Belsher, Petetit accused of bilking millions from investors

December 2, 2018

By KAREN VELIE

Multiple investors in projects by developers John Belsher and Ryan Petetit have filed lawsuits against the pair for allegedly bilking them out of money with promises of high interest on secured investments. [Cal Coast Times]

Several investors have accused Belsher of violating State Bar rules of professional conduct. While working as the lender’s attorney, Belsher allegedly advised his clients to invest in his and Petetit’s construction projects, many of which were never completed.

“Defendant Belsher intentionally and maliciously violated his fiduciary duties of loyalty and due care owed to his client, The Chase Trust, resulting in damage to The Chase Trust in an amount over $100,000,” according to a lawsuit filed by The Chase Trust. “Defendant Belsher’s conduct was despicable and malicious, entitling The Chase Trust to punitive damages.”

In another lawsuit, investor Russell Sheppel contends Belsher “systematically set out to exploit Sheppel’s financial wherewithal for the benefit of himself and defendant PB Companies,” a limited liability company created by Belsher and Petetit in 2012.

While serving as his attorney and aware of his medical issues, Belsher solicited Sheppel to invest more than $2.3 million in his projects, the lawsuit says.

According to the Sheppel lawsuit, Petetit claimed to be the owner of a home owned by Sheppel in Santa Barbara, and then rented the property out as a vacation rental.

“On or about Jan. 2016 and continuing until approximately Aug. of 2016, defendant Petetit held himself out as the owner of the property and listed the property as a short-term vacation rental on Vacation Rental By Owner,” the lawsuit says. “And wrongfully converted the proceeds from the rent of the property to defendant Petetit’s personal benefit.”

The Sheppel lawsuit also accuses Belsher and Petetit of failing to properly file liens on some of the properties and to pay Sheppel back when the properties sold, of financial elder abuse, breach of fiduciary duty, conversion, and fraudulent conveyance.

Timeline:

In 2012, Belsher and Petetit created PB Companies. Since then, their portfolio has grown to include more than a dozen projects that Belsher and Petetit valued at more than $300 million in 2015.

“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 said.

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.

Petetit and Belsher are involved in several large commercial, mixed-use and residential projects including a mixed-use project at the corner of Marsh and Nipomo streets in San Luis Obispo and an assisted-living facility in Arroyo Grande.

Since becoming partners, Belsher and Petetit have been under fire for reportedly not paying subcontractors, bouncing checks, commingling investor funds, diverting investment monies and utilizing shell companies.

Belsher and Petetit have found it easy to obtain building permits, as well as what appear to be special favors, from San Luis Obispo City staff and officials – despite falsifying contractor license numbers, disabling water meters and violating a variety of building codes.

In 2012, in the city of San Luis Obispo Petetit began applying for permits for an extensive remodel under a contractor’s license number belonging to HJ Construction. After city inspectors became aware of multiple code violations, they contacted HJ Construction President Dominic Judge, who said he had never worked on, or even bid to work on, the project. Even so, after paying a small fine Petetit was permitted to continue work on the project.

By 2014, multiple contractors and vendors said Belsher and Petetit were not paying them for their work, and were instead funneling monies to two companies the pair owned, Axis Engineering and Wright Homes and Communities. Belsher and Petetit created Axis Engineering in 2012 and Wright Homes in 2013, the California Secretary of State website shows.

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.

In 2014, San Luis Obispo County Supervisor Adam Hill served as a paid consultant for PB Companies whose project plans Hill openly promoted, according to government records retrieved by CalCoastNews.

Hill identified himself on a statement of information filed with the state as the “managing member” of San Luis Consulting, one of 33 limited liability corporations tied to PB Companies. Hill reported that he was paid $10,001 to $100,000 in 2014 for what he described as “writing, editing, and coaching.”

On a May 27, 2015 PB Companies spreadsheet titled “PB Corporations,” San Luis Consulting is listed as one of 33 LLCs tied to the development firm. On the spreadsheet, it says the operating agreements and bylaws for San Luis Consulting are pending with PB Companies’ Chief Operating Officer Simon Lowrie.

Hill later denied that he was working for PB Companies.

On July 13, 2015, Hill testified in favor of PB Companies’ Marsh Street project at a joint meeting of the SLO City Architectural Review Committee and the Cultural Heritage Committee.

In his speech, Hill repeated a presentation PB Companies staffers made to members of Save Our Downtown, a group with a mission to protect and promote the historical character, design, livability and economic success of San Luis Obispo’s downtown. In their presentations, both PB Companies staffers and Hill parroted claims the project’s approval would help satisfy a need for workforce housing for employees of technology companies.

By fall 2015, Belsher and Petetit had been in court over multiple financial controversies because of their failures to pay contractors and for not following building code regulations. In addition, Petetit had been charged with five felonies and six misdemeanors for issues including assault, writing bad checks and public intoxication.

On Nov. 22, 2015, Petetit assaulted his girlfriend at a home they shared in Arroyo Grande. Petetit pushed the victim knocking her to the ground, grabbed her by the throat and began choking her. He then dragged her to her feet and shoved her head through a bathroom window, shattering the glass.

In 2016, Jonathan Westbay and his sister Crystal Westbay filed a suit claiming Belsher and Petetit engaged in fraud and deception in order to lure them to invest in PB Companies and provide access to their property.

The suit alleges that Belsher and Petetit deceived the Westbays into investing money in a development project they never finished, failed to abide by an agreement to develop a property owned by the Westbays, and damaged Westbays’ property.

In 2016, Belsher and Petetit lost water rights which were key to their plans to build an assisted living and Alzheimer care facility in Templeton. Their failure to procure water rights could lead to hundreds of thousands of dollars in losses.

In 2018, Belsher and Petetit filed multiple bankruptcies associated with controversial projects in San Luis Obispo and Templeton which could lead to the projects failing.

Despite having real estate projects in bankruptcy, dozens of tax liens and multiple lawsuits from contractors and vendors for failures to pay their bills, developers Petetit and Belsher appear to be enjoying the high life.

In the past few years, social media posts show Belsher vacationing in France, Mexico and Hawaii, while Petetit rents private jets to transport him to exclusive sporting events.

Since June, seven lawsuits have been filed against Petetit and Belsher that include claims the pair has fraudulently diverted investor monies to themselves, rented out others’ properties and kept the rents for their personal use, and failed to pay back investors.

While CalCoastNews has reported financial issues with the developers, the Tribune has repeatedly countered with stories promoting the developers’ projects.