Armitage files bankruptcy details

Gary Armitage, the former Santa Rosa financial adviser at the heart of a state fraud probe, filed bankruptcy papers this week revealing how lavishly he lived and how deeply the Healdsburg resident has plunged into debt.

Armitage, whose Santa Rosa-based AGA Financial collapsed last fall, filed Chapter 7 bankruptcy earlier this month. He updated the filing this week, listing assets of $4.5 million and liabilities of $33 million.

"He went from being a fairly wealthy man to be being fairly destitute," said Armitage's San Rafael bankruptcy attorney Russell Marne. "He doesn't have any assets."

The majority of the assets listed in the new filing, $4.2 million worth, are in two pieces of real estate, Armitage's $2.5 million Healdsburg home and a castle he co-owns outside Redding, valued at $1.7 million.

The remainder is personal property totaling $371,832. An exhaustive list tallies everything from the couple's $5,000 wine collection to their $48,000 art collection to their one-eyed cocker-spaniel, named Snickers, valued at $50.

The majority of the liabilities, $29 million, represent claims by investors who either are suing Armitage for fraud or say they have lost investments he placed for them.

They include an elderly Santa Rosa couple, Bud and Nona Merrill, who claim they lost $3.2 million, and a $21 million claim by a group of investors represented by Berkeley attorney George Donaldson.

Numerous other claims have no estimated value.

The 57-year-old Healdsburg resident, accused in lawsuits of running a wide-ranging real estate Ponzi scheme, is under investigation by the state Attorney General's Office.

Investors were allegedly paid returns not from profits from their real estate investments but from money injected by new investors.

Department of Justice investigators have fielded more than 2,000 complaints against Armitage, former partner and Santa Rosa resident Jeff Guidi, and Redding real estate investor James Koenig. No criminal charges have been filed in the case.

Armitage's attorney said Wednesday that he has been unfairly vilified by investors who took a risk and lost when the real estate market imploded.

"This is not a guy who robbed little old ladies," Marne said. "This is a man who lost his whole life's savings. This isn't Bernie Madoff."

Numerous senior citizens from across the Bay Area have told The Press Democrat that they invested most of their savings into accounts Armitage touted as risk-free, but which were made in risky private land deals assembled by Koenig, a convicted felon.

Many of the items in the couple's 5,000-square-foot home show just how well Armitage and his wife, Nell, lived when business was good. Items listed include seven vehicles, a hot tub and sauna, and a collection of 50 Thomas Kincaid paintings, valued at $48,000.

But the filing also shows the depth of the couple's debts.

Both homes are substantially leveraged. The Healdsburg home has a $1.6 million mortgage on it, as well as a $203,000 equity line.

The castle in the mountain hamlet of Igo has a $765,000 mortgage and a $510,000 equity line on the property, filings show.

The filing lists secured claims against those homes of $5.5 million and $5.1 million respectively.

The filing also lists $7,204 per month in income versus expenses of $34,368, for a negative monthly income of $27,164 per month.

They list 12 credit cards with various banks totaling $310,000 owed.

Armitage also owes property taxes of $17,500 to Shasta County and $18,000 to Sonoma County.

The Armitages' former housekeeper is one of those named in the filing who still owes them money. Healdsburg resident Jennifer Cadd, 43, worked for the Armitages for about four years until last April.

She said the Armitages were kind, generous people who went out of their way to help others.

She borrowed about $20,000 from them when she ran into financial trouble, and had been paying them back, she said. She had paid back about half the money when she lost contact with them after they changed their telephone numbers, she said.

"I have a feeling they knew what was coming down and that's probably why they had me stop cleaning for them," she said.

The first meeting of creditors in the case is scheduled for 2:30 p.m. Wednesday at 777 Sonoma Ave., Room 116. The meeting gives creditors the opportunity to question Armitage on his filings.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.Gary

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