Gibson McElhaney loaned her sister $26,000 on an Oakland hills house that Gibson Nobles purchased in December 2013 for $820,000. Gibson Nobles sold the house last month for $1.28 million.
According to interviews and records, Reese helped Gibson Nobles find the Oakland hills house, as well as line up financing through a private lending company to purchase the home. Gibson McElhaney characterized Reese’s subsequent $36,000 loan to her sister as “construction completion money” to finish renovations being done to the property, and said her own loan to her sister was to stabilize the property after it became apparent Gibson Nobles could not finance the mortgage. Gibson McElhaney insisted to us that the house was to be her sister’s home, not an investment property.
The original $820,000 loan from a non-bank lender, the renovations, and re-sale of the house within one year for a $460,000 markup, however, indicate the house was an investment property, not a personal home.
The deal raises new questions about potential conflicts of interest with respect to Richmond Neighborhood Housing Services’ dealings with Richard Reese.
But there’s more. California Department of Real Estate records show that the broker who Gibson Nobles, with Reese’s help, went through to obtain the initial $820,000 loan was disciplined last year for professional misconduct.
[jump] Mark Hanf and his company, Pacific Private Money, were audited by the California Bureau of Real Estate in 2012. State auditors found that Hanf’s company had illegally co-mingled funds from real estate deals and failed to provide required disclosure statements, among other violations. The bureau brought charges against Hanf last year.
The audit also revealed that Hanf did not disclose to the state Bureau of Real Estate self-dealing transactions in which he loaned approximately half a million dollars of client funds controlled by his company to a separate real estate investment company of which he was a managing member.
On August 7, 2014 the Bureau of Real Estate fined Hanf and his company $19,617, and also suspended his real estate broker license for 45 days.
As we reported this week, Hanf’s Pacific Private Money was also the financier of an Oakland house-flipping deal that was spearheaded by Reese and involved an investment from Gibson McElhaney’s nonprofit, Richmond Housing Services, and from Gibson Nobles.
The council president’s involvement with Hanf also represents yet another example of her doing business with people with past legal and ethical problems. As we noted previously, Reese had been sued for fraud and accused of preying on low-income homeowners, while another of the councilmember’s business associates, Kevin Hampton, was convicted of forgery in the 1990s in Nevada and sentenced to two years in prison, according to Nevada corrections records.
According to Gibson McElhaney it was her sister Gibson Nobles who introduced her to Reese as a potential business partner for her nonprofit. Gibson McElhaney, and the board of her nonprofit, later decided to strike up a joint venture with Reese to flip properties in Oakland to generate income for Richmond Neighborhood Housing Services.
In an interview last week, Hanf told me that Reese is a longtime business partner who he knows very well. “I’ve made a number of loans to Nakatoma,” said Hanf. “They’re a good client of ours. They’ve done a remarkable job of finding distressed properties throughout Oakland.”
“They’re not greedy,” said Hanf. “They’re not profiteers.”