Creditors lay claim on estate of Sonoma Valley Bank borrower, Bijan Madjlessi

Creditors are lining up to file claims on the estate of disgraced Marin County developer Bijan Madjlessi after his sudden death last year left a pile of unresolved debts.

Madjlessi, the central figure in a federal bank fraud case that stemmed from the collapse of Sonoma Valley Bank, left at least $22 million in unpaid civil claims and judgments following his death in a May 4 car crash, according to court records.

It is unclear what, if any, assets are available to satisfy creditors. Numerous liens have been placed against the gated, 7,000-square-foot home Madjlessi shared with his wife in the hills outside Mill Valley, according to property records.

A Marin County judge now will decide how to divvy up Madjlessi’s estate. A potential creditor forced the issue by petitioning the court in December to begin probate proceedings, according to Marin County court records. Madjlessi’s widow, Biganeh, then filed her own petition last month, restarting the process to alert potential creditors, heirs and others that the case has been opened.

Her son-in-law has since been appointed to administer the estate on behalf of the family - Biganeh Madjlessi, her adult son, Michael Madjlessi, and daughter, Elizabeth Madjlessi Kendall of Santa Monica, court records say.

The court’s Feb. 2 approval of Alexander Kendall as administrator and personal representative for the estate triggers a four-month window during which those owed money can file a claim with the court. An inventory and appraisal of the estate is due June 2.

Neither Kendall nor the Southern California attorney representing him and his mother-in-law returned numerous phone calls last week. Biganeh Madjlessi was not available for comment.

The probate proceedings are likely to provide a window into some of the financial ruin Madjlessi left in his wake after years of disputed business practices, loan defaults, property foreclosures, unpaid tax bills and a host of lawsuits claiming he failed to pay for materials and contractor services related to various projects.

Madjlessi, 58, was at the center of a federal fraud and conspiracy case linked to the collapse of Sonoma Valley Bank, which was seized in 2010 by federal regulators who subsequently questioned the bank’s lending practices.

Madjlessi and his business partners defaulted on at least $34 million in Sonoma Valley Bank loans, accounting for about 14 percent of the total money deposited at the small community bank, according to a record review in 2011.

The complex criminal case revolves around $9.4 million in loans Madjlessi and his associates took out in 2009 for the Park Lane Villas mixed-use development in west Santa Rosa. Prosecutors allege Madjlessi and his co-defendants concealed the true identity of the borrowers, allowing a company controlled by Madjlessi to reacquire Park Lane Villas. Madjlessi was prohibited from bidding on the project, which he built in 2006 and lost in 2008 after defaulting on a loan from another bank that funded construction.

A federal grand jury indicted Madjlessi, his attorney, David Lonich, and two former bank executives, Sean Cutting and Brian Melland, last March on 29 felony counts of conspiracy, bank fraud, wire fraud, money laundering, making false statements and bank entries, and attempted obstruction of justice. The three surviving defendants still face prosecution.

The fraud charges had been public less than four weeks when Madjlessi drove to the beach by himself one May morning and failed to return, law enforcement authorities said. His body was found two days later in the wreckage of his Mercedes sedan, which had careened over the side of Shoreline Highway and plummeted more than 300 feet into a ravine about 2 miles from Muir Beach.

At the time he went missing, authorities described Madjlessi as a potential suicide risk. But in the absence of any evidence, his death was ruled accidental, the Marin County coroner said.

In addition to the pending bank case, Madjlessi faced criminal trial in Marin County last fall in a state insurance fraud case alleging he illegally filed duplicate insurance claims for coverage of fire damage from a July 2008 blaze at a Reno condominium-conversion project for which he recovered $3.4 million.

He also was the target of a pending civil case through which one of the project insurers, The American Insurance Co., owned by Fireman’s Fund Insurance Co., sought to recover $2 million it paid out for the fire at the Sundowner Casino conversion project, known as the Belvedere Towers, court records say.

American Insurance, which already had filed a claim against the estate, initiated probate proceedings Dec. 8 in Marin County Superior Court after seven months had elapsed and the family had not yet opened a case, according to court records.

Several other would-be creditors also had been checking periodically for a probate case, including Lawyers Title Insurance Corp., which was the first to file a formal probate claim, seeking to collect a $750,000 civil judgment against Madjlessi awarded in Sonoma County Superior Court in March 2012 related to the Park Lane Villas project.

Ticor Title Insurance Company also has filed a claim for payment on a $5.5 million civil judgment it was awarded in 2012 in Marin County related to the Belvedere Towers project, a company lawyer, Oakland attorney, Mark Epstein, said.

Claims also are expected from Westamerica Bank, which purchased the assets of Sonoma Valley Bank after its collapse and later won judgments totaling $14 million against Madjlessi in Sonoma County Superior Court in May 2012 and on April 10, 2014 - one day after Madjlessi’s arrest on the federal charges.

Attorneys for Westamerica declined to comment.

You can reach Staff Writer Mary Callahan at 521-5249 or mary.callahan@pressdemocrat.com. On Twitter @MaryCallahanB.