'I thought we were good friends'

<p>Kathy Adams owned a hair salon in Healdsburg called Le Melange. One of her longtime clients was Gary Armitage's wife, Nell.</p><p>So when she sought retirement advice, she naturally turned to Armitage for help.</p><p>"We went to Gary because they were friends and I trusted him completely," Adams said. "I knew almost nothing about investing because I never had any money to invest."</p><p>In 2006, Armitage suggested to Adams, 65, that she sell a rental property in Healdsburg and invest the money with him. She sold the home for $503,000, and rolled the money into a senior care center in Peoria, Ariz.</p><p>She also invested a $100,000 inheritance in a senior care center called Newhall Capital Resources LLC, a portfolio of three Los Angeles-based senior centers.</p><p>The investments initially seemed solid. She and her husband, Rick, were getting nearly $4,000 a month in payments.</p><p>Confident she could afford retirement, Adams sold the salon, bought a recreational vehicle and began looking forward to traveling.</p><p>But the payments suddenly stopped in 2007. Newhall later went bankrupt, and the properties were sold for less than the amount owed on then. Adams got nothing.</p><p>She was determined not to let the same thing happen on the Peoria property, and joined a group of investors who succeeded in wresting control away from AREI's owner, Jim Koenig, who was managing the property.</p><p>Koenig had missed loan payments, let property tax payments lapse and failed to pay other bills, Adams said. Now controlled by a committee of investors, new managers have been hired and Adams is hopeful some of their $200,000 in losses to date can be recovered.</p><p>"This kills me because I thought we were good friends," she said.</p><p>-- Kevin McCallum</p>