Local attorney accused of fraud
August 27, 2009
By KAREN VELIE
Federal bankruptcy court attorneys filed a fraud complaint against attorney Robert “Grigger” Jones, as well as Chris Molina, Daniel Phillips, and the group’s Pejihota LLC for allegedly hiding assets of bankrupt North County developer Kelly Gearhart.
Gearhart linked up with Jones, Molina and Phillips to sign a contract with the Salinan Tribe of San Luis Obispo County to develop an Indian casino in either Monterey or San Luis Obispo County through the Pejihota LLC.
In 2007 and 2008, Gearhart transferred between $1 million and $1.5 million into the group’s LLC at a time he “was insolvent and was made with the intent to hinder, delay, or defraud creditors,” according to the accusations.
In an apparent attempt to keep their venture cloaked in secrecy, the group has transferred their LLC filing at least four times during the past two decades. CalCoastNews discovered the transfers during a multi-state search of LLC filings.
In 2003, Pejihota Consultants LLC, at that time managed by Molina, filed a complaint against the Salinan Tribe claiming fraud, breach of contract, and intentional misrepresentation for not following through on an agreement to become federally recognized for the purpose of developing an Indian gaming casino. It is unclear how it was resolved because of issues of confidentiality.
The Bureau of Indian Affairs does not provide federal recognition to tribes primarily for the purpose of developing a casino. Tribal members, critical of the current council, were kept in the dark by their elected officials.
“We wanted a cultural resource center and medical facility,” said a tribal member who asked to remain unnamed because of fears of retaliation. “Most of us do not want a casino. The council signed a confidentiality agreement with Pejihota; we did not know anything until your story came out.”
On Jan. 16, 2007, Gearhart filed a Pe-Ji-Ho-Ta LLC with the state of Nevada. Nine months later, Jones filed a Pe-Ji-Ho-Ta LLC in California. Jones subsequently added “of San Luis Obispo County” to the name and refiled in California on Sept. 19, 2008.
On Sept. 9, 2008, Gearhart resigned as a member of the LLC. Ten days later, the remaining three members conveyed the assets of the LLC to the new LLC in an attempt to defraud creditors of Gearhart and Pejihota, according to the accusations.
“The conduct of the defendants (Jones, Molina, and Phillips) amounts to an intentional fraud causing actual damages to the creditors of the Gearhart bankruptcy estate and justifying the award of punitive and attorney’s fees,” according to the allegations.
Estimated cost of the development, according to the partners’ data, is $409 million.
The LLC members expect to reap 40 percent of all gaming proceeds for a period of seven years with an option to extend for an additional seven years. For all other developments, the LLC is to receive 50 percent of proceeds for 25 years with a 25 year extension option, according to the business plan of the Salinan Tribe and Pe-Ji-Ho-Ta LLC.
Pejihota documents project earnings of approximately $600 million over the next 50 years, according to the group’s records.
According to the Pejihota Budget, Jones and Molina are slated to receive salaries of $150,000 per year for their respective duties. Molina is the tribal spokesperson responsible for attending all tribal and governmental meetings. Jones is the chief counsel and in charge of operations, transactions, and contracts.
It is unclear who is currently funding the group’s activities. Inside sources report The Rottman Group (backers of a proposed Wal-Mart in Atascadero) was consulting with Jones.
Following an article on CalCoastNews.com unveiling the groups’ secretive plans, Jones responded to The Rottman Group’s Vice President Keith Mathias with an e-mail that states he would cast a “positive light” on their plans through the “real media folks.”
“As I related to you, I am not a checker player, thus could not have a checkered past,” Jones says in the e-mail. “I will get back to you soon on your comments on the Omnibus Agreement. I will initially say they are well thought out and acceptable to us.”
According to Mathias, The Rottman Group turned down the investment opportunity after doing their “due diligence.”
Jones, Molina, and Phillips attended a tribal council meeting earlier this month. Molina informed attendees that the federal allegations would be dispersed of within 30 days, said a tribal member.
A pre-trail date for Molina, Jones, and Phillips is set for September 2 in Ohio
Molina, when contacted by phone, refused to discuss the issue. Jones did not return calls seeking comment.