Con man misleads Hertel-Fowler bankruptcy trustee
June 12, 2009
By KAREN VELIE
Bankruptcy court trustees are investigating claims that businessman Rob Rossi and the City of Atascadero are concealing assets of developer R.W. Hertel and Sons in an attempt to help the bankrupt home builder avoid paying creditors and taxes.
Trustees began their investigations despite information that the man making the allegations is known to have duped Ross Perot, ABC’s Peter Jennings, and the FBI.
Scott Barnes is infamous for convincing Perot to drop his bid for the presidency due to information Barnes was accused of constructing. Barnes has a resume that includes serving time for fabricating evidence, illegal wire tapping, giving false testimony, and sending government investigators on wild goose chases, according to a Times article.
Nevertheless, Barnes appears to have a real claim against R.W. Hertel and Sons regarding faulty home construction. Along with two other creditors, Barnes forced the financially troubled contractors into involuntary bankruptcy on January 29 in an attempt to recoup a $42,000 debt.
A virtual pittance as Hertel asserted under oath that he personally guaranteed $145 million of R.W. Hertel and Sons’ debt.
Following R.W Hertel and Sons principles’ Ronald Hertel and Robert Fowler’s failure to appear at meetings of the bankruptcy court scheduled for April 6 and 22, bankruptcy trustee Sandra McBeth filed an emergency and ex-parte motion asking U.S. Bankruptcy Judge Robin Riblet to order the developers to appear at the next scheduled meeting.
“Due to the many allegations of impropriety and the inability to obtain information, the appearance of the principles Fowler and Hertel, are absolutely necessary and time is of the essence,” McBeth says in her motion. “Mr. Barnes has provided me with some information about the disposal of assets by the two individuals.”
As a result, in an uncommon action, Judge Riblet signed an order compelling Hertel and Fowler to appear in bankruptcy court or face possible arrest.
Hertel showed. Fowler did not. The court is allowing Fowler to make an appearance at the next scheduled meeting on July 29, before taking action against the elusive developer.
Hertel testified that he couldn’t remember, among other things, how many properties and jets he owned. Questions regarding his business dealings with Rossi and the city of Atascadero were frequently asked by trustee McBeth and an attorney for the creditors at the bankruptcy court meeting that lasted untill after 8 p.m.
Over the past 10 years, Rossi has entered into a number of development partnerships with Hertel and Fowler. Their last business dealing was in May 2008 when Rossi purchased “The Old Moose Lodge” property in downtown Santa Margarita from Hertel, according to San Luis Obispo county clerk of court records.
Barnes claims that Rossi and Hertel continue to have business dealings through “the many shell companies they operate.” He told a CalCoastNews reporter that numerous federal agencies were investigating Rossi including federal courts, the Internal Revenue Service (IRS), and the Department of Alcoholic Beverage Control (ABC).
However, Barnes failed to mention these investigations were prompted by referrals and protests he filed with the agencies. In addition, Barnes is the suspected author of dozens if not hundreds of blog posts that attempt to tie Rossi to fraudulent dealings.
“These claims are ridiculous and unfounded,” Rossi said. “They are beyond rational comprehension.”
Last month, Barnes lodged a formal protest with the ABC against Rossi’s liquor license transfer application. Barnes says he was interviewed by U.S. federal criminal agents regarding R.W Hertel and Sons in his statement seeking to compel the agency to stop the license transfer.
In addition, Barnes filed an informational referral with the IRS in which he claims Rossi is involved in political corruption, has made false deductions, and is a dangerous individual.
“Rossi has engaged in an operation to conceal assets of some of his associates and business partners including R.W. Hertel and Sons Inc. and Fowler in a variety of real estate scams and cons,” the referral says. “They are now in the process of having the ABC license changed from Hertel to Rossi to avoid taxes and creditors.”
In March 2007, Rossi purchased Hertel’s 50 percent interest in the Avila Village Inn. Though he transferred the property, Rossi said he forgot to change the name on the liquor license.
The class 70 license “authorizes the sale or furnishing of beer, wine and distilled spirits for consumption on the premises to the establishment’s overnight transient occupancy guests or their invitees. This license is normally issued to ‘suite-type’ hotels and motels, which exercise the license privileges for guests’ complimentary happy hour,” according to the ABC’s website.
Following the return of Rossi’s first transfer application due to a column containing a zero, Rossi’s executive assistant sent the request back with $1,165,994 as the total consideration, Hertel’s net for the inn, according to the notice of intended transfer.
The usual cost of a class 70 license is approximately $6,000.
Barnes also claims that Hertel is attempting to avoid taxes and creditors by transferring valuable property to the city of Atascadero. In January, a 54.4 acre open space offer of a partial dedication Hertel had agreed upon was transferred to the city. It was part of a 120 acre development the city council had approved.
The gift was considered mitigation for a residential development that has since been completed; Hertel had agreed to donate the land in question to the city for use as a park.
A tenacious investigator, Barnes is often described as a man unusually skilled at both uncovering true frauds and manufacturing others. He asserts that Hertel and Fowler have stashed $11 million in off shore bank accounts.
Court documents regarding Hertel and Fowler’s defaults on loans for jets and a yacht registered in the Cayman Islands, claim the pair is of “diverse citizenship.” U.S. Marshals seized the yacht because of concerns the pair would steer the ship from U.S. waters.
Hertel said under oath that he has owed the IRS $1.25 million since the 90’s. He hasn’t filed an income tax return in four years and claims he does not know how much he made last year.
“I don’t think so,” Hertel replied when asked if he had bank accounts outside of the United States.