August 4, 2013

Before Dixon, movie studio investment in Lathrop failed to deliver

LATHROP – Before Carissa Carpenter set her sights on Dixon as home for her latest movie-studio proposal, she had plans for the city of Lathrop south of Stockton – big plans.

LATHROP – Before Carissa Carpenter set her sights on Dixon as home for her latest movie-studio proposal, she had plans for the city of Lathrop south of Stockton – big plans.

Armed with a 57-page business plan labeled "confidential," Carpenter set out to raise money for what she billed as a $3.49 billion "city within a city" featuring more than 12,000 homes, the world's largest movie studio, an "up-scale California gaming club" and a water park and theme park.

She promised to build a cancer and heart treatment center on a parcel of land flanked by farm fields near Interstate 5 in the Central Valley. She told investors her River Islands development project would have three major hotels with 800 rooms, a Broadway-style performing arts center, an 18-hole golf course and a convention center large enough to host a Democratic or Republican national convention, according to the business plan, provided to The Sacramento Bee by an investor.

Interviews with 10 investors and former business associates, along with court documents and other records, indicate that Carpenter collected millions of dollars from investors across the country to bankroll her grandiose proposal between 2004 and 2010.

There was one problem: Carissa Carpenter never owned any part of River Islands and never had any role in its development, according to the president of the company currently building the project in the Sacramento-San Joaquin Delta.

Even so, Carpenter managed to attract investors by claiming she had sunk between $67 million and $123 million of her own money into the deal – an assertion that is not supported by the project's principals, nor by public documents that trace her troubled financial history.

"I am totally shocked," Allan Chapman, president and chief executive officer of the Cambay Group, said after The Bee provided him with a copy of a River Islands business plan Carpenter used in 2010 to solicit funds from investors.

"We own 100 percent of River Islands, and she's not a part of that.

"She's not an owner or investor and never has been. She doesn't have an option to purchase any of this land, and this is the first we've seen of this business plan."

Although Chapman says Carpenter met with him several times between 2003 and 2008 to discuss investing in his project, he said she never was able to come up with the funding.

"She was talking to various funding sources, none of which ever materialized," he said. "In the end, we told her to go away."

Carpenter and her Sacramento attorney, Robert W. Naylor, did not return calls and emails from The Bee for this story. They have not responded to repeated requests for comment since The Bee published an investigative report June 2 that found Carpenter has a 20-year history of unpaid debts, liens and court judgments.

She also has faced felony criminal charges in Sacramento and Los Angeles involving alleged embezzlement and fraud, though both cases eventually were dismissed.

Paul Beck, a Sherman Oaks attorney named in the business plan as corporate legal counsel for Carpenter's River Islands venture, and her lawyer on other efforts, declined to answer questions.

"I haven't been involved with Ms. Carpenter for some time," Beck said by phone.

Carpenter told The Bee in April that she had tried building in Lathrop in the mid-2000s but that water and zoning issues, as well as the real estate market collapse, doomed her effort.

"We were there for a couple of years," she said. "We tried."

Lathrop's community development director, Glenn Gebhardt, said city officials had no contact with Carpenter.

An ongoing Bee investigation into Carpenter's 16-year string of movie-studio proposals in Northern California and South Carolina – none of which has materialized – reveals the River Islands venture as her boldest.

The Bee found that Carpenter made at least two concerted efforts to raise investment funds on the land she did not own – the first between about 2004 and 2006, then again around 2010.

The first time around, she headed a company operating as International Properties Acquisition & Holding Corp. of Nevada. Later, she worked through an entity called Lathrop Green City Development LLC and identified herself as the company's CEO and founder.

"The return on our investment was going to be gigantic," said Eric Fry, a Utah man who described pumping $125,000 into the deal around 2006. "She was raising money and going crazy.

"I mean, she raised millions of dollars. We all handed it over."

Carpenter's pitch in Lathrop, population 19,209, is part of a familiar pattern for the 50-year-old self-described entertainment industry executive. In each project, dating back to 1997 in El Dorado Hills, Carpenter has swept into local communities, primarily in rural areas, with big plans, extravagant promises and prominent figures at her side.

She has raised enormous amounts of money from investors who say they were beguiled by the scope of her plans, the big-time Hollywood names she dropped and the promise of returns on their investments as high as 300 percent.

Her most recent effort is a $2.8 billion movie studio proposal for the town of Dixon, population 18,449, about 20 miles west of Sacramento. That deal now appears to be unraveling for lack of funding.

"I can promise you, this thing (in Dixon) will never go through," said Fry of Taylorsville, Utah, who filed for bankruptcy and said his marriage failed after his River Islands investment disappeared.

"It's not going to work, and it's a travesty what's happened."

A city in the fields

When Denim Vaughan met Carissa Carpenter in late 2003, he would say later in court, he thought he was dating a wealthy business executive from Granite Bay with a temporary cash-flow problem.

Vaughan, a stock trader, said he loaned Carpenter $12,500 in March 2004, money he had been saving to buy his daughter her first car for college.

Vaughan soon asked for his money back, and Carpenter responded by filing a restraining order against him in Placer County, claiming he threatened her over the loan. The restraining order was ultimately dissolved after Carpenter failed to show up in court.

But the court dispute offers a window into the real estate intrigue that was unfolding at River Islands, 58 miles south of Sacramento.

This was the period in which Carpenter made her first pitch to investors about her grand plans for Lathrop, saying her company was building a massive development with more than 5,000 homes and a movie studio.

"From the start she told me how she was building 5,000 homes on 11,000 acres in the town of Lathrop," Vaughan wrote in court documents filed in Placer Superior Court.

Vaughan said he met Carpenter on an Internet dating site and first went out with her on New Year's Eve 2003. In the few months they dated, he said in court papers, she tried to buy a $90,000 boat at Cal Expo. He told The Bee she also talked about knowing the "king of Iran."

But Lathrop was the focus of her attention.

Vaughn said in court documents that Carpenter told him she had a 51 percent interest in River Islands. She once asked him to drive her to the site, where she had him wait in the car while she disappeared into the trailer, he stated.

"As we dated, she continued to talk about her 'vast holdings' in the stock market, $3 million art collection and commercial properties that she owned around the world," Vaughan wrote.

Carpenter told Vaughan "that she had over $13.5 million invested in the project" and would arrange for him to have a job in the new city she was building, the court papers state.

"She often joked with me, stating that I could be anything I wanted from the Fire Chief to a maintenance person because she owned the development," he wrote in court papers.

In fact, the River Islands project had been years in the making by Cambay Group Inc., which owns the 5,000-acre tract. The Walnut Creek-based company describes itself as "the real estate development arm of British Isle-based Somerston Holdings Limited."

Over the years, developers have envisioned theme parks and golf courses for the site, but Cambay Group eventually declared its intent to create a master-planned community with 11,000 homes, a charter school, town center and business park.

Legal challenges and the 2008 real estate collapse stalled the company's progress and, so far, no homes have been built on the site west of I-5 in San Joaquin County.

The company has said it expects to begin building homes later this year.

The project's manager is Susan Dell'Osso of Lathrop, part of the Dell'Osso Family Farm dynasty that sponsors an annual Halloween event and corn maze that draw tens of thousands to the region.

Like Chapman, the Cambay Group CEO, Dell'Osso said Carpenter has no connection to River Islands and that her activities prompted them to consult an attorney.

"She has zero ownership in River Islands, never has had any financial interest in it," Dell'Osso said in a voice mail message to The Bee.

The allure of rich returns

But in Utah, Carpenter's vision for River Islands was drawing keen interest.

By 2006, she had connected with a group of investors in Utah who were friends and professionals, with money to invest in the vibrant economy.

Fry was a member of that group, and recounts traveling to Lathrop in 2006 to see what was happening with the $125,000 he says he invested.

"It seemed like it was just a big pumpkin patch," he said.

Utah dentist Ryan Willden was also part of the group, and said he is owed nearly $500,000 after suing Carpenter and being awarded default judgments. He said she had promised returns of $3 for each $1 invested.

The pitch, according to investors, included the notion that River Islands would have its own utility district providing electricity and water, as well as additional profits.

"We were all going to be paid every time a toilet flushed or a light turned on," Fry told The Bee, adding he came up with his $125,000 investment by taking out a second mortgage on his home. "We were going to get a percentage from the utility district."

After they turned over their money, the investors said, Carpenter made a series of promises that additional funding was coming in shortly.

"She continued to say that, oh, she's working on it," Willden said. "There was one excuse after another."

Fry said he and other investors, including Utah businessman Steve Stonebraker and Texas businessman Russ Behl, continued to hope the project would go forward and that they would get their money back.

"I remember just trying to rally with Steve and Russ," he said. "We'd have phone calls two or three times a week trying to figure out, does this thing have any validity?"

Behl, a Colleyville, Texas, businessman who says he invested "a lot" in Carpenter's Lathrop proposal, recalled one disturbing meeting he attended with her, Cambay Group CEO Chapman, a Colorado investor and others. Chapman's dismissive attitude toward Carpenter was not what the group had anticipated.

"He started the meeting by saying, 'You have nothing to do with this, you haven't invested any money, you're not a partner in this, you're not anything,' " Behl recalled.

Behl said he had believed – like many of Carpenter's investors – that she had sunk millions of her own money into the project.

"Everyone believed there was at least an option (to buy the land), paid for with lots of money," he said.

Even so, Carpenter smoothed things over by writing Chapman off as a temperamental "blueblood," Behl said, and he and other investors moved forward on the project.

Behl said a key inducement for him as he performed his due diligence was the apparent involvement of William Blair & Co. of Chicago, a global investment banking and asset management firm. The company, which Behl knew to be reputable, was described as an "exclusive agent" for a $750 million loan to Carpenter's company for the River Islands project, according to a document provided to The Bee by another investor.

The "confidential" 14-page document, purportedly from William Blair & Co. and dated May 2006, described the massive "land acquisition loan" that would be Carpenter's biggest funding source.

But Behl said the money never materialized.

A spokesman for William Blair in Chicago did not respond to requests for comment.

Behl and other investors who encountered Carpenter during this period said she certainly acted the part of a wealthy woman, traveling abroad, purchasing luxury vehicles and embarking on lavish spending sprees. In court files and in interviews, associates of Carpenter describe how she boasted about her Hollywood connections, her stock portfolio and her vast land holdings.

In 2004, she attempted to buy an $18.5 million Beverly Hills mansion, saying she had "an irrevocable and absolute loan commitment" of $328 million she was going to use to purchase the River Islands project and the 23,000-square-foot hilltop palace, according to a lawsuit filed by the homeowner after Carpenter's down payment check bounced.

In an online dating profile in this same period, she described herself as a "woman of the world" with expertise in international finance who traveled to Luxembourg at least four times a year – but Venice was her favorite destination.

Willden, the Utah dentist, sued Carpenter in April 2009 trying to get his investment and loan returned. He ended up paying $15,000 to a private detective to try to locate Carpenter, who uses a rented post office box in Malibu as her personal and business address.

Carpenter's attorneys responded in court documents in June 2009, blaming Willden for "aggressive tactics to collect the amounts he believed he was owed."

"Carpenter has a heart condition," the court documents state. "As a result, she has suffered two heart attacks.

"In between her heart attacks, Carpenter's blood pressure was dangerously high, and her doctors put her on bed rest and instructed her to strictly avoid all stress."

Willden eventually won a $448,000 default judgment against Carpenter after she stopped making court appearances.

He said he has yet to see any of his money.

'Robin Hood castles'

Despite the flurry of court activity in 2009, Carpenter had not given up on Lathrop. By 2010 she was back with a new business plan, pitching an even larger project to investors.

"It sounded like it was a real deal," said Mark Parker, an East Coast businessman who says he met her through a friend. "She had this letter of credit from some European investor for I don't know how many hundreds of millions.

"It looked like it was a real letter and everything."

Like the investors in the earlier proposal, Parker and others were promised a 3-to-1 payoff.

"I gave her a check for 25 grand, she gave me a promissory note for 75 grand, and it was going to be payable like in five months," Parker said.

The Bee obtained a copy of the Jan. 29, 2010, promissory note signed by Carpenter stating that Parker was owed $75,000, payable by May 1, 2010. He said he never has been paid.

In the business plan she was presenting to investors in 2010, Carpenter claimed she "had invested her net worth of over $123 million" in the project.

The plan spelled out her vision for River Islands and the major movie studio she wanted to build, one that would feature 22 sound stages, a post office, fire station and other features.

"A back lot consisting of a western street, residential street, New York streets and jungle will be built accordingly to the need of productions," the business plan stated. "Mexican village, Robin Hood castles and the like will be built when needed."

Carpenter also described her own Hollywood expertise for potential investors, stating that she "started her career as an international child model at the age of 2 with the William Morris Agency, one of the world's top talent agencies."

She stated she was "one of the top three grossing child actresses until the age of 18, when she became the youngest agent at William Morris."

A William Morris representative told The Bee it has no record of Carpenter at the agency.

The 2010 business plan listed a lofty group of principals connected to the project, including Howard Kazanjian, a producer on blockbusters that included "Indiana Jones" and "Star Wars: Return of the Jedi."

Kazanjian "will oversee the construction, day-to-day operations and long-term success of the River Islands studios," the plan declared.

Kazanjian, who has been named as a principal in Carpenter projects dating back to 1997 – and in the Dixon proposal – told The Bee in a series of emails that he no longer has anything to do with Carpenter. He said he advised Carpenter on the proposed studio layout in Lathrop but had no role in raising investment money and never visited the site.

Kazanjian said he always believed there was a single financier committed to fully funding the Lathrop project.

Other prominent names Carpenter touted as being involved in her River Islands project included Rudolph and Sletten Inc., a Redwood City-based construction company that built the Monterey Bay Aquarium and Crocker Art Museum expansion; the Gensler Group, a Los Angeles architectural firm; and APCO Worldwide Inc., a public relations and communications firm.

Dan Dolinar, Rudolph and Sletten's chief operating officer, told The Bee in June that a nondisclosure agreement prevents him from discussing his dealings with Carpenter. Gensler principal Marty Borko said in an email that "after careful in house review we are unable to comment about this."

Jerry Azevedo, senior director of APCO's Sacramento office, said the firm submitted a proposal in 2009 for communications work on Carpenter's project but that nothing came of it.

"We didn't work for Carpenter at any point," Azevedo said.

Waiting for a call

It is not clear when Carpenter abandoned her efforts in Lathrop. But she did not give up her quest for a movie studio in Northern California – or her attempts to raise funds from private investors.

By the fall of 2010, she had moved on to Vallejo, where she began pitching a studio for Mare Island. That project – along with a 2011 proposal in Patterson – also sputtered and failed.

In June 2012, she began courting Dixon officials, who eagerly embraced her movie studio vision.

More than a year after Carpenter first approached Dixon, no land has been acquired and no earth has been turned.

Carpenter told The Bee in April she had nearly $100 million set aside from investors, and her attorney, Naylor, said the International Brotherhood of Electrical Workers Local 180 was poised to make a "major investment" of its pension fund.

By then, she had promised landowners $50,000 an acre, for land that city officials valued at only $18,000 to $20,000 an acre.

Carpenter told Dixon media in early June she was still planning to move forward and would pay $100,000 an acre in coming days.

Gary Archer, a Dixon broker for several landowners whose property Carpenter tried to purchase for the studio, said he last heard from her in early to mid-June "just to reassure me that everything was rolling along."

Since then, he said, he has heard nothing.

Call The Bee's Sam Stanton, (916) 321-1091. Follow him on Twitter @stantonsam.

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