The Gilmore and Dresden Erickson Family Trust
Erickson Family Assets Pledged to Investors Plummet From $38,000,000
On Sept. 1, 2004, Gilmore and Dresden Erickson created the Erickson Family Trust and then loaded it with assets worth millions. On Dec. 1, 2004, they signed an Assignment of Interest, deeding several LLC's into the trust, including Willow Equities, LLC.
Erickson Family, Grandpoint Community Builders, Inc. and Northpoint Development
The Erickson's business, Grandpoint Community Builders, Inc. also did business in the names of Northpoint Development and Next Group. One of their ventures was to build luxury condominium high-rises in downtown San Jose, California. Though the family trust had assets that could have been sold to finance the projects, they chose to look elsewhere for funding. They wanted to raise $7,000,000 and pledged the assets in the Erickson Family Trust to anyone who would loan them $100,000 or more for a one year term, the time they needed before obtaining full construction financing.
On June 30, 2007, Northpoint Development had Jay Leite, a CPA and their accountant, write a financial statement listing assets in the Erickson Family Trust to give to people who were interested in loaning them funds for the condominium projects. Two complexes were in the works, one on Delmas Avenue and one on Fifth Street.
CPA Jay Leite States the Assets in the Erickson Family Trust
Jay Leite compiled the statement without any supporting documents to indicate where the numbers had come from, and he included in his cover letter to prospective lenders a disclaimer that he had not audited the financials, though according to his resume on www.spoke.com, "in 2006 he joined the Northpoint Development team as its CFO, and was in charge of Accounting and Finance."
In addition to note receivables of $2,271,000, the total value of all the LLC's listed was $36,723,050. The combined amount was $38,994,050. The LLC assets listed were:
- Arbuckle RoseGarden LLC, 60% interest...................................... $ 3,150,000
- Bava Commercial Center LLC .............................................................3,600,000
- Country Club Landing LLC, 32.5% interest .......................................1,080,000
- Fairview Properties LLC, 32.5% interest ............................................5,718,050
- Lincoln Crossing LLC, 25% interest ...................................................2,432,000
- MKW LLC, 60% interest .........................................................................2,440,000
- Santa Fe LLC, 32.5% interest ..................................................................468,000
- Texas Bridle Trails LLC .........................................................................5,025,000
- Vue Vang Partners LLC .........................................................................1,760,000
- Wing Ranch LLC, 32.5% interest ......................................................11,050,000
Private Lenders Loan Millions to Northpoint Development in San Jose
Individuals, some using their retirement accounts, then loaned Northpoint $2,600,000 to build the Delmas Towers condominiums, and the Fifth Street Tower complex raised even more. The U.S. economy was souring in 2008 but Northpoint Development still sought lenders, assuring them their loans would be secured through the guarantee clause by the Family Trust. They held webinars to keep lenders abreast of the projects, stating that the economic downturn was challenging, and asked for more time to repay the loans. The last loan Northpoint secured was in May 2008.
Northpoint Development Defaults on Loans for Delmas Towers and Fifth Street Tower
Loans to the private parties started to become due in the spring of 2008, yet Northpoint still had not obtained construction funding or even permits from the City of San Jose to commence building the condominium high-rises. Alex Erickson, CEO of Northpoint, told lenders he had identified two assets in his family trust to sell to pay off lenders, but had realized they were not worth as much as previously.
Asset Value in the Erickson Family Trust Disappears
Early in 2009, Alex told a lender, Dexter Eng, that he was in Texas "doing refinancings." Then on April 8, 2009, Alex Erickson sent an e-mail to the lenders stating they were going to meet with Palladium Capital in Palo Alto, California, to restructure assets. A week later on April 14, Gil and Dresden Erickson filed bankruptcy and claimed that the value of all the assets in the Erickson Family Trust had dwindled to zero.
Hester Avenue Asset Within Willow Equities, LLC
On April 8, 2009 Alex Erickson told lenders that a property (1783 Hester Avenue, San Jose) in the Willow Equities, LLC asset had diminished to half its value, from one million to $500,000. County records show that the property was purchased by Gregory Erickson for $312,000 in 2000 with a private note of $187,000. The property was sold or transfered to Willow Equities, LLC in 2004 for $500,000. Then Willow Equities refinanced it with Tamalpais Bank April 10, 2008 for $650,000. The equity removed from the property on Hester Avenue was not used to pay any of the private loans on the two condominium complexes in San Jose.
Read more: Condominium Development Disaster, Questions for Northpoint
Sources:
www.spoke.com
Erickson Family Trust
Financials for Erickson Family Trust
Delmas Towers and Fifth Street Tower webinars
Santa Clara County Recorders Office
San Jose, California
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