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Man Linked to Sonoma Valley Bank Arrested for Insurance Fraud

Condo developer allegedly filed a pair of insurance claims that overlapped after a 2008 fire at a project in Reno.

A man who is reportedly part of an ongoing investigation into loan defaults that led to the downfall of Sonoma Valley Bank was arrested Wednesday on charges that he filed overlapping insurance claims with two insurers after a 2008 fire at his condominium project in Reno, county and state authorities said.

Bijan Madjlessi, 55, of Marin County, was taken into custody by investigators from the California Department of Insurance’s Fraud Division at his office at the Marin Commons complex on Los Gamos Drive in San Rafael. Despite facing bail of $750,000, Madjlessi posted a bond of that amount and was released.

Madjlessi is also the subject of an ongoing federal probe looking into at least $24 million in loan defaults by his real estate companies, defaults that contributed to the downfall of Sonoma Valley Bank, which was closed by regulators last August and its assets sold to Westamerica Bank, according to the Santa Rosa Press-Democrat.

Madjlessi had insurance policies with both Fireman’s Fund of Novato, and Travelers Casualty and Insurance Co. for his Belvedere Towers condominium project, according to Dave Althausen, deputy press secretary for the state Department of Insurance.

The project caught fire on July 29, 2008, damaging two high-rise towers and a connecting building. The Reno Fire Department labeled the fire as suspicious, but no arson charges were filed, Althausen said.

Madjlessi filed claims one day after the fire with Travelers, whose policy covered the north tower, and Fireman's Fund, whose policy covered the entire site, and state investigators were alerted by Fireman’s Fund’s investigation unit in February 2010, Althausen said.

As a result of the overlapping claims, Madjlessi was paid twice for the damage to the north tower, although he told both insurance companies that there were no other policies covering the project, Althausen said.

Madjlessi was paid approximately $3.4 million by the two insurers, Althausen said, but should have only received approximately $2 million. He allegedly defrauded $1.4 million from the insurers.

“This is one of the largest cases we've seen,” Althausen said.

Madjlessi is charged with presenting multiple insurance claims for the same damages and making false statements in support of insurance claims, along with two related felony charges.

Marin County Deputy District Attorney Barry Borden said a criminal complaint has been filed and Madjlessi is scheduled back in court June 20. He remains out of custody on bail.

Madjlessi's attorney Douglas Horngrad refuted the allegations against his client.

"The charges are baseless," he said. "We will aggressively dispute the allegations."

Ralph Hutchinson June 17, 2011 at 01:49 AM
Sonoma Valley Bank~~Wonder if all the lawyers are reading this Patch blog? And their clients (SVB Execs and Directors)?
Ralph Hutchinson June 17, 2011 at 07:58 PM
SVB~~The tragedy is the denial to Sonoma Valley residents, customers, shareholders, the Press, SEC, and Call Reports. Straw borrowers known to Bank Execs and the Board, out of area lending, betting the bank on two Marin guys that turn out to be fradulent, then claim to be "victims of the economy?" Did these Insiders really think the community of Sonoma was THAT ignorant not to smell a rat and ferret out the ratline, causes that led up to the failure, capable of reading public documents at the Real Estate County Recorders Office, analyze SEC documents (Wall Street analysts, Investment Bankers, Former Regulators, Bankers and the like)? Did they think they could pull it off? Were they that confident they "controlled" the town of Sonoma? Had they really thought they were "THAT" powerful in the past to pull something like this off and get away with it? BIG FISH in a SMALL POND. Problem, many of the analysts, researchers, bloggers and sources are decent size fish that come from HUGE OCEANS and possess a vast array of skills and abilities to see through these shenanigans. Did they really think if they just made a few statements, wrote a letter, blamed the Government and the economy, and lay victim that it would all blow over? Did they really think if they just moved on over to the cross town banks that all would be fine? So much so they trumpeted their heralded new jobs with big pictures in the papers, ribbon "Cutting" ceremonies, that it wouldn't fuel the fires?
Ralph Hutchinson June 17, 2011 at 08:32 PM
SVB~~"THIN GRUEL??"~~ (Steve Page Jan 26th PD Quote)--I am a former director of Sonoma Valley Bank. The board and management of that institution are as fine a group of individuals and community leaders as I could ever hope to be associated with. The implication in the PD that any of this group might be the subject of criminal investigation is based on very thin gruel. When this alleged investigation eventually proves to be a) nonexistent or b) baseless, I trust you will reserve similar front page space in a Sunday edition to share that news. STEVE PAGE--Sonoma Hummmm: Since this quote 2 more front page articles, the Bijian May 29th PD article and the June 1st arrest of Bijian Madjlessi for 4 felony fraud counts? Fuerza Energy Drink, Ratline to local brokers...Gruel thickening yet? I think the front page coverage is going against the Directors and Execs at SVB whatta ya think? Can't wait for the next edition.
Ralph Hutchinson June 17, 2011 at 09:49 PM
SVB~~Well life has a funny way of sneaking up on you When you think everything's okay and everything's going right It's like rain on your wedding day It's a free ride when you've already paid It's the good advice that you just didn't take Who would've thought ... it figures Alanis Morissette - Ironic
Ralph Hutchinson June 18, 2011 at 12:38 AM
SVB~`Bijian's arraignment Monday in Marin Superior Court, could see ankle bracelets and surrender of his passport given a flight risk. Wait until the "canary" starts singing for a plea.
Ralph Hutchinson June 18, 2011 at 05:48 PM
SVB~~Will the local Sonoma Valley Press cover Bijian's arraignment? Silence is golden...why don't the other Papers report the news? At least half the Valley (4000-5000 people) was impacted by the failure of these Sonoma Valey Bank Execs and Directors and the quiet cover-up and finger pointing. Must be a photo op somewhere here. Thanks Patch for being a much needed Voice to the people.
Sonny Lynch June 19, 2011 at 01:50 PM
Bijan is busy as a beaver. http://www.corporationwiki.com/Nevada/Reno/nevada-belvedere-llc/46909739.aspx
Sonny Lynch June 19, 2011 at 01:55 PM
He works so hard. http://www.corporationwiki.com/California/San-Rafael/bijan-madjlessi/41711979.aspx
Sonny Lynch June 19, 2011 at 04:33 PM
Busy, Busy, Busy. But he's not the only one gettin' busy. http://www.marin.ca.gov/depts/MC/courtcal/nameq_mc.cfm?sel_name=ja
Ralph Hutchinson June 20, 2011 at 02:53 AM
SVB~~Reports from sources suggest Regulators criticized Board skills and abilities asking for removals/substitutions, leading up to the last months, particularly the Directors Loan Committee (Nicholas, Switzer, Brangham, Sangiacomo, and Downing). But the egos of the highest ranking Corporate officials (Chairman and CEO) refused. Cronyism? Did they think they were in so deep they had to stick together and circle the wagons to cover? Could this lack of trust and confidence in the Directors have contributed to the swift decisions to seize the bank? Coupled with forebearance agreements, extending and pretending, evergreen loans, 101 Houseco LLC taking "assignments of notes" instead of clear liens on real estate, and what Regulators must have known about straw buyers and straw borrowers all add up to "a vote of no confidence."
Ralph Hutchinson June 20, 2011 at 02:14 PM
SVB--Ex-Bankers fled to Rabobank and Sonoma Bank. President Sean Cutting and Chief Operating Officer Cathy Gorham fled to Rabobank after an unsuccessful bid at Bank of Marin (they passed on the pair) to start a new branch. Bijian Magjlessi's primary account officer Brian "Fuerza Energy Drink" Melland who talked Madglessi and partner Larsen's wives to invest $50k each into his Latino marketed energy drink, and his sidekick Veronica Ordaz both wound up at Sonoma Bank the former Sonoma National now owned by Sterling Bank of Spokane. Melland in Special Assets at the Santa Rosa hub (ironic working w troubled assets since he did so well creating Madjlessi's mess and certainly did work that deal out?). Ordaz a loan officer believed to recently be transferred back to the Sonoma Office according to recent ad campaigns. Melland and Ordaz were reportedly soliciting former SVB customers working as a team (unusual for special assets to develop biz?) earlier this year. Ironic Rabobank had Madjlessi participations and still may yet, and Sonoma Bank years prior experienced Bijian in Fountain Grove and other Santa Rosa failures as Sonoma National.
Ralph Hutchinson June 20, 2011 at 05:17 PM
SVB~~Rabobank bought Napa Community Bank 2-17-10. Napa Community Bank was said to be a participant in some of the Bijian Madjlessi loans originated by SVB's Cutting. They had to have known of Bijian criticisms by FDIC regulators as lead participants in syndications are required to share regulatory comments with all other junior participants. link ---> http://www.rabobank.com/content/investor_relations/investor_news/Rabobank.jsp Cutting's hiring announcement was done in October 2010. link ---> http://news.sonomaportal.com/2010/10/15/another-svb-exec-joins-rabobank/ So Rabobank having a piece of Bijian themselves, had to have known the straw-buyer, straw borrower issues, renewal histories, lack of performance on construction loans, etc. Participants get the exact same information as the lead does simultaneously. As for the 2002 Press Democrat article about Fountain Grove problems, any underwriter worth their salt could have Googled that just as was done here. From there questions should have arose. Court records are also prevalent. Then again...if Bijian was "well known to Sonoma Valley Bank Management" as they claim, they must have known all...and he must have come well recommended by somebody? Who knew what and when?
Ralph Hutchinson June 20, 2011 at 05:28 PM
SVB~~Did SVB Execs notify other loan participants like Rabo and Charter Oak Bank of Napa about Bijian's risks and issues? Did they withhold conflicts of interest (Fuerza Energy Drink) and gifts/junkets taken by SVB Insiders that warranted SAR's to be filed? Did they withhold key investigations and inquiries by regulators into Bijian? Did they withhold forebearance agreements...is it possible these forebearance agreements were done without knowledge and approval of the Board and other participants? Rabobank knew...unless...SVB Execs withheld key information which would be a breach of a typical Loan Participation/Syndication agreement. The threat of backlash and lawsuit from junior participants would have spooked Regulators so if SVB was on the ropes as we surmise, these looming actions and any known breaches of Participation Agreements would have undermined regulatory relations for fear a participant might sue and rescind the contract thus forcing SVB to buy-back the piece of the loans originally sold for breach or worse yet, misrepresentation, negligence, or other. Since these loans were already nonperforming SVB's capital could have never sustained a hit like taking these toxic assets back on contract recission awards.
Ralph Hutchinson June 21, 2011 at 01:59 AM
SVB~~Bijian first? Now a Director? "Turning State's Evidence" is when an accused testifies as a witness for the state against his associates or accomplices. Turning state's evidence is occasionally a result of a change of heart or feelings of guilt, but more often is done in response to a generous offer from the prosecution, such as a reduced sentence or a favorable location for serving time. In particularly high-profile cases may be offered immunity from prosecution even if he/she has committed serious infractions.
Ralph Hutchinson June 21, 2011 at 04:50 PM
SVB~~AOL and the NYTimes backed Media will report the truths. Local Papers of record are a dinosauers. Who's talking? The Directors and Execs will be looking at each other, blaming the other. They all knew at the end leading up to failure, its a matter of who knew what and when...who held out and why?
Alexis Fitts June 22, 2011 at 04:44 PM
Ralph, you're going to need to limit your comments to statements that are relevant to the content of this site, otherwise I'll have to start deleting comments or blocking your account. Statements that are this incessant, and have little to do with the content here, are bordering on harassment. Thanks.
Ralph Hutchinson June 22, 2011 at 05:40 PM
Thanks Patch for a forum to discuss pertinent issues that effect more than half the Valley residents and businesses (Bank Failure of SVB). Other forums are not open to intellectually stimulating and somewhat controversial issues and appear conflicted. First Amendment Rights of Freedoms of Speech and Freedoms of the Press (including blogs) are still alive and to you we are greatful. That is not the case throughout the Sonoma Valley.
Sonny Lynch June 26, 2011 at 05:34 PM
A blockbuster is about to be reported on this story. I wonder who beside Bijan has rolled? <crickets chirp>
Ralph Hutchinson June 26, 2011 at 10:20 PM
SVB~~With Bijian plea-bargaining, they will begin to roll and turn on each other. All comes out in the wash. They will have to choose sides soon enough. Right....or wrong or can they remember the difference? The next Chapter in the Pulitzer Prize nominated Northbay saga awaits.
Sonny Lynch June 27, 2011 at 11:32 PM
What is this? If reports are right its the mysterious soft drink company founded by a banker and borrowers' close relations. http://www.wrapvehicles.com/blog/press-release/fuerza-energy-drink-van-wrap/ Does this resemble a laundramat
Ralph Hutchinson June 27, 2011 at 11:53 PM
Fuerza Energy Drink (aka Magnussen Innovations) was SVB Loan Officer Melland's side business and invested in by Bijian Madjlessi's affiliates, his spouse Biganeh and his straw partner Glenn Larsen. Seems to me to be a HUGE conflict of interest. Melland was the handling officer for Bijian. Loan customer and loan officer? WOW. Here is a website showcasing the product and ironically...being targeted to the Latino market...the ad copy is in...of all things LATIN? I think the marketing team and leadership of this company have some things left to be desired. I am pretty sure the Latino markets actually speak Spanish perhaps? http://www.behance.net/gallery/Fuerza-Energy/110240 Wash and spin cycle...as long as it comes out clean on the other side? Suspicious activity to say the least. Did the SVB Execs and Directors file a SAR? If not...did they break the law for failing to file a referral form? More to come for sure. From my extensive knowledge of Banking Law, a SAR would have been required and their failure to file puts them in jeopardy of violations. Merely terminating an employee does not negate failure to file SAR's. They should have known. The Compliance Officer, the former President a previous OCC Regulator, and two attorney's (or at least one practicing on the board the other educated in law). No excuse. The Bank Ethics Policy also would have discouraged even prevented such conflicts of interest. Thin Gruel?...LOL!
Ralph Hutchinson June 28, 2011 at 12:37 AM
SVB~~What does the Fuerza flavor "Jamaica" have to do Latino appeal? Isn't that a Caribbean country known for Reggae? Am I missing something? Did Bijian realize the marketing campaign he was investing in was so far off printing ads in Latin (only attorney's and Doctors speak that...and Latin majors perhaps Romance Literary types) or just doing favors for his Loan Officer quid pro quo?
Ralph Hutchinson June 28, 2011 at 02:21 PM
SVB~~Bijian certainly was a "colorful character" and brought a "carnival like atmosphere" to Sonoma Valley Bank. Like a Big Race coming to town...who can lend out the most money to a single character, grow the bank, and bust it out. Come to think of it those Fuerza cans are also quite colorful as well...
Sonny Lynch June 28, 2011 at 02:52 PM
Above the Fuerza van it says "No time for laundry?" A laundering vehicle? Oh my. Didn't Bob Newkirk allude to this above?
Ralph Hutchinson June 28, 2011 at 03:48 PM
SVB~~There could be motive to circumvent detection. This practice is common under the Bank Secrecy Act known for tracking laundering activity and layering between loans, investments, and cash/wire movements. Often these investments later pay dividends, or companies dissolve and return the funds...cleansed and washed.
Sonny Lynch June 28, 2011 at 08:15 PM
How about in the sense of setting up a drink company where it was never really important to succeed if the primary goal was to get payola to its intended target ? how much is the question.
Ralph Hutchinson June 28, 2011 at 08:24 PM
Assumption is FDIC-Inspector General and Special Investigations Group-TARP have the numbers. The lid blew on Fuerza and SVB Directors had Melland terminated February 2010, the handling officer for Bijian Madjlessi, the largest borrower largely responsible for the bank's failure.
Ralph Hutchinson June 29, 2011 at 03:52 AM
SVB--Shareholders sue Directors and Execs claiming negligence. The gruel is looking like "target paste" now. Directors are: Nicholas, Switzer, Downing, Brangham, Page, Pistole, Hitchcock, and Sangiacomo. Execs targeted: Cutting Just posted on the internet. http://www.pressdemocrat.com/article/20110628/BUSINESS/110629471/1350?Title=Sonoma-Valley-Bank-shareholders-seek-money-from-insurer
Sonny Lynch June 29, 2011 at 03:11 PM
New Press Demo story confirms ongoing FDIC investigation of some Directors and Officers.. http://www.pressdemocrat.com/article/20110628/BUSINESS/110629471/1350?Title=Sonoma-Valley-Bank-shareholders-seek-money-from-insurer
Ralph Hutchinson June 29, 2011 at 03:56 PM
The PD article above states FDIC losses are at $14 million yet all previous indications pegged losses at $10.1 million? Have their been revisions? Are they result of these Bijian Madjlessi assets? Sonoma Storage Emporium (SSE, LLC) a partnership between Bijian and Glenn Larsen, another construction project only partially competed (third floor remains a cold shell girders and hanging wires). This asset was sold December 2010 for about $5 million and the amount owed according to court documents was in the $15 million range. Net of accrued interest and penalties this could account for several million dollars more than original estimates. Hernandez spokesperson for the FDIC was referenced in the article for loss estimate, a trusted source. SSE, LLC (4201 Santa Rosa Ave, Santa Rosa) was highly suspect of being participated (loan syndications) with the now failed Charter Oak Bank of Napa where $5 million of Sonoma Valley Bank toxic assets were realized of the total $13 million that ultimately failed this institution. All Bijian Madjlessi related deals. The third in the trilogy of trilogies was Courtside Village affiliates on Sebastopol Road in Santa Rosa discussed in length in the January 23rd PD article.

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