Despite loan troubles, Carinalli finds support

<p>Clo's Parkside Grill and BBQ was a place where retirees in tennis gear ate next to youth baseball players still wearing cleats and grass stains from an afternoon game.</p><p>The Santa Rosa restaurant was quintessential small-town America, a staple of local life next to Howarth Park. Yet the family hot spot would have closed shortly after opening in 1997 — if it opened at all — if not for the financial backing of one man.</p><p>“Clem Carinalli lent us money to get started, and when we were struggling, he lent us more money when no one else would,” said Jim Bergin, 65, co-founder of Clo's. “For a guy who owns a big chunk of Sonoma County, he was just so accessible, and so helpful.”</p><p>And then Bergin said what many people say about Sonoma County's largest individual land owner who has fallen on hard times: “I think he's an honorable man. He is as honest as the day is long.”</p><p>That reputation is perhaps Carinalli's biggest asset as he now tries to avoid bankruptcy and restructure $150 million in debt owed to bankers, pension fund managers, retirees and other investors who lent him money.</p><p>Carinalli is grateful for the support from Bergin and others, but his inability to pay back lenders has been a tough blow to a man who built his reputation providing financial assistance to charities, entrepreneurs and nonprofit organizations.</p><p>“What have I done for people lately?” he asked, his voice dropping down to a near whisper. “I can't pay people back.”</p><p>Carinalli, a county native raised on a dairy farm, spent more than 30 years shrewdly assembling a real estate empire worth tens of millions of dollars.</p><p>After the real estate market collapsed last year, Carinalli's business empire fell apart under the weight of his debt. In May, he told most of his lenders he could not continue repaying them.</p><p>But remarkably, his reputation appears largely intact, and that is proving crucial to his plan to salvage his business and repay creditors.</p><p>Asks for patience</p><p>He has asked about 50 lenders not to sue him or foreclose on his properties, but rather to wait three to four years for the real estate market to improve so he can sell about 200 properties and pay people back. He will not make interest payments during that time, costing his lenders large sums of money.</p><p>For his plan to work, just about all of those creditors need to go along with it, Carinalli has said. Essentially, they need to trust him. So far that appears to be happening.</p><p>“I'm trying to work with Clem. I want the best for both of us,” said Bob Oliver, a retired dentist in Sebastopol who invested with Carinalli.</p><p>Oliver described Carinalli as “a nice human being” who made some mistakes.</p><p>“If I'm going to lose a ton of money, I'm not going to be happy,” Oliver said. “But if he was a scumbag, I'd be really pissed about it.”</p><p>Oliver said he has no plans to seek repayment through the legal system, which is one of his options.</p><p>Carinalli secured most of his loans with real estate and personal guarantees, meaning his creditors could try to force him into involuntary bankruptcy or foreclose on his land if they wanted. But lenders, such as Oliver, say they want to give Carinalli a chance to unravel his finances.</p><p>“I can't see how running in there with a whole bunch of attorneys on my sleeve is going to help anybody,” he said. “We're both culpable. That's show business.”</p><p>Carinalli has told people that the most important thing he needs is time. When the real estate market improves, he will be able to repay his debts, he said at a June meeting where he laid out his plan to creditors. </p><p>Carinalli initially focused on restructuring his debt to banks of about $100 million. Bill Schrader, president of Exchange Bank, which continues to receive loan payments from Carinalli, said his reputation as a man of integrity will help him work out a repayment plan with other banks.</p><p>“Certainly, character is a very critical element in a deal,” Schrader said. “It will be an important factor, albeit not the sole factor.”</p><p>Focus on smaller lenders</p><p>In August, Carinalli began focusing on meeting with smaller lenders, such as local pension fund mangers, retirees and land investors, he said.</p><p>“He's got a goal that he wants to do everything he can. And people have kind of accepted that,” said Robert Barbieri, founder of Redwood Coast Petroleum and a Carinalli creditor. “I'm comfortable with him. And that seems to be the consensus of the people I've been around.”</p><p>Carinalli established his reputation by providing financial assistance to scores of people, and by volunteering his time — and money — to numerous foundations, nonprofit groups and charity events.</p><p>“Anybody who needed help with anything, the first person you would send them to is Clem,” said Debbie Meekins, former president of Sonoma National Bank, which Carinalli helped found in 1985. “He always stepped up to the plate.”</p><p>Meekins, now an executive vice president at Sterling Savings Bank, which acquired Sonoma National Bank in 2007, said she turned to Carinalli when the Santa Rosa Chamber of Commerce needed financial help in the late 1990s.</p><p>Meekins, who at the time was a chamber board member, asked Carinalli to buy the chamber's building.</p><p>He did and then he leased the building back to the chamber at a favorable rent, she said.</p><p>“The chamber got a bunch of cash, and it got reduced rent for a bunch of years,” Meekins said. “He's just a wonderful man.”</p><p>Community involvement</p><p>Part of the good will toward Carinalli derives from his long history of community involvement and charity donations. He has been especially active in the Catholic Church and agricultural organizations. Carinalli was chairman of Cardinal Newman High School Board of Regents and served as a board member for 12 years. He has served as a board member for the Sonoma County 4-H Foundation for more than 20 years.</p><p>He has donated hundreds of thousands of dollars to community organizations. However, many of his recent pledges have gone unpaid, including promised donations to the Council on Aging and the Santa Rosa Junior College, according to people with knowledge of the situation.</p><p>SRJC named a reading room at its new library to honor Carinalli and his wife, Ann Marie, after the couple pledged money to the college. He told SRJC President Robert Agrella he was having cash-flow problems, and the college should name the room after someone else, Agrella said.</p><p>“I told him not to worry about it. I told him, ‘You have been a great supporter of the college and we're going to stick with you,'” Agrella said. “I'm confident that when he gets back on his feet, he'll meet that pledge.”</p><p>Agrella said he did not know the amount of the pledge, and the head of the SRJCfoundation that administers the money did not return a phone call requesting comment.</p><p>Pledge for kitchen</p><p>Shirlee Zane, former executive director of the Council on Aging and now a county supervisor, said Carinalli had pledged $150,000 to build the council's Meals on Wheels kitchen during its 2005 fund-raising campaign, but that he was unable to come through with the money.</p><p>“I am sure that he made that pledge in all sincerity,” Zane said. “But every time I called him about it, he'd say things might be better in another three months. It seems that things never turned around for him.”</p><p>While he still has many supporters, Carinalli's problems have cast public spotlight on his private financial dealings. The attention has led to public criticism of the way he used his numerous connections to benefit financially.</p><p>Loans to Carinalli by the Sonoma State University Academic Foundation have attracted statewide attention, fueling legislation that would require university auxiliary organizations to disclose internal documents under the state Public Records Act. Carinalli, a former board member on the SSU foundation, received his first loan two days after he resigned in 1995.</p><p>“I love my community”</p><p>Carinalli said he only wants the best for Sonoma County.</p><p>“I love my community,” he said.</p><p>In the past month, Carinalli has returned to community gatherings, attending events for the Sonoma County Fair and Santa Rosa Chamber of Commerce where he was repeatedly approached by those offering encouragement.</p><p>His friends have described Carinalli as being under tremendous stress as he works to get out from underneath his $150 million of debt and toward his goal of eventually repaying people.</p><p>“I have to persevere through this, or many people aren't going to get their money back,” Carinalli said.</p><p>Exactly how much Carinalli owns, and how much he owes, is not a matter of public record. Unless Carinalli is forced into bankruptcy, his creditors have to take his word regarding his financial condition.</p><p>“If it is doable, we will be paid back in some way, shape, or form in the future,” said Larry Bertolone, a retired real estate agent who is owed more than $1 million. “I know the man. I trust the man.”</p><p>A lot of work to be done</p><p>Carinalli seems flattered that people still hold faith in him, but he is the first to acknowledge a lot of work remains to recover his creditors' money.</p><p>“It's very early in the stages of going forward. We've got a long ways to go,” he said. “But I'm hopeful.”</p><p>His supporters are also hopeful. They want to see Carinalli returned to financial health.</p><p>“He's just a good person,” Bergin said.</p><p>Clo's Parkside Grill and BBQ closed in 2006 after years of financial difficulties. Bergin decided to continue a catering business he had started as an offshoot of the restaurant, which he said is now more profitable than the restaurant ever was.</p><p>When the building he wanted to rent for his new endeavor appeared to be unavailable, he called Carinalli.</p><p>“A few weeks later the landlord called me and we worked out a deal,” Bergin said. “Clem had made a call for me. He is always willing to help out.”</p><p>You can reach Staff Writer Nathan Halverson at 521-5494</p><p>or nathan.halverson@</p><p>pressdemocrat.com.</p>