Armitage to lose wine and paintings

Clients of disgraced Santa Rosa financial adviser Gary Armitage are looking less and less likely to recover anything from his bankruptcy estate following a closer examination of his assets by a court-appointed trustee.

Armitage and his wife, Nell, have no equity in either their luxury Healdsburg home or their castle-themed retreat outside Redding, bankruptcy trustee Andrea Wirum concluded in court papers filed Friday.

Both homes have more debt than they are worth in today’s real estate market and their sale would probably not generate any money for creditors, Wirum found.

Debts in the case have soared from $33 million in February when Armitage filed bankruptcy to nearly $90 million today, mostly from investors claiming they were defrauded.

Some small amount of money may be recovered for investors from the sale of Armitage’s extensive personal collections of wine and art.

Under an agreement reached with the trustee, Armitage has been forced to surrender his $11,000 wine collection and most of his approximately 50 paintings, primarily by pop illustrator Thomas Kinkade, valued at $26,000.

Armitage had originally claimed bankruptcy laws allowed the couple to keep the art and wine. But the trustee took a closer look and objected to the collections being categorized as exempt household goods, according to filings. The agreement allows the couple to keep three paintings and some jewelry, but requires them to give up the remaining paintings and the wine collection.

The trustee has hired an auctioneer, West Auctions, LLC, to sell the art and wine at an online auction June 4.

Wirum estimated that the couple’s home on Wild Horse Court in Healdsburg is no longer worth $2.5 million, as originally estimated, but $1.8 million, below the amount owed on the home.

Brigadoon Castle, a former bed and breakfast in rural Igo, is also saddled with debt. The castle, in which the Armitages have a 75 percent interest, is worth between $1.6 million to $1.7 million, less than the debt and sale costs on the property, Wirum estimated.

The debt levels effectively eliminate any hope some investors had of recovering some of their lost money through the bankruptcy process. The homes represented approximately $4.1 million of the $4.5 million in assets the Armitages claimed.

The news will be little consolation to Armitage’s investors, many of them elderly residents of Sonoma and Marin counties who claim to have lost their life’s savings after placing their investments with Armitage.

Leslie Santucci, a Santa Rosa travel agent who lost $103,000 investing with Armitage, is one of a group of investors suing him for $27 million in Marin County.

She and other investors are wondering why the criminal investigation is taking so long.

“We all just watched (Bernard) Madoff go away, and we’re kind of like ‘Where’s our justice?’” Santucci said.

Armitage and former partner Jeff Guidi shuttered their Santa Rosa firm, AGA Financial, in the face of more than a dozen lawsuits alleging the men defrauded their mostly elderly clients.

Armitage’s attorney, Russell Marne, did not return a call for comment. Guidi denied any wrongdoing Tuesday in a statement e-mailed from his attorney.

The state Attorney General’s Office is investigating the firm. It has received more than 2,000 complaints against the men and a related firm, Asset Real Estate & Investment (AREI), owned by James Koenig. Total losses are estimated at more than $200 million.

Armitage and Guidi advised hundreds of Sonoma County clients to invest tens of millions into complex real estate investments set up by Koenig, who turned out to be a convicted felon with a history of investment fraud.

In many cases, the men urged their clients to invest all of their retirement funds in risky AREI products, including corporate notes not backed by any real estate, according to state investigators.

Civil suits have further accused the men of charging excessive fees, failing to tell investors about Koenig’s criminal past, and elder abuse.

“If the only reward we get is to see Gary go off in an orange jumpsuit, we’re going to have to be happy with that,” Santucci said.