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From: lewis.perdue@wineindustryinsight.com

Subject: Mobius Painter, Part 2: Funds Missing; Buyers On Hold; Fraud & Conspiracy Charges Heat Up Sonoma Winery Battle

Date: 2009-02-11 17:33:45

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Mobius Painter, Part 2: Funds Missing; Buyers On Hold; Fraud & Conspiracy Charges Heat Up Sonoma Winery Battle

The long tangled litigation over the Sonoma Valley land and use permits belonging to the bankrupt Mobius Painter Winery & Cellars (see Part 1 here) has gotten hotter and messier with harsh accusations and legal filings in both Sonoma County Superior Court and the U.S. Bankruptcy Court.

The current flurry of activity includes:

  • Robert W. Wyndelts, a Scottsdale, AZ investor with an option to buy then resell the 15-acre parcel on Highway 12 east of Oakmont,  has filed a lawsuit charging nine counts including fraud and civil conspiracy.
  • Winery Disposition Group, (WDG) a bankrupt company controlling the land has filed a third amended plan of reorganization whose centerpiece is a sale of assets  to Healdsburg vintner Ken Wilson. A hearing in Bankruptcy Court in Santa Rosa is scheduled for Feb. 27. Comments on the plan must be filed by Feb. 13.
  • Santa Rosa Bankruptcy Attorney  Steven Olson, in a Jan 30, 2009 filing, charged that WDG’s attorney,  “breached her fiduciary duties to the bankruptcy estate” for her role in the legal proceedings. No formal response has been made to the charge.

As previously described by Wine Industry Insight, the Mobius Painter story has become a lengthy saga worthy of a John Grisham thriller. In the interest of keeping articles as short and timely as possible, WII will present facts as a series of installments.

“DOUBLE ESCROW” LAND PURCHASE “FLIP” LEAVES $119,000 UNACCOUNTED FOR

According to transfer tax payments on deeds filed with the Sonoma County Recorder’s Office, Mobius Painter LLC, a limited liability corporation managed by Orange County businessman Bruce Halvax, purchased the land on Oct. 14, 1998 for $397,591.

Deed-sale of land to Mobius Painter LLC. Click to enlarge

Deed-sale of land to Mobius Painter LLC. Click to enlarge

The deed to a second sale of the same land, recorded at the same t1me (see time stamp) shows Mobius Painter LLC selling the parcel  f0r $517,500.

Deed-Mobius LLC to land owners - Click to enlarge.

Deed-Mobius LLC to land owners - Click to enlarge.

The second page of the deed contains the names of the new owners. They are the same group of investors identified as “land owners” in the legal documents referenced in this article.

Deed, Page 2, showing land owners - Click to enlarge

Deed, Page 2, showing land owners - Click to enlarge

The double escrow “flip” resulted in a$119,909 gain,  a 23-percent profit.

Halvax told WII in an email that “I never received any money on this transaction.”

The money remains, so far, unaccounted for.

Various court documents and investors involved with the transactions have blasted Halvax, saying that he did not disclose the “double escrow.”  Halvax told WII that those involved should have done a better job with their due diligence.

LAND QUICKLY MORTGAGED - THIRD AND FOURTH TRUST DEEDS ISSUED

On April 26, 1999,  Halvax, who managed the effort and owns 36.62% of the land, arranged loans from the Interstate Lumber Profit Share Plan of Scottsdale, AZ.

The Interstate loan was secured by a first deed. Bankruptcy Court documents show a claim from them for $220,696 secured by a second lien against the property. The first lien position is currently held by the Sonoma County Tax Collector for $155,775 in unpaid taxes.

Bankruptcy documents also show a third lien against the property to land owner Mary E Thielemeir to secure a loan listed at $82,930 and a fourth lien to another land owner, William Grimsley for a bankruptcy claim listed at $240,321.

LEGAL BATTLES BEGAN WHEN MONEY RAN OUT

Following the purchase, Halvax raised $480,938 from other investors to develop winery plans. Some investors told WII privately that they believed the amount was closer to $750,000, but those estimates are unconfirmed.

The process did not go smoothly. Halvax blamed the DotCom meltdown as a reason for failing to raise more money. At any rate, noted winemaker Brooks Painter — who had been brought in as the wine star — resigned from the company and returned all his equity on March 16, 2002.

Then, on Oct. 9, 2002, the “winery investors” sued Halvax in Orange County (Calif.) Superior Court, charging fraud, breach of fiduciary duty and material omission in a securities transaction.

NEXT INSTALLMENT: Mobius Painter, Part 3: A White Knight, Another Fraud Lawsuit, Conspiracy Charge Over Land Transfer

  • WYNDELTS, A DOGGEDLY PERSISTENT “WHITE KNIGHT”
  • MORE COURT BATTLES OVER THE SETTLEMENT
  • LITIGATION MOVES NORTH TO SONOMA COUNTY
  • APPEAL DECISION, PROPERTY TRANSFER, KEN WILSON, CHAPTER 11
  • PROPERTY GETS TRANSFERRED IN LLC SHUFFLE
  • WDG BANKRUPTCY FILING CALLED FRAUDULENT

Wine Industry Insight will follow court proceedings and keep readers informed. In addition, WII will — when time and breaking news allows — also provide a future installment on other details of the early transactions which were summarized in this and the previous article.

Posted by lperdue on Feb 11th, 2009
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Lewis Perdue
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Phone: 707-326-4503, fax: 707-940-4146
Email: lewis.perdue@wineindustryinsight.com