Local developer and hotelier John King is being sued for alleged fraud, along with his wife, Carole, and his associated corporation Palm Dunes LLC, by a lender attempting to reclaim about $9.5 million owed to it by the Kings.
King, one of the largest private employers in San Luis Obispo County, owns several popular hotels including Sycamore Mineral Springs near Avila Beach, the Cliffs in Pismo Beach and Apple Farm Inn in San Luis Obispo. In 2008, he had 700 employees in San Luis Obispo County and 1,000 companywide.
The lawsuit filed last month by Textron Financial Corp. follows a federal court judgment made in its favor in April. After a hard-fought battle that involved King putting at least one of his limited liability corporations into bankruptcy, Textron was allowed by the court to take possession of two of King’s major properties in the county: Vaquero de los Robles in Paso Robles, which King planned to develop into a hotel with bungalows, a spa, a vineyard with a wine-tasting facility, lakes and golf courses on nearly 400 acres; and the 490-acre Spanish Springs, a would-be residential and golf course development in Price Canyon between Pismo Beach and Edna Valley.
When Textron agreed to loan more than $14 million to the Kings for development of the properties in 2006, King also put his holdings on the line. However, in this most recent filing, Textron alleges the Kings transferred seven other parcels of San Luis Obispo real estate worth millions of dollars into Palm Dunes LLC on May 20, 2009 — a day before the hearing on Textron’s application to recover its debt.
The Kings’ actions, the creditor alleges, were made “as part of a scheme or artifice to hinder, delay or defraud TFC (Textron) and/or other creditors of the Kings,” according to Textron’s lawsuit filed in federal court July 2.
Textron believes it is entitled to the Kings’ interest in the property and wants the value of those properties applied to the Kings’ debt to the lender. That value is still to be determined.
In an unrelated action, the Kings had also personally backed a loan from Wells Fargo to the Inn at Morro Bay. The bank foreclosed on the property and repossessed it for $8.5 million; that action wiped out the collateral interest in the property by another lender, Virtual Realty, for $5.5 million. It is unclear if that lender will pursue the Kings personally for that debt, according to the Kings’ attorney, Fred Glick, who spoke about the issue to Judge Charles Crandall last week.
King did not respond to the Tribune’s inquiries for his side of the story. Glick told The Tribune he would have “absolutely no comment” on the matter.
— Melanie Cleveland
Bits & Pieces Motorcycles, previously at 202 F-2 Tank Farm Road in San Luis Obispo, has changed its name to CoastRiders Powersports Sales & Service and has moved to 3285 S. Higuera St.
Gary White, who owns the business with Neil McClain and Jeff Cool, said the new name more accurately reflects the primary focus of the business, which started in 1978 as a motorcycle salvage business and evolved into a sale, consignment and service facility for all brands of motorcycles and power sport vehicles. Two employees, technicians Dan Argano and Tyson Baker, are employed at the 5,000-square-foot location.
— Julia Hickey