Receivership or Legal Robbery? The Unregulated Industry That May Be Illegal.

Mark Adams CRG

CALIFORNIA – Many locals in Mariposa County know about Jerry Cox and the wrongful prosecution launched by their well-known corrupt Mariposa County DA Thomas E. Cooke. Mr. Cooke decided to file multiple charges including rape and kidnapping against Jerry even though the original investigator had proved the accuser was lying during her initial statement to the CHP. Jerry had to post $500,000 bail and face his town with a dark cloud hanging over his good name.

Jerry Cox speaks with Merced Gateway News about the fabricated accusations against him.

Jerry had purchased over 400 plus acres of land in the pristine mountainous area of Mariposa County. His dreams of owning an agri-business were finally coming true and it wasn’t like it just happened either. Jerry attended Cal Poly and received his degree in Business. He went on to work with a variety of companies including Starbucks to develop unique and exciting marketing materials. After saving for a few years Jerry finally made his move from Southern California to Mariposa with big dreams for his and Mariposa’s future. Bison Creek Ranch was born.

But he soon ran into problems with the county. They wanted him to purchase various permits and weren’t happy with the new visitors to their quiet and sleepy town. Soon Jerry began receiving notices of code violations or various permits that were needed and Jerry, though a bit unhappy about being singled out, did what was necessary to ensure any possibility of a violation was taken care of including having his land rezoned after approval from the County’s Board of Supervisors.

All got a bit quiet for a moment as Jerry continued to bring city folks up to the mountains where they could experience a life they’ve only seen in the movies and read about in books. Where the night skies endless pinpricks of light breaking through the cover of dark are clearer than most have ever seen as a wild wolf howls off in the distance. Yes this was a real destination where the tired, the over stressed, the over burdened and the heartbroken could go to rejuvenate with nature before taking on the world below once again.

It’s been a few years since Jerry was able to prove his innocence, even though it was proven on the very day the allegations were made; he has been made to suffer more than a common criminal. Not only has his good name been marred and dragged publicly through the mud, but the county was able to legally steal his land. All 400 plus acres including all buildings and other properties were taken through a little known and relatively new scheme called “receivership.”

What Exactly Is A Receiver?

A Receiver can be almost anyone the court decides to employ in civil cases where a neutral party is needed to control and protect a person(s) or company’s interest. The only restrictions is a Receiver cannot be related to the Judge or either of the two parties in the case. A Receiver’s qualifications may vary from state to state, but in California there is no formal training or education needed.

Once a Receiver is appointed they take possession of all property including assets associated with that property. For example if you own an apartment complex that has been cited for multiple code violations and you’ve never fixed the violations, the city/county, where the complex is located, can sue you in State Court. The court appoints a Receiver generally agreed upon by you and the plaintiff. The Receiver is ordered by the court to take possession of the apartment complex and all monies collected. The Receiver basically acts under the court’s control and continuous supervision. (See Turner v kern county (1977) 72 Cal.App.3d 804, 813)

California Rule of Court 3.1179 directly state that, “The Receiver is an agent of the court, not of any party to the litigation, and as such (1) is neutral; (2) acts for the benefit of all who may have an interest in the receivership property; and (3) holds assets for the court, not the plaintiff not the defendant.”

The California Code of Civil Procedure § 564 et seq., goes on to affirm that “(a) A receiver may be appointed, in the manner provided in this chapter, by the court in which an action or proceeding is pending in any case in which the court is empowered by law to appoint a receiver.” Unlike an injunction a Receiver is meant to be a temporary remedy in a civil action that seeks some other relief by final judgement.

The Receiver is usually appointed because they can swiftly and efficiently bring the property up to code making it a viable asset to the local community. In order to achieve their objective the Receiver takes bids from contractors to repair all damage. The Receiver is not set by any budgetary constraints and places liens on the homes in order to borrow the money from banks to pay for the repairs. The Receiver also collects their own fees, legal fees (if any), and other administrative costs. They are not required to get the court’s approval on costs.

During the housing crisis in late 2008 – 2007, people lost jobs and money was tight. Many individuals couldn’t keep up with home repairs or make investments in business property maintenance and soon many properties were in disarray. The media reported on it often as lenders foreclosed at a rapid pace.

Mark Adams, CRG, and Health and Safety Receiverships

Mark Adams CRG

Mark Adams on his website states he, “pioneered the health and safety receivership remedy in California, becoming the first receiver ever appointed under the California Health and Safety Code. Over the past two decades, Mark remains the most experienced health and safety receiver working in the state. He has been appointed by 131 different judges (state and federal) to rehabilitate 224 properties in 34 counties and 103 different cities. Mark has mentored or trained most of the other health and safety receivers operating in California. Mark is a sought after speaker at state and national housing conferences. He submitted an amicus curiae brief in the California Supreme Court’s landmark ruling in support of the health and safety receivership remedy, City of Santa Monica v. Gonzalez 43 Cal. 4th 905 (2008).”

Mark goes on to claim that he is, “Considered to be the most experienced health and safety receiver working in California. Appointed by 130 different Superior Court judges and one United States District Court judge in 34 different counties as health and safety receiver on 224 different dilapidated properties,” and that Mark has, “Special expertise in dealing with recalcitrant property owners, whether they be passive investors, slumlords, convicted felons, drug addicts, hoarders, or the mentally ill.” Mark also claims, “CRG is dedicated to protecting and preserving assets assigned to its custody and control while maintaining an ever-present sensitivity to the human and social side of the work. CRG is able to achieve immediate and effective results by deploying a team built specially for problem properties. This team includes attorneys, contractors, accountants, receivership administration, cleanup crews, property managers, professional organizers, ground operations managers and financiers.”

And when I use the term “claims” I mean it all seems like a bunch of fluff from a guy who made himself into an expert in legally stealing homes and income properties for code violations by receivership appointments, refurbishing them at the owner’s expense, while making a nice chunk of money once the property is sold. Just a quick glance at CRG’s own website shows some suspicious reviews left by “Community Organizer” and by “Neighbor” among other un named reviewers.

And for me to say there have been no positive results from the new “Health and Safety” receiverships would not be fair, but there seems to be many more that are troubling to say the least. Moreover, Jerry isn’t the only property owner to come under receivership for circumstances that are alleged to be more about personal vendettas launched by politicians to attack home and business property owners. There are many Californians who are either homeless while waiting through the court processes to lose their homes or are in limbo as everything they ever owned is taken away legally.

Imagine your spouse dies and you’re depressed, you let your home’s maintenance get away from you and soon you get a knock on your door from a city code inspector. Fix the noted violations in 30 days or civil proceedings may begin. You don’t have the money or the will to do much of anything and soon you’re in court and ordered to leave your home as a Receiver is appointed. It doesn’t matter if that’s all you have and it doesn’t matter the hardship you may be enduring. Calls to a city code enforcement office to make a complaint of violations can be made anonymously.

Matthew R. Silver – Partner Attorney at Silver & Wright

And the financial gains for California Receivership Group and law firms like Silver & Wright are quite lucrative and worth defending at any cost, which came to light during a recently released batch of emails regarding correspondence between Silver & Wright and California Receivership Group’s representatives showing they are working together to foreclose on Jerry Cox’s land in Mariposa. Even though the Receiver (CRG) is supposed to be acting as a neutral party in the case and answers only to the judge.

Curtis Wright – Partner Attorney at Silver & Wright

The emails “show that Mark Adams, as a neutral agent of the Court, repeatedly strategized with Silver & Wright on everything,” wrote Marc E. Angelucci attorney for JDC Land Company, LLC in a filing to Mariposa County Judge Dana Walton. “They called each other repeatedly, asked each other’s advice, cheered each other on, asking not to forward one of their emails to Jerry’s attorney and not to respond to something because “it’ll flag” the issue, and exchanged insults about Jerry Cox and his counsel, calling Jerry Cox a “fool,” a “piece of work,” comparing him to a donkey, (stating) Jerry’s people are “shenanigans” and “cronies.” In one email, Mark Adams tells Silver & Wright, “I vote for just going after Angelucci.” Mark Adams also told Matthew Silver, “His game will end with a foreclosure sale.”

Attorney Marc Angelucci

See below the downloadable Statement from Mr Angelucci to a Federal Judge regarding the correspondence between the County Attorney Silver & Wright and CRG. It is important to note that not all emails were released by CRG when ordered by the Mariposa County Court Judge Dana Walton.

When the court deems a property is in violations of health and safety codes they are supposed to send the owner a letter to correct the problems. Only when the problems are being ignored does the court step in. But in Jerry’s case it didn’t work that way. He was arrested for crimes the authorities knew he didn’t commit and while he was in jail, they started the process of taking his land through receivership. So Why Is It Called Legal?

Legal Robbery?

Joshua A. del Castillo Partner Attorney at Allen Matkins

“Attorneys, lenders, and court-appointed receivers have often debated the limits of a receiver’s power to sell real property out of a receivership,” said Joshua A. del Castillo, law partner with Allen Matkins. “While receivers have for years cited to the same statutory authority and case law for the proposition that they are empowered to sell real property out of a receivership, one California Superior Court recently concluded that there are significant restraints on a receiver’s ability to conclude such a sale. In Wachovia Bank, NA v. Downtown Sunnyvale Residential, LLC, et al.,the Santa Clara Superior Court likened the receiver’s proposed sale to a de facto foreclosure, and refused to approve the sale, despite the fact a different judge in the same court had previously authorized the receiver to sell the property.

In the Downtown Sunnyvale case, the lender sought and obtained the appointment of a receiver in connection with a large but incomplete retail development project. The owners of the project effectively abandoned it in 2009, resulting in over $20 million in mechanics’ lien claims and unpaid property taxes. The receiver sought and obtained approval from the court to sell the property out of the receivership. In accordance with that order, the receiver sent out 500 solicitations, received thirty bids, identified the six best bids, and ultimately selected one bid as better than all others. The selected bidder made a $10 million nonrefundable deposit, and the receiver sought approval from the court to consummate the contemplated sale. Although the receiver complied with an existing court order from a prior judge regarding sale procedures, the borrower objected to the sale when it finally came for hearing and the court ultimately denied the receiver’s request for permission to sell the property.

At oral argument on the motion to approve sale, the lender emphasized the equitable role being performed by the receiver over a then-abandoned property that returned no rents or profits. The Downtown Sunnyvale court nonetheless characterized the receiver as merely a rents-and-profits receiver, as opposed to an equity receiver, and found it compelling that the receiver was appointed in a lawsuit for judicial foreclosure and specific performance of a rents provision. The court likened the sale of the property over the objections of the borrower to a foreclosure that lacked the statutory protections guaranteed under California law. The borrower complained that it should be able to buy the property.”

Mark Adams and his company CRG have been accused of over inflating costs to ensure property owners cannot afford to do anything but sell their property. And once its sold CRG, the contractors and lenders all get their cut and if there is anything left, it goes to the person whose property was taken from and sold.

Some courts have taken action against CRG and Mark Adams once they see that Mr. Adams is not all he claims to be. On June 26, 2015, Mark Adams was appointed by Judge George Hernandez to be the receiver for a 96 unit hotel named the Empyrean Towers. In November of that same year Mark Adams was replaced by Randy Sugarman, of Sugarman & Company, LLP., by Judge Roger L. Efremsky, as a Chapter 11 trustee for the property. Mark Adams and CRG were replaced after tenants complained to city officials that the majority of repairs needed at the residential hotel, had not been completed.

Phillip Richardson stands on what used to be his property. (Photo by Don Leach/Daily Pilot)

In another case in Costa Mesa, CA., a homeowner named Phillip Richardson, had property inside his house taken and sold as well as registered vehicles. Eventually, the judge, who visited Richardson’s property, disliked how items California Receivership wanted to fix kept popping up, so he had Adams discharged.

The statement made by CRG that they work with an, “ever-present sensitivity to the human and social side of the work,” is obviously and glaringly not true. So why are they and other companies like them allowed to continue? Why don’t these city governments work with the property owners and local charities, companies offering professional services and help as a tax incentive? Many questions remain as I continue to try and reach Mr. Adams to ask him these and other important questions directly and on the record.

In Part 2 we’ll take a look at the many voiceless victims of CRG and other Receivership groups who may be exploiting California property owners and we’ll talk with the very people affected by these actions. Their stories are beyond tragic and could have been handled to ensure there is an “ever-present sensitivity to the human and social side of the work.” But there were no such sensitivities. Was the human toll really worth the profit? We’ll ask those questions and more in Part 2.

If you or someone you know is faced with their property going into receivership, please read this case law which protects an owner from the receiver selling their property – California Superior Court Invalidates Receiver’s Sale of Real Property Holding That the Sale of Collateral Over the Objection of the Borrower is Tantamount to Foreclosure

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