Where’s the Val Verde Money?
Pride of Montecito Now Hidden Behind Locked Gate
Thursday, August 12, 2010
SHE WANTS AN INVESTIGATION: A niece of the late owner of Montecito’s Val Verde estate is calling for an investigation into what happened to $20 million in charitable trust funds and loan proceeds.
Although Nancy Oliva, a PhD and RN at UC San Francisco’s Institute for Health and Aging, isn’t accusing former Val Verde Foundation Executive Director Gail Jansen and her husband, Lee, of criminal wrongdoing, she issued a statement to The Independent claiming that they squandered funds and spent money “in questionable ways.”
The Jansens and other former boardmembers must account for $7 million in Austin Val Verde Charitable Trust funds and $13 million in loan proceeds, she said, on behalf of herself and other Austin family members. The Jansens could not be reached for comment and their attorney did not reply to a message.
Last year, when the foundation found itself $1.4 million in arrears on its 2006 $13-million loan, it declared bankruptcy. Oliva and others ask why, if the foundation established by Dr. Warren Austin and his Chicago billionaire wife, Bunny, left a $7-million fund to preserve the historic estate, it was necessary to float a loan using the estate as collateral, against the late Austin’s express wishes?
A decade ago, the County Board of Supervisors denied a plan to open the estate to tours, thereby depriving the foundation of an income stream. A dubious raffle scheme cost $616,394 to run but brought in only $160,950, according to foundation documents.
Administrative expenses appear to be extremely high. “We feel that a prompt and thorough investigation” by the Santa Barbara County District Attorney’s Office and the California Attorney General’s Office is called for, Oliva said.
However, an investigation is already underway by bankruptcy trustees to find out why a nonprofit with major assets plunged into bankruptcy last year. A report, expected to reveal much about who did what when, is due later this year.
Outrage over the fate of Austin’s estate has simmered in Montecito for years. And family squabbling over the property began soon after Austin’s death. Dorothy Austin, his daughter, sued in Superior Court in 2000, Oliva said, resulting in a massive file. The 2002 settlement called for appointment of Austin family members to the foundation board, who could have functioned as watchdogs, but that was never done, Oliva said. What was implemented, she said, was payment of several thousands of dollars a month to the Jansens as consultants.
“Val Verde appears to be a train wreck totally out of the public’s eye,” one resident wrote last year to Santa Barbaran Gary Breitweiser, who had appraised the estate’s decorative arts — furniture, silver, and the like — after Warren Austin died in 1999.
Breitweiser, indignant over what he considers mismanagement of the foundation, wrote to the Santa Barbara County Grand Jury in January calling for a “thorough investigation of the financial manipulations of the Austin Val Verde Foundation.” He said he got no response. A senior deputy DA told me that he doubts that the office has sufficient staff for such a probe.
It’s not clear who else was on the board during this time, but three prominent Montecitans resigned at one point, said to have been upset at events taking place.
Billionaire Russian banker Sergey Grishin, who lives near the property, bought it out of bankruptcy last year for $15.3 million, then sold it a few months ago to another neighbor, Peter Muller of Morgan Stanley, for $14.8 million, apparently with somewhat less land. (Bankruptcy trustees have sued Grishin in bankruptcy court for allegedly reneging on an agreement to pay an additional $450,000 for the estate’s furnishings. The items eventually were auctioned off for around $200,000.)
Wrote niece Oliva: “It is clear from the financial records that are public and from the state of disrepair of our aunt and uncle’s great estate that little of the Austins’ money or the borrowed funds had been used to adequately maintain the Val Verde gardens and physical property since Warren’s death in 1999.
“We would like to know what became of a number of Austin Val Verde archives, real property, personal property and antiquities that are unaccounted for.
“Warren and Bunny Austin never anticipated that Val Verde and their own personal property would be sold at a discount to satisfy Austin Val Verde Foundation creditors’ claims. They and the community deserved better.”
New owner Muller has not revealed what he plans to do with Val Verde, once the pride of Montecito, now hidden behind a locked gate.