Transcribe your podcast

Californians have long tried to get rich off the desert. I'm Emily Guerin of L.A. Studios, California City. Join me for a live virtual conversation in partnership with the Autry Museum RSVP at Kecksburg in person.


Previously on California City. Oh, wait a minute, I am in business, I don't want to say anything about that, OK?


What do I wanna say in Kern County?


You know, this is not really a secret, but the thing is, is what they're doing is, as far as we know, is not illegal.


At 10 a.m. on Wednesday, September 25th, 2019 11, people gathered in the parking lot of an industrial office park next to the airport runway in Burbank, California. There were four employees of a company called Regulatory Resolutions, all wearing suits, three California Highway Patrol officers and uniforms with guns on their hips to investigators for the California Department of Business Oversight, one locksmith and one computer forensic specialist named Joe. They opened the door to a long hallway and all 11 of them walked up a flight of carpeted stairs.


They stopped right outside a cheap looking wooden door. There were two pieces of paper taped to it. One had a Microsoft Word ClipArt smiley face, giving a disembodied thumbs up. It read, uh, you made it. See, that wasn't so bad now, was it? The other sign said, Welcome to Silver Saddle. It was the company's headquarters. Meanwhile, managers at three different banks received an email from regulatory resolutions instructing them to freeze all of Silversides bank accounts.


And one hundred and thirteen miles away for CHP officers, two employees of regulatory resolutions and another locksmith drove past Gallileo Hill, past the gate house and down the long driveway. That leads to Silver Saddle Ranch. It had been 61 years since Nat Mendelson started selling the dream of California City. But when you when was there anything there at the time? Oh, was just dirt.


It's going to be wonderful. He was very optimistic and very excited about it. Forty eight years since the Nader's Raiders called it the big lie. If you profit at the expense of people who are being duped, then your evil little there's an evilness to that 42 years since Ken tried to stop it. They prey on what we all share in humanity, which is our wishful thinking.


Thirty four years since Tom Máni started Silver Saddle. So what are you saying? I'm saying they may not they may exaggerate their claims.


And more than two years since Ben Perez got home after a long, strange weekend and realized all he wanted was to get his money back. I feel like I hope my dream is not going to happen anymore. It was another warm, sunny day in Southern California and Silver Saddle was getting shot down. I'm Emily Guerin, and welcome to the final episode of California City. I'm Sasha Khokha, host of the California Report magazine, Take a road trip for your ears to meet the real people who make the Golden State unique.


I'm the kissing disc jockey.


One hundred miles in any direction from here to a large town where you can buy groceries. I think the most radical thing is black and brown. People that we can do is be happy.


Subscribe to the California Report magazine podcast for those only in California stories. Have you enjoyed listening to California City join me, Emily Guerin, for a special virtual event with the Autry Museum. Together, we'll explore the American dream of getting rich quick through owning land, especially empty desert land. And we'll look at its dark side. Why are Californians obsessed with trying to get rich off the desert? Join us Thursday, September 3rd, RSVP at Kocherga in person.


Regulatory resolutions ran the raid on Silver Saddle that day, they're what's called a court appointed receiver. They're a company that takes control of other companies that are being sued and they run them while the case is proceeding. Getting a receiver appointed is kind of a big deal. It means the judge thinks the state is likely to win their case. It also means a judge thinks that the company being sued will keep harming people unless they're shut down.


Regulatory resolutions wrote a really detailed report of what happened on September twenty fifth. It's kind of a play by play and I have spent a lot of time with this document. And I also talked to someone who was there that day, but he only agreed to talk to me if I didn't reveal his name.


So just after 10:00 a.m., the group opened the door and they walked inside, they found seven women and one man busy packing up. Thirty seven file cabinets worth of documents. There were boxes everywhere. Apparently, they had been preparing to close the Burbank office and move everything out to California city. One of the guys who worked for regulatory resolutions, Cooley, told all the employees, everybody remain calm. Step away from your computers and leave your phones on your desks.


Come with us to the break room. There's a lawsuit against Silver Saddle. Just give me a few minutes. We need to take care of a few things. The CHP officers swept the office, they looked for all the possible exits and made sure no one could sneak out a hard drive or a file folder. The locksmith changed the locks. Joe, the computer forensic specialist, began copying hard drives, emails, spreadsheets and bank statements and regulatory resolutions began pulling people out of the break room one by one to see who knew what.


After questioning them, they escorted the employees back to their desks so they could collect their coffee mugs, their sweaters, any pictures of their kids. The team open file cabinets, drawers, they open boxes. They scanned any document that seemed interesting and labeled what office that had come from. They worked late. They ordered sandwiches. They came in early. They worked late again. Out in California City, Silver Saddle Ranch was nearly deserted when the authorities arrived, there were just six employees there, mostly the people who took care of the animals, 12 goats, 12 sheep, five chickens, four horses, two ponies, two burros, two alpacas, two peacocks, one llama and four cats, including the Cat Emet midnight.


They made arrangements to move most of the animals off site and feed the ones that stayed behind.


Then a locksmith changed the exterior locks on all the buildings. The front gate was chained shut and a makeshift plywood sign was left leaning against it. It red and green spray paint. No trespassing state authorized access only. And then they all left. This raid was two years in the making in May 2017, this state agency called the California Department of Business Oversight received its first complaint about Silver Saddle.


The DIA regulates a lot of different financial transactions, student loans, mortgages, banks and securities. And they told me the complaint they had received was from someone who had won a raffle at a Filipino grocery store. This person had gotten a call inviting them to a buffet dinner, and there they'd been invited to spend a free weekend at Silver Saddle, where they said they were pressured into spending a bunch of money. So the DBO investigated and they came to the conclusion that Silver Saddle was selling unlicensed securities.


OK, so let me just explain this.


Remember how Evan Perez bought his share of the land banking project? He spent thirty one thousand five hundred and forty dollars. Well, when I looked at his paperwork, I realized it wasn't a lump sum. There were a bunch of smaller charges, including two thousand dollars to this thing called the Capital Improvement Fund.


And in a letter, Tom Máni wrote to investors that would later wind up in court documents, he said that this fund would be used to develop the empty desert land that surrounds the ranch.


But the DBO decided that the capital improvement fund was actually a security. It was something of value that you can trade like stocks. And the DBO said Silver Settled didn't have a permit to sell securities.


So in May, twenty eighteen, one month after I began my research for this podcast, the DBO told Silver Saddle to stop, stop selling the capital improvement fund and stop saying untrue or misleading things about it. In other words, the DBO wasn't going after silverside all over land sales because land sales isn't what they enforce, but they could sink their teeth into this other thing, the capital improvement fund. They explained all this when I called them. And after we hung up, we went our separate ways.


I was investigating. They were investigating. Silver Saddle did stop selling the capital improvement fund, but they kept right on selling the land banking project. According to the DBO, it felt like a slap on the wrist. So I was totally caught off guard when the email appeared in my inbox in September twenty nineteen, saying the DBO was shutting down Silver Saddle completely.


I was really curious what had changed, but DBO investigators wouldn't talk to me, so I asked someone else, someone who was working on the case, and he told me that maybe the fact that I had been digging around had put Silver Saddle on the DBS radar. There was, as he put it, starting to be a drumbeat. Silver Saddle was getting shut down and there was a court hearing coming up. It was silver chance to appeal to make their case before a judge that they didn't need a regulatory resolutions taking control of their company, of their thirty seven file cabinets, their 16 bank accounts or their dozen sheep.


So, of course, I had to go. That's after a break. The hearing was on October 16th at the San Diego County Superior Court. I got there early and I sat in the front row of the courtroom as people filed in. At the front of the seating area, there was this bailiff in uniform who paced back and forth. She barked at people to put away their phones and take off their sunglasses, and if they didn't understand what she was saying, she just yelled louder and slower until someone translated.


Once all forty two seats were taken, she began turning people away. At one thirty pm, Judge Joel Woelfel walked in in his long black robe. And we all stood, he sat and we sat. Two men remain standing, facing the judge, the lawyer for the DBO in a light gray suit and the lawyer for Tom Máni in a charcoal one. There was another lawyer on the phone. He didn't mute himself so everyone could hear his loud breathing.


Tom, in his lawyer, argued that a court appointed receiver was unnecessary, shutting down Silver Saddle would do more harm than good, and there was no evidence of a cover up. The divorce lawyer disagreed. He said there were suspicious transfers of money. He said Silver Saddle had squandered tens of millions of dollars. He said they lied and targeted unsophisticated consumers. Then it was the judge's turn. He sided with the DBO. In order to protect the public, Silver Saddle needed to stay closed and regulatory resolutions kept in charge.


The whole thing maybe lasted 20 minutes and then everyone got up and filed out to the hallway. I tried to catch the DeVos lawyer, have a reporter. I went to college students, OK? I didn't know it then, but the DBO lawyer knew exactly who I was. He'd listen to my interview with Tom Aning, the one that Tom had secretly recorded. It had been on a computer at the Burbank office. All right, thanks. Outside the courtroom, people were huddled together in groups and their voices echoed off the hard stone floors as they tried to decide who to talk to, a woman and a pretty silk scarf came up to me.


Hello. Hi, I'm Chinese investor. Oh, OK. I'm. I'm a reporter, you know. Nice to meet you, too. My name is not Jessica's mom told my friend. Yeah, right. For me. OK. Yeah.


Laneway Show had driven all the way from Orange County. Her interpreter friend David Dye was also a Silver Saddle investor.


He wore a suit for the occasion. How are you? Good.


How are you? I'm Emily. I'm David. Nice to meet you, David. My pleasure.


I record and through David Lee, we started telling me about how a Silver Saddle sales agent had pressured her into buying a share of the land making project complete.


OK. Well, just said OK. At a time this sold those land, they say, you know, their water, their sewage, their road is built, but now there are nothing there.


And you couldn't cancel it, you know, once you cast. But to decide. No.


So you don't think it's a good investment. You don't think you'll ever be able to make money off of it. You just want your money back. We want the money back.


And now and by this point, a small group had gathered around us. At least one person was filming me. David turned to speak to them, kind of like a preacher addressing his congregation.


Absolutely. Everybody. Yes, everybody. Yes. I'm not a woman again. Yeah. That means we want your money back. That's the Chinese.


That man yelling out was Jim DAFWA. His eyes were big and they flashed beneath his bushy eyebrows. His mortified teenage daughter hid behind his shoulder as David translated, You do what you thought.


One woman, people, they are cheaters. And, you know, they cheated on us. He wants to stop cheating, stop them from cheating again and cheating the different people. Thank you.


OK, thank you so much. Thank you. Thank you.


And that's why David told me he learned the hard way not to trust America's laws.


You know, whether we are immigrants and we start in America, we cannot imagine just happened to us.


How come? Very naive. You think so? Yeah. Yeah. And we think everything is law and order. And we have so much trust on the toters business peoples and that they gave a good presentation.


Does it make you think differently about America? I was the nasty different I was the er the more experienced I know America better. Hello. Hey, Ben. Hi, Emily. Hi, can you hear me OK? Yes, OK, cool. So what like what did you think when you saw this press release about Silver Saddle being shut down?


Like how did you feel?


I feel like, you know, a sense of relief that it's finally over.


It had been over two years since Ben's trip to Silver Saddle, two years since he'd signed away his food truck money. It's been a long time, like. I feel super hopeless, but do you feel any better now knowing that, like you might get it back? Hopefully you don't you know, I'm not convinced. I don't know. Yeah, yeah. Ben was not confident that the lawsuit would help him, not nearly as confident as David in his group and reading through court documents.


I could see why Silver Saddles finances were a mess. Years had passed without any basic accounting at all. Their books were so disorganized, the fraud examiner determined it must be deliberate. Silver Saddle must have been transferring money between multiple accounts to make it difficult to trace. Most of the money the fraud examiner found was gone. A lot of it was used to pay sales agents. Marion Decru had been making three hundred thousand dollars a year, according to the CBO.


All that was left was the ranch itself and all the things that had been left behind, including two American flags to projector's grains for booster seats, eight broken paddleboats, 15 fake wine bottles, one cowboy statue, one jackalope and one hotdog roaster. The DBO want Silver Saddle to give all the investors their money back, but how even if they sold the ranch and sold all the vacant land that remained, it wouldn't generate near enough money to pay everyone back in full because the land was near worthless real estate, as the DBO put it.


They said people like Ben Perez had paid around 100 times more than what it was really worth a hundred times.


But in the courtroom in San Diego, Tammany's lawyer proposed a solution. The people who'd bought into Silver Saddle could take over the ranch from Tom Máni and run it themselves. David and Liane did not like that idea.


One bit of cash at a beach house. You just you suggested, you know, that what they want is do not do anything. Just, you know, take the land, take the ranch, then, you know, West Wetton, just not right away. This is not the correct legal action at all.


They didn't want anything to do with Silver Saddle. They just wanted as much money back as possible. And given the charges against Silver Saddle and the dozens of investors I talked to, I assumed most people felt this way. But then I met Antonio Garcia.


Antonio was standing at the opposite end of the courthouse hallway from David in Laneways Group. He was a large man in a baggy suit with a Bluetooth in his ear. And he was standing very close to Tom Menees lawyer, surrounded by a group of people who were listening intently.


And in the two thousand people that are members or investors, there are people there. There are doctors are accounts that can run this place to be good. Good.


Because they're discussing the proposal Tammany's lawyer had made earlier in the courtroom. Antonio said that he had a large group of people who all wanted to take over the ranch from Tom, meaning that if we have control, we would make the money back that we invested.


Antonio said all he needed was to convince the court that everyone who had bought into Silver Saddle was on the same page. So Tom and his lawyer had an idea.


Maybe a survey might be helpful. Now we will do a survey and we'll send it to everybody.


OK, I realized I'd talk to Antonio before on the phone. I'd asked Debbie Nicastro, the woman we'd interviewed with Tom Máni, for the names of some people who were happy with Silver Saddle. It may be a wonder if maybe Antonio and Tom maybe were working together, that in the way Antonio was talking to Tom's lawyer, standing so close, speaking so calmly, are you driving back somewhere right now?


OK. I mean, can I come in? I don't know.


I introduced myself and Antonio told me if I wanted to keep talking, I could meet him at a restaurant a few miles away from the courthouse. I am going into Lindas Filipino cuisine, an ice cream parlor. Antonio was sitting around a table with a few people I recognized from the hallway they'd already eaten and the table was littered with Styrofoam plates and dirty napkins, an older man offered to buy me something to eat like a tree.


What is it called? Hello. Hello. Oh, I've always wanted to try that, actually. What price is there? Like green tea or tea? They have tea. Oh, I'll have green tea, ice cream, green tea.


The older man plot the huge plastic cup of ice cream, coconut and sweet red beans in front of me.


I tried semi's successfully to eat it with one hand while I held the microphone with the other.


I mentioned I'd been talking to David at the courthouse.


That's the guy who doesn't like us. He's contrary to what we're doing. He he will tell you that we were not honest and all that stuff, blah, blah, blah, whatever.


Antonio told me that silver saddle and all the land around it still had a lot of potential. It was going to be worth something someday. He had what I think Kathryn ever would call the vision. It's it's a good location for many of the high tech industries. There was a one time talk about Virgin Airlines using it as a place to to develop their their space program. That in itself alone brings a lot of value.


He said there could be a hemp farm there or a field of solar panels or a water park. The land already had water and power.


But remember, Las Vegas was a desert. Before it became less obvious, on the one hand, you had the people who were mad at Tom Máni, the ones who blamed him, the ones who want nothing to do with the land, and they just want their money back. And then there were the people who see a future for Silver Saddle and for California City people like Antonio, who explained it all to me absentmindedly as he picked up the food on his plate, chewing as he spoke.


We acknowledge the fact that there is some mismanagement of the money. So are you do you blame him? Are you mad at him or angry in any way?


No, they're mad at him. Because of what? I think they feel like he in the salespeople lied about the value of the land and pressured them and, you know, told them they would make a lot of money overnight, and then they did they were not told that they were going to make money overnight.


They were told that they would make money as soon as you develop the promise to make money is later on in the future. In other words, Silver Saddle was a long term investment, just like Tom Máni had told me long term, it was so familiar. And are you affiliated with Tom Máni or Marion or Silver Saddle in any way? No, totally separate. OK. Anything that you heard otherwise is is not true. What we're seeing today, after an hour and a half, my hollow hollow with a melted gloppy syrup, Antonio was done picking at his food and the other people with him seemed restless about their long drives home.


I shook their hands and I ordered a Styrofoam container of mung beans due to go. I took it outside and I ate it on the curb. Is the sunset over the empty parking lot. In the weeks after I met Antonio, I kept asking myself the same question I'd had about Mendleson and Tamani, what are Antonio's intentions? I decided to ask one more person, Darrell Horwitt. Antonio had hired him to represent all the people who bought into Silver Saddle.


But for reasons that are too complicated to explain, he's no longer representing them. I can't describe any attorney client communications, but I can tell you that when I worked with them, there was no indication they were working with Mr. Máni.


Except the Department of Business Oversight does have an indication that Antonio was working with Mr. Máni. I found it in some court documents. It was a quote from an email that Marinda crew had written to one of her clients. She was suggesting that the client elect, Antonio, is the official representative of the people who had bought into Silver Saddle. Please vote for the following people she'd written. They are all members of our team. I still don't know if Antonio was working with Silver Saddle, but either way, Darryl seem to be trying to distance himself from him.


But hope springs eternal for a lot of these people. They have this romantic notion that it's going to be something if it if just given the chance, it will it will happen.


And again, it's never going to you and I rationally can look at it and realize it probably isn't ever going to happen. Why do people believe things that they know or believed to be false? It's because we have a default to truth. We want to believe people are telling us the truth. Real estate is the basis of all wealth, period, worldwide basis of all wealth, kings, queens and wars are fought over her. If she's dirt, someone's going to die for that piece.


All of the DBAs findings and evidence show that what Silver Saddle sold at the price they sold it for is a bad investment. By any measure, such pricing was astronomical and not supported by any market metric, reads the receiver's report.


So why do people like Antonio still believe?


I think it's because what Silver Saddle salespeople were selling, what salespeople in California City have sold for decades in one form or another is a particularly beguiling dream, a dream that through blood and sweat and a little luck, we can make the desert into our garden.


California owes its very existence to this dream, our dams, our aqueducts, our fields of almonds. Our herds of cattle are freeways, our cities, we made the desert bloom, we turned dust into gold. So why not in California city? Why not in one more place? By mid-August, Ben Perez had been out of work for five months. The pandemic forced Google to close its campus in early March. And so with no Google Earth to cook for, then got sent home.


He's on unemployment now. His mom, his three brothers and his sister still live together. Ben still sleeps on the couch. The case against Silver Saddle was on hold for months because of coronavirus, and it's nowhere near finished, but regulatory resolutions has been busy. They're selling off Silver Saddles assets, which is something the court has allowed them to do to try to generate as much money as possible for people like David Leon Way and Ben. They sold one horse for twenty five hundred dollars.


They sold 12 sheep and 10 goats for five hundred dollars, and now they're trying to sell the ranch itself and the thousand acres of empty land that surrounds it for two point five million dollars, which is a fraction of what Silver Saddle claimed it was worth.


If the sale goes through, Ben Perez will get less than thirteen hundred dollars back. He spent more than thirty one thousand. Antonio Garcia, of course, hates this idea. He thinks the ranch is worth way more than 2.5 million dollars. He thinks regulatory resolutions just doesn't understand its potential.


He thinks they don't have the vision. And he's still trying to convince the judge that he and all the other people who bought into Silver Saddle should run the ranch themselves. That's how they'll make all their money back. Testing, one, two, three, testing, testing. I decided to come back to California City one more time. I don't know, I guess I just wanted to see it in the age of coronavirus, see if anything's changed. I mean, honestly, it looked just as quiet as it normally does.


I drove out here to Silver Saddle and was just shocked again by how far away it is. I mean, California City is already so remote and so recital's and the most remote part of California city. That plywood sign with the green spray paint is gone. Instead, there's an actual keep out no trespassing sign. But I know the road to Galloway Hill is still public. So I drove up here and put the brake on and now I'm just standing out here.


It's windy today and the birds are drafting ravens or maybe they're crows. There's a Mylar balloon blowing around and a creosote bush. And there's a billboard for the Galileo project, the land banking project that Ben Perez and thousands of other people bought into. The billboard blew over at some point. It's just sitting there on the ground, faded and the sun. It's been a long time. I feel like it's been a really long time since I first came to this place.


I think if I were in charge of selling land here, I would focus on the silence. I mean, it is a stunning thing to experience. Where else, within 100 miles of Los Angeles, can you hear absolutely nothing manmade, just the wind. California city is unlike anywhere else I have ever been, and I think it's because not Mendelssohn's dream failed to come true, if he hadn't dreamed so big and come up so short, California's city would be, I don't know, unmemorable.


I mean, it would just be any other Sunbelt suburb. It wouldn't be a place where you can just belt out karaoke and then wander home still singing on curving moonlit roads. It wouldn't be a place where you can spend a cool spring morning on top of a manmade waterfall hearing thrushes sing. It wouldn't be a place where you can trace the tracks of long gone wagons across the windswept ground. And it wouldn't be a place where you can drive to the top of Gallileo hill and stare out at the beautiful nothingness.


The nothingness is what makes the anything possible. I'm good. California City is written and reported by me, Emily Guerin, sound design, production and story editing by the brilliant R-1 champion Knicks and James Kim editing by Mike Kessler, who stays cool and always gets it done. This podcast belongs to the three of you to fact checking and additional production by the Diligenta Gabriel Donetta of mixing, mastering and all things engineering by the talented, impatient Valentino Rivera. Our incredible original music is by Andrew.


Even our website is Elia's dotcom slash California City, and it was designed by Andy Cheatwood and the digital and marketing teams at Southern California Public Radio. Our very talented photographer is Shava Sanchez. Leo Gomez designed our visuals and our logo. Thanks so much to the team at L.A. studios, including Taylor Kaufman, Angela Bromstad and Kristen Muller. And special thanks to Megan Garvey for letting me out of the CPK newsroom for so long to work on this. Thanks also to Herbes Ginelle, Adrian Hill, John Rabe, Sal Licadho, Eduardo Perez, Bill Davis, Bianca Ramirez, Kaleen Goller and Gaby Weinberger.


There were so many people I interviewed for this podcast whose stories did not make it in, but they taught me so much thanks to Alexia Civita, Nia Gonzalez, Tom While, Michael Raeburn, Bruce Tucker, Bill White and Mimi Avians, Herbert Hunt, Chris Bockman, Frances He. Maria Konnikova, Ralph Khaleel, Shannon Starky, Jennifer Hado, Lenny Martinez, the Carlos family, Phong Nguyen, Rene Clemente, Richard Arredondo, Eladio Morales and Julie Dorson.


The Jane and Ron Wilson Center for Investigative Reporting helped make California City possible. Ron Olson is an honorary trustee for Southern California Public Radio, and the Olsson's do not have any editorial input on the stories. We cover a special thanks to all the CBC's gnarliest members who make our work possible. California City is a production of L.A. studios. Thank you so much for listening. Let's get those heels off your feet for you. How's that feel?


You know, the way I'm pushing my thumbs in that forget video, audio porn is making waves and demand is growing.


I fell in love with it. It worked for me immediately. And I shared it with all my girlfriends at Stanford. Now it's like there is definitely something here. There needs to be an option that is totally devoted to women and their eroticism.


I'm Nick and my podcast Servant of Pod explores the stories behind the stories. Subscribe wherever you get your podcast.