'I crashed and burned'

<p>He had his own Boeing 737 jet, a $385,000 Mercedes-Benz, homes in Hawaii and a $16 million estate being built on a hill in Santa Rosa's exclusive Shiloh Ridge neighborhood — all by the time he was 45.</p><p>Robert W. O'Neel III was living large, brokering real estate deals across two continents with the financial backing of Wall Street and from Sonoma County lenders, including a $3.5 million loan from Clem Carinalli, the county's largest individual landowner.</p><p>And then about two years ago, it all began to fall apart.</p><p>As a result of hubris, the collapse of the financial markets or some combination of both, O'Neel's empire is in ruins, with his partially built dream estate overlooking the Mayacama Golf Club wrapped in protective seal and abandoned.</p><p>“I crashed and burned,” O'Neel, 46, said recently while seated in the conference room of his attorney's office in downtown Santa Rosa.</p><p>The son of a prominent Sonoma County developer, O'Neel is a local face on a story that may come to define a generation, one in which people with access to easy money and credit parlayed their good fortune into jaw-dropping wealth.</p><p>But when your business partners are cutthroat hedge funds and banks such as Lehman Brothers, it can turn out to be “Risky Business,” to borrow the title of a 1983 movie from which O'Neel likes to quote lines, in part because of his passing resemblance to the actor Tom Cruise (others say he looks like Richard Gere).</p><p>The downfall has been fueled by at least three big deals gone bad: purchase of Jepson Winery and vineyards in Mendocino County, a proposed Utah ski resort and a 900-acre Florida residential community.</p><p>O'Neel no longer creates a buzz by swooping into Charles M. Schulz-Sonoma County Airport aboard his $40million Boeing jet. These days, he said, it's middle seat coach.</p><p>“I can't blame anybody but myself,” he said. “Why did I start that house? Why didn't I wait until a certain ... You know, I can look back at all kinds of things and say I never should have done it. But I can't. Those were decisions I made at the time.”</p><p>Wearing jeans and a blue polo shirt, O'Neel spoke at length about the financial problems that have led to lawsuits, bruised feelings among old friends and the repossession or foreclosure on much of what he accumulated.</p><p>While he was visiting in Santa Rosa, his twin daughters, Nina and Isabella, were with their mother, model and actress Tatiana Abracos, at her family's home in Brazil. It was the girls' second birthday.</p><p>O'Neel said he was staying at his parents' west Santa Rosa home, which is itself a showcase set among acres of vines. The property was nearly lost to a foreclosure sale July 20 for a past due payment of about $3million, according to county records.</p><p>The property is in the name of Young America Homes Inc., the company that Robert “Bob” O'Neel Jr. founded in 1963 and was bought by his son in 1997. The younger O'Neel said the payments on the property now are current, but he would not elaborate.</p><p>The prospect of his parents losing their home — Bob O'Neel is 81 — is a sobering indication of how serious Rob O'Neel's financial problems are. He said his net worth at the height of the market was north of $100million, but that now he's simply trying to stave off bankruptcy.</p><p>O'Neel said he learned the real estate business by working in sales for his father's company, which in its heyday was among the key players in Sonoma County development, responsible for a significant number of homes built in Rohnert Park.</p><p>The pair are so close that Rob O'Neel had been planning to build an indoor basketball court at his Shiloh Ridge compound and fashion it with the logo of the Indiana Hoosiers, for whom the elder O'Neel played.</p><p>“Driven” young man</p><p>The eldest of three siblings, Rob O'Neel recalled growing up at Willowside Estates at Santa Rosa Country Club and attending a private elementary school before going to Willowside Middle School. At Analy High School in Sebastopol, he played basketball and talked about the money he hoped to make some day.</p><p>“He was definitely driven, even as a young person,” said Brett Page, who played high school basketball with O'Neel and now coaches the Analy varsity boys' team. “He was savvy with his money and was already doing deals in high school.”</p><p>Page recalled O'Neel renting a limousine and driver to attend their high school reunion. He also used to show up at Page's house driving one of his Ferraris.</p><p>“I think for some people who didn't really know him, they probably thought he was arrogant and full of himself,” Page said. “But growing up with him, I know he wasn't like that.”</p><p>O'Neel said he bought his first plane — a twin-engine Gulfstream GIV business jet — when he was 39. That was followed by a GV, a faster, bigger, twin-engine jet with even greater range, and then with the Boeing 737 business version of the mainline passenger jet. He said he made money on all three planes by renting them out — in the case of the GV, for $8,000 an hour.</p><p>On-board meetings</p><p>Gary Roberts, a longtime commercial real estate developer in South Carolina's Myrtle Beach, recalled driving to an airport there for business meetings with O'Neel aboard the 737, which had a private bedroom suite, a full kitchen, an office and flat-screen TVs.</p><p>“It was the type of plane, it was so pretty you had to take your shoes off to go inside. He was my hero,” Roberts said</p><p>Roberts also had the opportunity while in New York to ride in O'Neel's $385,000 Mercedes-Benz Maybach. “The only thing I hated about it was the windows were tinted, so the women couldn't see me. I felt like a movie star,” Roberts said.</p><p>Roberts said O'Neel had more toys than anyone he'd ever worked with in nearly three decades along the southern coast. But he said O'Neel also had good business sense and charisma, and that he would not hesitate to work with him again.</p><p>“There's a fine line between being an idiot and being brilliant,” Roberts said in a thick Southern accent. “Look at Bill Gates. If he had failed at Microsoft, they would have said he's crazy. I think in this case, Rob O'Neel rolled the dice in a big way, and now that the economy has turned, I think he will lose in a big way.”</p><p>O'Neel's two Ferraris and the Mercedes have been repossessed. He said his last remaining home in Hawaii is in foreclosure. Another home O'Neel owned on Santa Rosa's Stonecastle Lane near Spring Lake Park was sold at a foreclosure sale June 5.</p><p>All of the planes were sold.</p><p>O'Neel still owns the Shiloh Ridge estate east of Windsor, which has been in construction since 2005. But he may not be able to hold onto the property much longer.</p><p>Carinalli, whose $3.5 million loan to O'Neel included the home as collateral, has notified O'Neel that he plans to foreclose on the property due to a defaulted payment in the amount of $252,688, records show.</p><p>Two lending institutions have claims to the property: Sonoma National Bank, in the amount of $522,136, and Hudson International Inc., which filed a lawsuit Aug.12 in New York courts alleging O'Neel has defaulted on a $4million loan. That loan also includes as collateral a loft O'Neel owns in New York's Soho district.</p><p>Carinalli meeting</p><p>O'Neel said he and Carinalli met twice two weeks ago to discuss the status of the past due payments, and that he's confident he can work out a deal to keep the property. Carinalli declined comment.</p><p>Carinalli is trying 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>O'Neel said it's guys like him who have put Carinalli in the position he's in.</p><p>“Clem is a bank,” O'Neel said. “Clem was a vital cog in the developer world here. If we could have gotten traditional financing, we would have done it.”</p><p>But O'Neel's legal problems do not end there.</p><p>He is being sued by Nordby Signature Homes for $801,000 in payments the company said it is owed for work on the Shiloh property. Craig Nordby, president of the company, knew O'Neel from high school.</p><p>He said the pair met two weeks ago to discuss the suit.</p><p>“The lines of communication are back open,” Nordby said. “We've had a sit down. I'm hopeful we can come to an agreement.”</p><p>The owners of the Santa Rosa design firm Ireko also are suing O'Neel and his wife, claiming they are owed $336,887 for work on the Shiloh home. The O'Neels already have paid the firm $2.37 million, according to the suit.</p><p>Two years of planning</p><p>Jim Rascoe, co-owner of Ireko, said working on the O'Neel estate was the job of a lifetime, one that involved two years of planning and the expertise of numerous creative people, many of them local.</p><p>To achieve the ancient Italian look sought by the O'Neels, Rascoe said a stucco artist was planning to blast into the stone veneer on the exterior of the main house, to make it look as if it had been weathered by centuries of wind and rain.</p><p>He said an artist traveled to Pompeii to study original frescoes that were to be replicated for the house, including one from the famous House of Faun that was to adorn the main entryway floor. The estate's wine caves were to include 15 chandeliers.</p><p>Rascoe, who also designed O'Neel's home on Stonecastle Lane and his parents' home on Hall Road, said he was devastated when the work couldn't continue.</p><p>“When you have years and years of accumulated knowledge and you rarely have an opportunity to resource all that, and then suddenly you do, it's a remarkable inspiration for anyone. It's the equivalent of a reporter having the story of a lifetime,” he said.</p><p>Absentee landlord</p><p>O'Neel blamed cost overruns on the house to being an absentee landlord, which he said led him to approve things he shouldn't have.</p><p>As it is, the unfinished house can be seen from Mayacama Golf Club, a blight on what otherwise is a stunning development of mega estates.</p><p>“It's too bad, because it could have been the crown jewel of the neighborhood,” said a neighbor who asked not to be identified.</p><p>O'Neel no longer has offices for RWO Acquisitions, the company he founded in 2005, on the 45th floor of a Fifth Avenue building in New York, with views of Trump Tower and Central Park.</p><p>He had a number of projects in the works that he hoped would make RWO a “pre-eminent provider of superior living and leisure environments” on an international level, according to the company's Web site. But that vision has yet to pan out.</p><p>Asked for examples of projects he's built, O'Neel couldn't offer any. Instead, he presented himself as the person whose skill is in bringing various interests together to get a deal done. “For day-to-day operations, I'm not the guy. That is not my strong suit,” he said.</p><p>The most high-profile of his projects was an ambitious plan to transform about 3,900 acres of what used to be the Myrtle Beach Air Force Base into a residential community known as “Withers Preserve.” O'Neel owned about 900 acres.</p><p>Appeared with governor</p><p>He held press conferences with well-known people, including South Carolina Gov. Mark Sanford and the CEO of General Electric, to tout the project, which was going to combine luxury living with green building standards.</p><p>He also gave interviews to the local press aboard his Boeing jet, telling one reporter that he believed so much in the area that he wanted to buy whatever he could there, despite a softening real estate market.</p><p>“We're buying more when most people wouldn't in this environment,” he said. He also confessed his desire to own a pro football team.</p><p>But in March 2008, Manhattan-based XE Capital Management took over management of 600 acres of the property from O'Neel, who said he still maintains an equity interest. He said he also has about 257 acres that he hopes to develop in Myrtle Beach, as long as he's successful in buying out Lehman Brothers' stake in the property.</p><p>O'Neel blames his misfortunes on the investment firm's bankruptcy, which he said scuttled their agreement.</p><p>“That was a big blow to me,” he said. “You had absolutely zero cash flow and the credit markets were ravaged. A developer lives on credit, but there was absolutely nothing out there. After 90 days, I was back in the door with Lehman Brothers, but nobody had any idea what was going on. They basically fired everybody and rehired 20 guys.”</p><p>Another deal he was working on to build an exclusive resort in Utah is now the subject of a federal lawsuit filed by the landowner, who accuses O'Neel of taking $10.5million and spending it on his personal lifestyle, including the purchase of a private jet, according to court records.</p><p>O'Neel argues that he bought the jet prior to the deal and that he and his investors put $25million into the project.</p><p>With the backing of Fortress Investment Group, a large New York-based hedge fund, O'Neel purchased Jepson Winery in Mendocino County in 2005 with a plan to develop 1,000 acres into home estates. But after failing to get rezoning approval, Fortress moved to sell the property.</p><p>Rewarding, but risky</p><p>Tony Ford, one of the real estate agents listing the property, called O'Neel's “speculative” business style potentially rewarding, but also risky.</p><p>“You're taking a lot of other peoples' funds and planning for all this stuff to happen. But it can go south. There's no guarantee in it,” he said.</p><p>Ford said Fortress' refusal to budge on the asking price of $10.5million led to delays in selling the winery that cost him a commission, and that ultimately it sold for about $4.5million.</p><p>But Ford said this was a situation where people knew the risks.</p><p>“There's nothing illegal about it,” he said. “The investors all know the risks. These people loaned him millions of dollars.”</p><p>Records show that O'Neel has not contested many of the court actions against him, including lawsuits seeking payments on the cars. In a case filed against O'Neel in New York Supreme Court by an Israeli company, a motion for summary judgment in the amount of $2.25million is pending.</p><p>Rather than fight using legal means, O'Neel is hoping that he can convince people to give him more time to get his business going again, hence his meetings with Carinalli and with Nordby.</p><p>But his old friend Page said O'Neel has been telling him for two years that his recovery is just around the corner.</p><p>“When I talked to him, he would say that things were not working the way he wanted them to — that the market was down and he wasn't able to make this deal or that deal. But at the end of the conversation he'd say, ‘I've got something working and I'll be back in the game.'”</p><p>You can reach Staff Writer Derek J. Moore at 521-5336 or derek.moore@pressdemocrat.com.</p>