The children of bankrupt developer Clem Carinalli have agreed to relinquish claims to millions of dollars in order to settle a lawsuit filed by their father's creditors.
The four adult children will forgo collecting between $3.4 million and $7.3 million potentially owed to them under their father's bankruptcy plan approved in November, and they agreed to transfer $1.39 million into his bankrupt estate to be split among his other creditors, according to the settlement filed in U.S. Bankruptcy Court on Tuesday.
Carinalli filed Sonoma County's largest-ever personal bankruptcy case in 2009, and since December a trustee has been working on behalf of his creditors to liquidate his more than 200 properties in order to partially repay his $194 million in debts.
The settlement brings an end to one of the inquiries launched by creditors to identify Carinalli's remaining assets and recoup as much as possible from the man who once was Sonoma County's largest individual land owner.
Carinalli claimed to have $466 million in assets in 2008, but by the time of his bankruptcy filing less than two years later he claimed his assets had dropped to $196 million, according to court records.
Last July, creditors alleged Carinalli's sons Kevin and Keith Carinalli and daughters Kelly Suacci and Kerri Olhiser received millions of dollars in assets from fraudulent and improper real estate deals with their father in 2007 and 2008.
Carinalli and his children denied the allegations at the time, and continue to deny any wrongdoing, according to court documents filed as part of the settlement on Tuesday.
But for the first time, court documents have detailed just how entwined Carinalli's financial dealings had become with his children's and suggested that he might have been insolvent as far back as 2007.
Efforts to reach Carinalli and his children late Tuesday were unsuccessful.
Between 2007 and 2008, Carinalli transferred about 30 homes to his children and received about 30 percent less than the purchase price — meaning his children might still have owed him as much as $7 million when he filed bankruptcy in 2009, according to the court documents filed by Andrea Wirum, the trustee of Carinalli's bankrupt estate.