53 acres of commercial property was owned by other parties. In fact, even through hearings August 1, 2001, Rogal insisted property ownership was different but management would be the same for the full 27 acres, a boldfaced blooper per deeds; but honest in another sense. He intends to develop and sell 24 homes despite no approval for a subdivision of sorts or time shares if the land doesn‘t go with the deal, so yes, other people will own property after he manages the construction and sales of what were supposed to be mobile homes for affordable housing (Click.).
On November 30, 2001 “The St. Helena Star” revealed all of the shenanigans of Rogal with various members of Public Works and the Planning Department who are of late “no longer employed by Napa County” up to and including the director of planning and one of his assistants. In the article not only do we learn of the deception facilitated by past employees, but other brash statements made by Rogal agent John Slade. In an April 5, 1999 groundwater geologist report prepared by Slade, he stated that the lodge wells (on the commercial parcels) are also “contractually obligated” to supply an additional average of 16,750 gallons per day of water to Carneros Inn (referring to the mobile home property). By this time effectively all of the properties belonged to Carneros Inn LLC so one might question the validity or even the existence of such an agreement.
Needless to say, the “Star” article by John Speck was in-depth so that we learned how it came to be that the EIR omitted any study of the water problem (where demands of the inn would take 12% of the entire basin’s water capacity) while it devoted 31 pages to the problem the resort would cause by increasing traffic by 1% -- in order to mitigate this problem to a .83% increase! We caught the fact that the draft EIR was dated April Fools Day, and contained the statement “substantial depletion of groundwater resources” as one of the “effects found not to be significant”. That took care of the water problem in one sentence. As John Stewart, the County’s hydrologist reported, it basically makes no sense when none ask the question “how much of the basin is already drawn by existing users?”. If 95% is already used before recharge can occur, adding 12% means “you’ve got a problem here”.
And note the choice of timing for well tests chosen by Rogal and Slade -- late winter and early spring when the basin is full and swollen following rains, and demands by area residents are at their lowest. Of course it’s going to look like they can pull 40,000 gallons a day with “no problem”. But keep in mind, information was kept from many decision-makers, as the focus was placed on the EIR which found no problems.
An article in the Pittsburgh Post-Gazette dated August 24, 1999 (before any approval of the project at the planning level) discloses that Hillman Properties, Inc. has an economic interest in Carneros Inn, Napa, Ca. Their role is described as “hospitality” for a 27 acre, 96 hotel/cottage unit, spa, restaurant and 24 luxury long-term rental units”. So now we discover that 24 mobile homes cast as affordable are to be sold off as luxury vacation homes. Furthermore, by the summer of 1999 Hillman knew the project included 27 acres long before most in planning even heard about the resort (Lodge) project. (Click.).
It was the control of the Zopfi mobile home park property through Rogal mechanisms with the bankruptcy court that apparently came first, with the commercial property falling after Rogal had obtained his October 6, 1997 court order signed by Allan Jaroslovsky directing sale to Keith Rogal and Associates or his assignees. And conveniently, the newly created, Oakland-based Yosemite Mortgage Fund LLC felt compelled to file two notices of default to prompt the sale.
As Gavin Newsom indicated, before February 1997 some type of deal was done in the milieu of bankruptcy court players that virtually guaranteed the Zopfi property would be his. Perhaps it was Yosemite Mortgage that expressed an intent to file a notice of default post haste that Gavin sensed ... At this time Carneros Inn had no transparent equity position in the adjoining Measure-J exempt commercial properties -- in fact, the Zopfi family and Loyd D. Gularte held a deed of trust on the property in their favor from 1995. However, Judge Newsom had a financing interest in the commercial properties later that is revealing. As Trustee of the Ronald Family Trust A, of Reno, Nevada, he provided $600,000 on December 22, 1998 to Carneros Inn LLC, secured by the two commercial properties that were subject to lot line adjustment. It’s pretty clear that in being able to offer the property as collateral, Carneros Inn LLC had “title in transit” pending lot line adjustments in some type of deal with 452 First Street East Ltd. of Sonoma.
Foresthills Hotels & Resorts was formed in January 1999 and listed the Carneros Inn project as one of their four new world class resort endeavors featured in the November 29, 2000 issue of Resort Management (Click.). This article describes the project as an 86-room luxury resort and spa scheduled to open summer 2001 in Carneros, Ca., fitting of the project to toss in a post office and create a new town! Recent research shows that Foresthills Resorts & Hotels dissolved earlier in 2001. This dissolution is not unlike many others. By May of 2001, hotel/resort occupancy had dropped 20% year-to-year across the country.
Powerful people they say. The party to whose attention the Ronald Family Trust A deed of trust is directed: Thomas E. Woodhouse who is also an officer with Judge Newsom in Newsom Investments Ltd. and Zuka Holdings LLC, both Nevada corporations. By 1999 the control has spread over properties, and by October 2000 the deed is recorded transferring the commercial parcels to Carneros Inn LLC. This is followed by approval of two use permits to applicant Carneros Partners, Inc. that doesn’t exist.
Again, Gavin Newsom talked of his lofty ideas for San Francisco properties. The Carneros district has sprung up with some “loft” names attaching to other ventures, suggesting a plan that fans from the Newsom core, perhaps in keeping with our findings of intention to violate our land use laws and General Plan with the creation of a town, complete with post office, through an on-going process of over-reach. Were this project approved, including a parcel designated ag-watershed, watch out, down goes the Carneros.
And of the investors? We are told that Gavin’s business partner and friend, Jed A. Smith, is an investor. And who is Jed A. Smith? Why, he’s another candidate for supervisor in San Francisco. And more than simple politics, restauranteering, and business venturing with Gavin crops up in his past. Remember the hype about Drugstore.com following the hype about Cybersmith? That Jed Smith.
Yes, indeed, this Harvard M.B.A. with his sights on get-rich-quick schemes took his father and private investors by storm in 1995 with his Harvard M.B.A. business plan. He launched his Cybersmith Cafe in Harvard Square, branched out to White Plains, N.Y., and Palo Alto, mainly on OPM (other peoples’ money) as his father backed his interest off to 10%. By 1998, Jed’s venture didn’t make it to the IPO circuit; instead it went bankrupt, out went Smith, and successors took over Cybersmith But he was wired in, had been working with L. John Doerr on deals, and making the venture capital circuit for some time (lots of ink at http://www.bostonglobe.com archives).
Once defeated and revealed, Jed pursued his other scheme, hot for an IPO and the bucks he could make selling junk private shares converted to registered shares on an unsuspecting public. That was Drugstore.com, where he had been wired in through the Doerr loop. Remember the stock that immediately zoomed to $70 per share, and now lies at the bottom of the bay at about 75 cents (and that’s an uptick from 50 cents), all in less than two years?
And where is Jed A. Smith, dot.com creator and crasher? Hard to say about his status with Alcohol & Beverage Control where his license is essential in one of his deals with Gavin, as it won’t retrieve at the state’s website for some reason, nor will Gavin’s. And as to Catamount Management Corporation, we are hard-pressed here. This Delaware corporation filed it’s Statement and Designation by Foreign Corporation on June 28, 2000 but has yet to file a statement of officers -- actually, none is due for two years these days so we may have to wait until June 28, 2002 to learn more -- it’s not online and we’re not venturing out to snoop.
As to Drugstore.com, we offer the following information on the wanderings of Jed A. Smith from a summary of a recent class action filing:
According to a Press Release dated June 27, 2001, a class action lawsuit was filed against Drugstore.com, Inc. The complaint alleges that defendants Drugstore.com, Inc. Jed A. Smith, Jeff Bezos, L. John Doerr (and others) “violated the federal securities laws by issuing and selling Drugstore.com common stock pursuant to the July 28, 1999 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors.... To receive the ability to (purchase shares) the underwriters’ brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices“. This scheme is known in the industry as “laddering” and of course is highly illegal. Smith made millions in the deals on hyped and ladder-pumped share prices as he cashed out, according to the complaint. He held nearly 1 million shares of common stock and certain preferred entitlements when Drugstore.com went public, with a potential to make anywhere from $18 million to $70 million on the deal.
Of course with the complaint , this means that Jed Smith’s assets may be someone else’s assets and those who filed the litigation for Drugstore.com shareholders intend to recover ... millions from Jed Smith that belong in their pockets if shareholders prevail. (For further information, go to Click.. The http://securities.stanford.edu website is invaluable in keeping tabs on the boys and their forays that have busted more than one widow, college student, or pension.)
Jed was an “intended” new board member of Amazon.com, had the arrangements with Drugstore.com legitimately finalized to enrich him further. That didn’t come to pass, as Jeff Bezos of Amazon.com is also a named defendant in the laddering complaint. And he’s also a defendant in Amazon.com litigation. Bezos was on the board of Drugstore.com and flew with venture capital firms preaching Keiretsu (like the old Yakuza concept of control, penetration with cross-ownership of companies, and illegal profiteering formerly known as Zaibatsu where players are compromised to engage in yet further illegal conduct by spreading to other companies to expand the game). Bezos knew Jed Smith as he kicked off Cybersmith and grew in connections in the venture capital world. Both were running with L. John Doerr, another defendant in class action suits and a Keiretsu preacher (Click. and Click. and Click.).
This is no small matter, for it is Stull, Stull & Brody that is among major plaintiff counsels on the heels of investigations of the SEC and Department of Justice (until recently) into laddering and other illegal activities among some of Wall Street’s biggest investment banks. And the investment bankers are talking, identifying schemes in which their employees participated and other players from corporations they served, with investigations centralizing originally in the Southern District of New York. (Click.)
But where would this leave Carneros Inn LLC with Jed’s involvement as an investor or restaurant magnate in the Carneros development? Why, possibly sheltering money from illegal gains, of course, as Gavin’s lofty plans advance through some sort of apparent done deal for which the Board of Supervisors in Napa is intended by them to be a “rubber stamp”. At this juncture, it is highly unlikely Jed Smith or Gavin will have careers in politics, as Willie Brown’s fortunes appear to be winding down as well. And San Francisco voters once again have had to appeal to the Secretary of State to examine election practices during his administration. Once again, significant irregularities were found.
It was Gavin who introduced Proposition K that Mayor Brown wanted to see -- for the November 2000 ballot that “looked to control growth” but wouldn’t, and pulled votes away from Proposition L that was a slow growth initiative. Despite the confusion cast by two Propositions, L was winning, until rather mysteriously the tide turned to defeat when absentee ballots, now in question, were counted. Had Gavin not introduced what was designed to be a competitive initiative, San Franciscans would have had laws to control the visibly out-of-control-build-out of San Francisco that has displaced thousands from affordable housing and middle income families as well. Click.
Already Judge Newsom has to explain his error to other investors -- about what he asserted he can do with property in Napa County and what our laws permit. How is he going to handle the disturbing news about Keith Rogal’s ruses and misrepresentations? April Fools? About the reputation of Carneros Inn LLC as possibly a laundry service for Gavin’s business partner, a reputed investor? How the scheme takes away precious affordable housing desperately needed in Napa in favor of a town destined to spread to other insiders, in violation of our General Plan? How about charges of gentrification? How is he going to explain the problem he has, taking in investment capital when there are no valid approved use permits, certainly not for Carneros Inn LLC or anything remotely legitimate? How would he be able to downplay the plopping of land into his lap as “merely a coincidence” when Gavin gave away the plan as early as February, 1997, and there were no defaults or creditor assaults made against the Zopfi estate at that time. When county residents have seen many examples of assets illegally converted from estates in reorganization, some into the hands of Disney-wired people? Land grabs that involve murders, mysterious fires, and multi-million dollar estates of long-term residents, some of whom had absolutely no debts but were assaulted with false litigation springing from the same courts, same legal-political milieu, in some cases finding judges holding investment interests as spoils, intended or not?
Judge Newsom clearly has a big mess to handle -- a delicate situation requiring his and his cronies’ abandonment for atonement as he ticks off the codes that show his investors just why this project is prohibited by codes (and case law). After all, thanks to Gavin and their own bold internet postings they may have been caught in the act midway in what is commonly known as “the game”.
It seems details of the Carneros Inn project have absorbed more of Judge Newsom's time. On Sunday, December 2, Matier & Ross of “The San Francisco Chronicle” alerted us to a recent State Parks and Recreation Commission change. Clint Eastwood was named to fill a vacancy. When we went to the parks website to view the list of those now serving, Judge Newsom's name no longer appears (Click.).
And they say kids do the darndest things -- it sure applies to Judge Newsom’s son, Gavin. We caught wind of one article where sis Hilary resigned as President of one of Gavin’s business ventures. Gavin on the other hand chooses in some ventures to fill each and every officer position. In a Statement by Domestic Stock Corporation he filed April 14, 1997 on Falstaff Management, he’s everything, all three officers, and three directors all rolled into one. This is listed as a venture involved in restaurants/bars and the address indeed leads to Balboa Cafe. Gavin signed the document as “general partner” of his corporation, deciding to chose yet another title for himself. Those familiar with the scene know that Jed A. Smith has a piece of the Balboa Cafe action, and Gavin’s signature as “General Partner” appears to confirm this type of association.
Gavin’s November 12, 1999 Statement by Domestic Corporation for Airelle Wines, Inc. (located out of a retail shop) indicates the business is a winery. This time his father is listed as mere Secretary, while son is the Chief Executive Officer. Director John Nees rounds out the field, but appears to live with Judge Newsom. Actually, we would assume the above address COULD be a work location, but then the form requires the disclosure of a home address for each officer/director.
We would like to emphasize that both of these forms were filed AFTER Gavin was appointed to a responsible position as a supervisor by Mayor Willie Brown. God save the City we all love. Gavin may have found a way to save himself, as his girlfriend (now fiancé) landed a job with the District Attorney’s office. No matter that four years ago she was terminated by District Attorney Hallinan, as Gavin’s relationship simmered with Kimberly, a spot opened owing to a complex murder investigation.
Gavin’s getting married December 8 to his Assistant D.A. love Kimberly Guilfoyle. She now travels with 24-hour police protection that courses to Pacific Heights where the last thing residents need are fears of a contract hit next door or in their neighborhood. Dashing in to handle those last-minute wedding arrangements must be a fete in itself.
The soon-to-be Mrs. Gavin Newsom is prosecuting the case against attorneyweds Noel and Knoller who had adopted Aryan Brotherhood member Paul “Cornfed” Schneider. Schneider’s dog mauled and killed lacrosse coach and teacher Diane Whipple. A wedding, honeymoon, and holiday festivities won‘t slow this young lady a bit, but Gavin may saddle her with his mis-steps. (Click.).
We’re beginning to get more of the drift of the deals in San Francisco. As Savannah Blackwell wrote July 5, 2000 in “No Cash, No Contract” about Willie Brown’s world “Regardless, Meriweather’s case -- which also involves infamous political players such as Charlie Walker and Eddie DeBartolo -- exemplifies a city government awash in corruption. His story, coming amid FBI investigations of Brown’s administration, shows a city hall where insider politics trumps not only good intentions but also the rules of the game -- and where sometimes, you have to pay to play.” (Click.) In Napa, players at least act as though they have strong incentives to corrupt the laws, whether there is a pay to play system or not. Often it’s doled out as an upswing in business, “referrals” among the attorneys, social prominence and retainers for having played the game. Wine flows around like leaves floating about on a windy day .
We continue to ponder the process by which AB1389 by Assemblyman Kevin Shelley slipped through the state. This is the bill signed October 4, 2001 by Gov. Davis that permits the development of 400,000 square feet of San Francisco Port Authority property into private interest commercial, retail, restaurant businesses. He may know nothing of bigger schemes this act could serve, and appears not to be aware of litigation, or the impact a recount of the slow-growth Proposition L votes might portend. Governor Davis is a busy person, and also undoubtedly missed Richard Foglesong’s “Married to the Mouse” that reveals some irregularities and deceptions by Disney in deals with Florida’s governor that resulted in the now massive theme park, resort and hotel hub known as Orlando -- and then some.
The Carneros Inn hearing is still slated for January 22, and we’re on the edge of our seats, wondering what more will be uncovered about this scheme and its players.
** For earlier stories on Carneros Inn:
"It's Judge Newsom's Carneros Inn Slated January 22" Click.
"Disney's San Francisco to Napa Connections" Click.
*** To view additional information on Drugstore.com, go to http://www.bigcharts.com, enter its Ticker Symbol DSCM in the box, and “click” the blue “draw chart” box. Access is provided to the SEC, and news articles appear below the chart.