Does Petetit lawsuit reveal fraudulent business practices?

March 21, 2016
John Belsher and Ryan Petetit

John Belsher and Ryan Petetit

By KAREN VELIE

A lawsuit filed earlier this year alleges PB Company principal Ryan Petetit fraudulently induced a Nipomo couple to lend him more than $240,000. The suit lists seven complaints including breach of contract, fraudulent inducement, and negligence.

But there are other issues raised by the lawsuit, allegations that Petetit commingled investor funds, diverted investment monies, utilized shell companies and treated assets for the San Luis Obispo development as his own.

Those allegations mirror claims made by former associates of a group of companies Petetit now owns with attorney John Belsher.

Belsher, 61, and Petetit, 28, are principals in dozens of development related companies including Axis Engineering, Wright Homes and Communities, and PB Companies, according to company documents. Belsher and Petetit are involved in more than a dozen proposed projects that — once completed, they say, — will be be worth more than $300 million.

Before Belsher and Petetit created PB Companies in 2012, Petetit was a principal in another development company, DVR Development.

In 2011, Petetit approached Bradley and Theresa Deick with an investment opportunity involving the purchase and development of a residential property at 1179 San Carlos Drive in San Luis Obispo. Petetit allegedly told the Deicks he would rehab the property within about six to nine months, at which time he would sell the home for a minimum of $700,000, according to the lawsuit.

Petetit first met the Deicks through their daughter Crystal Farnsworth, and her husband Robert Farnsworth, who are both listed as co-defendants of Petetit’s. For years, Crystal Farnsworth worked as a secretary at Belsher and Petetit’s PB Companies.

After agreeing to invest in the the San Carlos Drive project, the Deicks used their home and a rental property as collateral for the money loaned to Petetit and the Farnsworths, according to the lawsuit.

“In order to fund the transaction with defendants,” the complaint says, “Petetit drove with plaintiffs to various Coast Hills Federal Credit Union offices in the cities of Nipomo, Santa Maria and Orcutt in an effort to encourage and assist the plaintiffs in securing a home equity line of credit against plaintiffs primary residence….”

However, while failing to remodel the single family home, Petetit did manage to get three more loans on the property for an additional $200,000.

Additional investors confirmed Petetit had originally claimed he would remodel the home with plans to sell it in about six months.

However, Russ Sheppel, a partner in several PB Companies projects and an investor in the San Carlos Drive property, said that Petetit and Belsher told him their plans were to construct a home for Petetit to occupy. After a new home would be constructed on the lot, Petetit would secure a mortgage to pay back the investors, Sheppel said.

After five years of, 1170 San Carlos Drive remains undeveloped.

After five years, 1170 San Carlos Drive remains undeveloped.

Since 2011, the San Carlos Drive project has been mired in controversy. Petetit allegedly falsified a contractor license number, disabled water meters, and violated a variety of building codes.

In July 2012, the city suspended Petetit’s building permits.

Then, in Jan. 2014, Petetit demolished the home.

Several of the investors then filed three foreclosures on the property for a total of approximately $200,000, according to property records. Petetit then paid back those investors.

On Oct. 14, 2014, the city of San Luis Obispo filed a claim for injunctive relief because of Petetit’s repeated code violations and because the property had become a public nuisance, according to court documents.

On Nov. 18, 2014, the city entered into an agreement with Petetit in which the city agreed to lower his fines from $14,700 to $1,500, and Petetit agreed to diligently pursue construction of the residence, according to the contract. Since then, the property, currently a vacant lot, has remained essentially untouched.

On Dec. 15, 2014, the court ordered Petetits’ building permits null and void because of Petetit’s negligence and malfeasance.

Since PB Companies was founded in 2012, prosecutors have charged Petetit with five felonies related to a violent attack on a girlfriend, and five misdemeanors, including two charges of writing bad checks.

Following Petetit’s latest arrest, Belsher claimed Petetit was no longer involved in managing PB Companies, and that he had founded Central Coast Developers as a management company to oversee Petetit’s and his other holdings.

During the past few years, the pair has been under fire for allegedly not paying subcontractors, commingling funds, violating building codes and funneling investor monies into several companies they created, without disclosing their ownership to investors.

In one case, a contractor who asked to remain unnamed threatened to take Belsher to court if he did not begin to pay some of his debts. In February, Belsher agreed to pay several of his outstanding bills if the contractor would agree to a reduced amount.

Belsher than paid the contractor on a check from Axis Engineering, a company co-owned by Belsher and Petetit. Nevertheless, the approximately $10,000 check signed by Petetit bounced.

After the contractor filed a lawsuit in March, Belsher mailed him a cashier’s check to cover the amount of the bounced check. Belsher told CalCoastNews he did not want to discuss Petetit’s continuing involvement in their partnerships or the bounced check.

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Kaiser Bill

“Oy vey.” – Belsher.


Scarlet

Hey, Trib: Isn’t it about time for you to feature a puff piece on the wonderful things these bozos are up to?


blr

It appears some of the projects that PB Companies were developing have been rolled over into a new entity: http://www.jbdevco.com/


slojoey

Hmmm. no address on web site.


the situation

JB DEVCO, LLC. Stay tuned for next month’s changing of the name


ajdury

Off the CA Secretary of State website:


Entity Name: JB DEVCO, LLC

Entity Number: 201601110146

Date Filed: 01/04/2016

Status: ACTIVE

Jurisdiction: CALIFORNIA

Entity Address: 412 MARSH ST

Entity City, State, Zip: SAN LUIS OBISPO CA 93401

Agent for Service of Process: JOHN W BELSHER

Agent Address: 412 MARSH ST

Agent City, State, Zip: SAN LUIS OBISPO CA 93401


What’s old is new again.


Thomas A

Good timing. BP Companies is featured in the latest Fire Adam Hill video. Fire Adam Hill!


https://youtu.be/-KSXeRo6WMI


Thomas A

p.s. We love you Karen and CCN. Thank you.


mej

Karen Velie, Wow! This county owes you a huge debt of gratitude.


scoopone

I believe these two guys still have active projects ongoing in SLO at this time plus others in the planning department pipeline? Why aren’t “businessmen” like them permanently outlawed from doing anything with the city.


doglover

Time for bratty Ryan Petetit to turn over his assets and start again. He is a fast talker with no shame or integrity.


How many summers are we gonna go without Fosters Freeze because this partnership said they were gonna build something? Dumb ass!


Whomever invested with this punk deserves to lose their money. Sorry!


Skip Tracer

No offense doggie, little “bratty Ryan” is actually a violent felon who targets women. Not trying to demonize Petetit here, just calling it how I see it. The fact that Hill is doing undisclosed business with this guy speaks volumes not only about Hill but also their shady ass business.


doglover

Agreed.

Mr. Petetit has a problem: sounds like with women, alcohol and money

Big bundle of stress!


hijinks

Because our corrupt city loves developers and all their bs. Oh, and they hate residents, who just get in the way.


achillesheal

Imagine how the daughter feels after getting mom and dad involved with this situation.


mej

Hmmmm reminds me a little of Mary Gearhart. I thought we left that kind of behavior back in the 60s.


SLOBIRD

If she worked there for any length of time she knew what was happening to the business. This has been going on for years, under different names, partners, investors, projects, etc. Wonder what she was promised to do this and if it was worth it to her and her parents. Very sad!


the situation

Records also show that Sheppel lent Petetit $150,000 on the property back in 2013 and took a first lien position. Who in their right mind would lend that much money (or any money) and take a 1st on a property that was in foreclosure???? Petetit probably lied to Sheppel too and told him there were no default issues… I wonder who wrote the checks to pay off the lien holders last year when the property almost went to the auction blocks. A hundred bucks it was probably Sheppel.


Jorge Estrada

As far as I’m concerned, if these people are walking the streets then that’s SLO business.