Carinalli divulges list of creditors

<p>Clem Carinalli on Tuesday revealed the first outlines of the network of financial backers who helped him become Sonoma County’s largest individual landowner and now face losing millions of dollars as it collapses.</p><p>A U.S. Bankruptcy Court judge placed Carinalli and his wife, Ann Marie, into Chapter 11 bankruptcy on Tuesday, giving the couple protection from their creditors while they attempt to restructure $165 million in debt.</p><p>Carinalli filed a 25-page list of more than 600 people and institutions that are owed money. Although some names are duplicated, the document details a lengthy roster of banks, business executives, retirees, pension funds, government agencies and other creditors that have become entangled in the implosion of Carinalli’s real estate empire.</p><p>The 21 largest unsecured creditors alone are owed $46.1 million, according to a second document filed Tuesday at U.S. Bankruptcy Court in Santa Rosa. These lenders did not secure their loans to Carinalli with collateral, such as a deed giving them an ownership stake in a property.</p><p>Carinalli did not return a telephone call seeking comment Tuesday. Several of his lenders expressed support for the embattled real estate financier.</p><p>“I know it’s a terrible situation, and that’s a lot of money,” said Marilyn Diamond, 79, who loaned Carinalli $2.5 million, making the Santa Rosa woman the fourth-largest unsecured creditor on the list. “But I know if Clem can repay me he will. He’s not a Bernie Madoff.”</p><p>Other unsecured creditors reached Tuesday night echoed Diamond’s faith in Carinalli’s ability to recover from his current financial troubles, and many lamented that Carinalli was now in bankruptcy court.</p><p>“The only people that are going to win will be the attorneys,” said Jon Ledyard, 63, a Sebastopol resident who is owed $601,500.</p><p>Carinalli notified lenders in May that he could no longer make payments on some loans, blaming the real estate downturn. He spent the next four months meeting in private with lenders, attempting to negotiate a restructuring plan that would allow him to repay creditors when the real estate market improved in three to four years.</p><p>A small group of creditors, including former Santa Rosa Symphony conductor Corrick Brown, forced Carinalli into bankruptcy on Sept. 14 by filing involuntary bankruptcy under Chapter 7.</p><p>The group felt Carinalli was giving preferential treatment by continuing to make payments to some lenders while claiming he could not afford to pay others. They were also concerned that Carinalli had invested their money in a Lake County development project run by Jay Soderling, a convicted white collar felon.</p><p>On Tuesday, Carinalli requested to have the involuntary bankruptcy petition converted into a Chapter 11 bankruptcy. U.S. Bankruptcy Judge Alan Jaroslovsky approved the request within hours of it being filed in Santa Rosa court.</p><p>Under Chapter 7, Carinalli would have been required to liquidate his assets and repay creditors. Now under Chapter 11 he can work to renegotiate the terms of his loans and attempt to one day re-emerge from bankruptcy.</p><p>Diamond said she was relieved to hear Carinalli’s bankruptcy was converted from Chapter 7 to Chapter 11.</p><p>“I think it will still be OK,” said Diamond, a retiree living in Fountaingrove. “When the real estate market turns around, it will be OK.”</p><p>The list of creditors is a who’s who of Sonoma County business circles. It includes longtime business associates Dennis Hunter and James Ratto, who partnered with Carinalli to run the county’s garbage company, North Bay Corp.</p><p>Others named on the list include Jim Keegan, Jr. and Al Coppin, who own the county’s largest commercial real estate brokerage, and Donna Born, Santa Rosa’s first female mayor.</p><p>The largest unsecured creditor is Larry Bertolone, whose family is owed $5.2 million. Bertolone, a retired real estate agent and former president of the county’s Multiple Listing Service, has previously said he believes Carinalli will pay back creditors if at all possible. He did not return calls seeking comment Tuesday night.</p><p>Sonoma Bank, which Carinalli co-founded in 1985, is the second-largest unsecured creditor on the list. Carinalli owes $5 million to the Santa Rosa bank.</p><p>Another creditor on the list, retired attorney Robert Sinai, 93, said he trusted Carinalli because he was an honorable man and because he signed a personal guarantee. Robert and Rachel Sinai are owed $1 million.</p><p>“I had no discussions with him about what he did with the money or how he invested it,” Sinai said.</p><p>He said he made good returns on his investment with Carinalli for 10 or 12 years before the payments stopped.</p><p>While the debt is a significant one, it won’t leave the couple destitute. He said he has “other resources.”</p><p>The bankruptcy filing Tuesday marks the beginning of a long process that could take several years to resolve. The next step is for Carinalli to file a complete list of his properties and debts, including how much he owes the parties listed in Tuesday’s 25-page document.</p><p>The judge on Tuesday granted Carinalli an extension to submit that list. He and his wife now have until Oct. 29.</p>