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La Jolla couple file for bankruptcy

By Jonathan Partridge

The Gilroy Dispatch

A La Jolla couple who own the majority of a 6,400-acre property in Gilroy that they had planned to develop filed for Chapter 11 bankruptcy on Jan. 4, owing more than $71 million on the property at the time.

La Jolla resident Wayne Pierce, who along with his wife, Marci, owns 85 percent of Sargent Ranch LLC south of the Northern California town, filed reorganization papers in San Diego bankruptcy court.

“I’m surprised that it lasted this long before it went into bankruptcy,” Santa Clara County Supervisor Don Gage said on Jan. 6.

The bankruptcy filing is just the latest blow to the beleaguered project, which has faced massive debt, a forgery scam involving a Native American tribal leader and outcries from environmentalists over potential development.

Sargent Ranch attorney John Smaha said the company had tried to work with lender Danville-based First Blackhawk Financial through last week, but failed to reach a deal that prevented the property from going into foreclosure. Now, the company intends to file a plan of reorganization and a disclosure statement, likely within the next four months.

“We’re very hopeful that we’ll work out a plan that’s largely consensual,” Smaha said.

Papers filed with the bankruptcy court indicate that the ranch company includes $716.1 million in assets, including a $400 million sand extraction sales company and nearly $200 million in habitat mitigation credits.

Millions are owed to other unsecured claimants, including lawyers, an engineering firm and various consultants. The ranch company also owed $330,760 in back taxes to Santa Clara County and $53,034 in back taxes to Santa Cruz County at the time of the bankruptcy filing.

The Pierces used about $35 million from dozens of investors to develop a plan for Sargent Ranch through Santa Clara County, according to Dispatch archives.

When this plan failed, Wayne Pierce teamed up with the Amah Mutsun Indians and Rep. Mike Honda, D-San Jose, to help the tribe gain federal recognition and reclaim Sargent Ranch, where their ancestors fished, hunted and raised families. This arrangement could have potentially entitled the development to bypass county planning regulations.

However, forgery of tribal papers and federal scrutiny of Pierce’s past dealings appear to have killed the project. Neither Val Lopez nor Irenne Zwierlein, who both claimed to be leaders of the tribe, could be reached for comment.

Pierce’s former office line was disconnected on Jan. 6 and when reached on an apparent cell phone, he said “I’m losing bars” before the line went dead. He did not return subsequent phone calls.

Pierce was one of many developers linked to one of the most abusive land scams in recent California history, according to state and local authorities.

The FBI, the Internal Revenue Service, the U.S. Securities and Exchange Commission, and a host of state authorities have targeted David Fitzgerald — the man Pierce recruited to orchestrate a Contra Costa land development deal known as Roddy Ranch — for securities fraud. Authorities estimate that Fitzgerald’s schemes throughout the state have cost investors more than $250 million.

Then, in 2007, federal officials confirmed that Zwierlein — who inked the deal with Pierce to bring development to Sargent Ranch — forged and mailed documents to the government in what her rival called an attempt to cling to power. At the time, Honda had sponsored legislation that would have fast-tracked federal recognition of the Amah Mutsun tribe.

Gilroy Councilman Bob Dillon, who served as a spokesman for the Sargent Ranch project for about a four-month period in 2006 when he was not on the council, said the project had experienced challenges for a while.

The development proposal had included about 200 senior housing units as well as a Native American cultural center when he was involved in the project, he said. There also had been giant mortgages on the property, he said.

“It had been a shirt-tail operation for some time,” he said.

Plans to develop Sargent Ranch have long been unsuccessful. County zoning regulations, environmentalists and local politicians have thwarted plans for hotels, golf courses and housing developments for two decades.