Developers practices draw questions, complaints
July 21, 2015
By KAREN VELIE
Editor’s note: This is the first in a series about developers Ryan Petetit and John Belsher, their development projects, their promises to investors of 20 to 50 percent rates of return, legal troubles, and reported failures to pay subcontractors.
The principals of a San Luis Obispo-based real estate investment and development company involved in more than a dozen proposed projects are under fire for not paying subcontractors, violating building codes and allegedly funneling investor monies into several companies they created without disclosing their ownership to investors.
In 2012, John Belsher, 61, and Ryan Petetit, 28, created PB Companies. Since then, their portfolio has grown to include more than a dozen projects that Belsher and Petetit value at more than $300 million, according to the Pacific Coast Business Times.
“The company was founded to create investment solutions and equity plays in the real estate and business world where the legal and financial expertise of the principals would generate a great climate of success for the company and its investors,” the PB Companies website says.
Petetit and Belsher did not return requests for comment. Rush Sheppel, a partner in several PB Companies’ projects, said that since PB Companies was created in 2012, they have never finished a project or construction of any residential or commercial building.
Petetit and Belsher are involved in several large commercial, mixed-use and residential projects including two subdivisions in Templeton, a mixed-use project at the corner of Marsh and Nipomo streets in San Luis Obispo and an assisted-living facility in Arroyo Grande.
Belsher and Petetit have secured money from banks, hard money lenders and private investors, according to county records. In some cases, investors have been promised rates of return between 20 to 50 percent, according to an email from Petetit to a potential investor.
“The San Luis rezone is going to run us about $400,000-$500,000 we will offer a 20%-50% rate of return or a percentage of the increased value,” Petetit said in a 2014 email. “For example current value is 2M the value of 200 apartments and 70 single family homes will be $15.6M. It will take two years to accomplish this then when we sale [sic] the project or decide to build it out, which we will most likely build it out we return the investment back to the investors plus their returns.”
Investors in a 26-home proposed development in Templeton were procured through San Luis Obispo based Mid-Coast Mortgage with a promise of 10 percent interest, according to the loan broker.
Wright Homes and Communities is building five homes in the Toad Creek subdivision. Wright Homes and Communities, Axis Engineering and PR Companies share the same address. Belsher and Petetit created Wright Homes in 2013 and Axis Engineering in 2012, California Secretary of State website shows.
Vince Crooks, president of Mid-Coast Mortgage, said his company does not write checks to PB Companies. Instead, his hard-money lending company pays the subcontractors working on the projects, he said.
“Every subcontractor has been paid,” Crooks said.
But, several subcontractors who worked on the Toad Creek development said they have not been fully paid though they have received some payment from Axis Engineering or PB Companies.
In the past few years, the partners have been in court over multiple financial controversies such as breach of contract and not paying fines for building violations.
In 2014, Michael Evert filed a breach of contract lawsuit after PB Companies did not pay him $3,859 for remodeling the PB Companies’ office at 3480 South Higuera Street. After the lawsuit was filed, PB Companies negotiated the payment down to $2,300 and the case was closed, court records show.
In addition to multiple civil actions, Petetit has been charged with five misdemeanors since co-founding PB Companies, two over money issues.
In 2014, Petetit was arrested for and charged with two misdemeanor counts for writing bad checks. The charges were dismissed after Petetit agreed to enter the San Luis Obispo County bad check program, according to court records.
Get links to the rest of the series, like CCN on Facebook.