Smells like Bankster Spirit...

[c1ue]

As always, the big boys find ways to get their debts slashed, while everyone else can pound sand.

http://www.therenorealestateguide.co...-the-belvedere

Washoe County recently conducted the sale of tax delinquent properties. According to Nevada statutes the properties are placed for sale if the taxes have not been paid for at least three years.

The RGJ reported on the purchase of 92 condominiums by David Lonich, the attorney representing Bijan Madjlessi of Belvedere LLC. Madjlessi planned to market the condos in the Sundowner’s north tower, but the economy and the real estate market soured and he was unable to sell as planned.

The lawyer for the developer of downtown Reno condominiums — converted from rooms in the former Sundowner Hotel and Casino — on Wednesday purchased 92 of the condos for nearly $2 million at auction, after his client was delinquent in paying nearly $800,000 in taxes to the county.

But, here is the part that the RGJ, for whatever reason, did not tell.

The story was related to me by people that had attended the Washoe County Tax sale last week.

Lonich bought all 92 units and experienced little or no competition. Others bid on some of the properties, but were all out bid.

The nature of the tax lien is that it is superior to all other liens. Consequently, when a tax sale is conducted, all other liens are wiped out.

So, what else was wiped out? Since the taxes take precedence over all else, any financing, or mortgage loans were eliminated. According to notices of default totalling approximately $47.9 million, debt in that amount was eliminated, completely. The RGJ reported that the property was purchased for $7.89 million. I’m not clear how debt could grow to 47.9 million. Nevertheless, it would appear the banks lost, big time.

Likewise, public records showed a total of 359 liens had been filed against Belvedere LLC and the property. Some of these liens may have been satisfied, but this has not been verified. A total of 771 documents have been recorded associated with Belvedere LLC and I have not reviewed all of them. These liens have all been completely wiped out by the tax foreclosure. Each of these liens represents someone that Belvedere LLC owed money, and each was left holding the bag.

Contractors didn’t get paid. Vendors didn’t get paid. The HOA didn’t get paid. and even the City of Reno didn’t get paid.

Now, I believe that some of these liens may have been satisfied because some of the units may have been sold but this has not been verified. Therefore the total numbers may vary a bit, but this is still close.

And what did Madjlessi lose? You may be surprised to learn that he fared a bit better than his associates, the banks and the contractors and vendors. He was able to eliminate $47.9 million in debt for a mere $2 million and he got a lot of his building upgrades for free.

It’s nice work if you can get it.

[cjppjc]

Re: Smells like Bankster Spirit...

It seems strange the mortgage holders did not bid.

[c1ue]

Re: Smells like Bankster Spirit...

Questionable auction above, insurance fraud below...

http://www.rgj.com/article/20110603/NEWS/106030339/California-Insurance-Department-arrests-developer-double-dipping-Reno-Belvedere-fire-claims?odyssey=mod|newswell|text|FRONTPAGE|s

Bijan Madjlessi, who controls the Belvedere Towers condominium project in downtown Reno, has been charged with felony insurance fraud in making multiple claims for losses after the building caught fire nearly three years ago.

California Insurance Department officers arrested Madjlessi at his office in San Rafael, Calif., on Wednesday. He was booked into the Marin County (Calif.) Jail and was released after posting a $750,000 surety bond several hours later.

The Marin County district attorney's office has charged Madjlessi with presenting multiple insurance claims for the same loss and fraudulently supporting an insurance claim. Each felony charge is enhanced as Madjlessi is also accused of committing an aggravated white-collar crime greater than $500,000 and taking more than $1.3 million.

Douglas Horngrad, Madjlessi's lawyer in San Francisco, has described the fraud charges as "an invention of the insurance companies."

"He is not guilty of the charges. He is going to aggressively contest them, and we are confident he is going to be acquitted," Horngrad said.

Madjlessi's arraignment in Marin County Superior Court is scheduled for June 20, Horngrad said.

Belvedere fire in Reno

Reno fire investigators described the fire at the Belvedere, the former Sundowner hotel casino, on July 29, 2008, as arson. The fire climbed up the unoccupied 14-story south tower that sits on top of the former casino building that faces Fourth Street. The 11-story north tower toward the rear, largely renovated as condominiums, also was damaged. About 10-15 people were evacuated. The arson case is still open.

According to an affidavit signed by Thomas McCallister, Marin deputy district attorney, Madjlessi received double payment from two insurance companies for the same damage from the fire.

On behalf of the Belvedere Towers Homeowners Association, Madjlessi purchased a policy with Travelers Casualty insurance company for the north tower. It was renewed June 25, 2008. He also had insurance on the entire property with Fireman's Fund Insurance Co.

On Aug. 8, 2008, Madjlessi told a Fireman's Fund adjuster that he had no other insurance or claims on the property. Fireman's Fund paid the Belvedere Homeowners Association and Madjlessi $2 million for damages to the entire property, including $860,376 for the north tower.

On Aug. 9, 2008, Madjlessi told a Travelers adjuster that he had no other insurance or claims on the north tower, McCallister wrote. Travelers then paid Belvedere Towers LLC $1.4 million in five payments.

It's one of the larger cases of double-dipping insurance fraud in California, said Dave Althausen, a California Insurance Department spokesman.

Repairs take 2 years

Despite the $3.4 million in insurance payments, it was two years before burned portions of the buildings were renovated. Charred exterior walls, broken glass and plywood over broken windows on the west side of the buildings remained until last summer, when repairs were finally made, said Cindi Gil-Blanco, Reno code enforcement officer.

Gil-Blanco said she mailed several citations to Madjlessi over these issues and other problems. She said the letters were returned unopened.

Companies controlled by Madjlessi bought the former Sundowner for $7.89 million in 2006. On March 14, Madjlessi settled a lawsuit filed with Metcalf Builders Inc. of Carson City over money owed for the condominium renovation work. A foreclosure lawsuit with U.S. Bank was settled later that month. His companies also sold the south tower to Mountain Air Enterprises, controlled by another Marin County investor. A civil suit over that sale is pending.

Companies controlled by Madjlessi were delinquent in paying nearly $1 million in Washoe County property taxes and downtown railroad trench special assessment district taxes owed on many of the north tower condominiums.

In April, Madjlessi attorney David Lonich bought 92 of the condos for nearly $2 million at a county auction.
Another 80 condo units owned by individuals in the north tower were not involved in the sale.

The project, which was to include more condos in the south tower and offices and shops in the casino building, stalled when the downtown condo craze ended with the collapse of the housing market.