Couple known for high-end real estate fall into bankruptcy

A couple who made a name and fortune in high-class coastal real estate have crashed into bankruptcy and are asking a court to erase more than $40 million in debt, including $625,000 that stemmed from alleged misuse of a helicopter loan. According to court filings, property records and interviews, the couple, Robert and Loraine Dyson...

A couple who made a name and fortune in high-class coastal real estate have crashed into bankruptcy and are asking a court to erase more than $40 million in debt, including $625,000 that stemmed from alleged misuse of a helicopter loan.

According to court filings, property records and interviews, the couple, Robert and Loraine Dyson, shut down their Solana Beach real estate brokerage, an affiliate of Sotheby's International Realty, in October. They also filed for personal bankruptcy and have apparently scotched plans to develop an equestrian resort and estates in central Riverside County.

Their bankruptcy attorney, K. Todd Curry, said the crashing real estate market had swallowed the Dysons, along with hundreds of thousands of other homeowners and people who worked in construction and real estate.

Robert and Loraine Dyson did not return messages seeking comment.

The Dysons' financial unraveling was as spectacular as their ambition. The couple own a $7 million estate in Rancho Santa Fe and ---- until recently ---- several other residences in the most exclusive areas of the Southern California coast and the San Jacinto Mountains.

Press releases from their real estate agency reported billions of dollars of annual sales. Their charitable foundation parceled out tens of thousands of dollars.

The Dysons' slide into bankruptcy followed an attempt to transform themselves from high-end real estate agents into high-end developers at what may have been the worst possible time.

They put some $30 million into property in the foothills of the San Jacinto Mountains starting in late 2005, with plans for equestrian estates that would eventually ramble over nearly 2,500 acres.

Lender questions helicopter deal

One of their creditors, an equipment financing subsidiary of banking giant Wells Fargo, objected to their bankruptcy filing earlier this week, a move that could prevent part of the debt from being erased.

Wells Fargo loaned one of the Dysons' companies $1 million to buy a six-seat helicopter in early 2006, but later discovered that the Dysons diverted part of the money for their own uses, according to a filing by the bank.

Wells Fargo seized the helicopter after the Dysons defaulted on the loan early last year. The lender sold it for $420,000, leaving $625,900 remaining on the balance that the Dysons owed, the bank said in its filing.

Curry said Wells Fargo's allegation lacked substance and appeared to be an aggressive attempt to collect on a large debt.

The Dysons did business through several corporations that they owned, which theoretically could have shielded them from creditors. But Curry said most lenders required the Dysons to guarantee the debts personally. Filings such as Wells Fargo's aren't common when the debtor seeking bankruptcy protection is a corporation, Curry said.

The couple built Dyson & Dyson Real Estate Associates into a moderately large, widely known brokerage before selling it in 2001 to Coldwell Banker Residential Brokerage, a locally owned affiliate of the national Coldwell Banker network that became Southern California's largest agency.

"They were the premier brokers in the San Diego area," said Roberta Murphy, formerly an associate broker at their Solana Beach brokerage, which at its peak employed about 100 agents.

Diamonds in the desert

A non-compete agreement with Coldwell Banker forced the Dysons to focus on real estate sales in the Coachella Valley. They returned to North San Diego County in September 2007 after the agreement expired. They affiliated with Sotheby's, a sister business to the tony auction house based in London.

In a September 2007 interview, Bob Dyson said his market niche would help the brokerage ride out San Diego County's real estate bust. Ritzier markets were holding up fairly well at the time, in part because well-heeled buyers were making relatively large down payments and avoiding the subprime loans that had led to waves of foreclosures elsewhere.

But mansion prices have taken a hit of their own since then. Agents have pointed to high interest rates on large mortgages and to stock market losses that leave less wealth for a buyer to put into a more expensive home.

Dyson & Dyson shut its Coachella Valley offices over the course of 2008 and its Solana Beach office in late October.

They filed for Chapter 7 bankruptcy on Oct. 30, estimating their debts at $50 million to $100 million and their assets at $1 million to $10 million. A debtor who qualifies for Chapter 7 can usually keep a car and other necessities, subject to limits on their value; other assets are sold off to cover portions of the debt, and the remaining debt is wiped away.

The trustee supervising their bankruptcy recommended in December that the couple abandon the Rancho Santa Fe home that they bought in June 2005 because debt and liens account for nearly its entire $7 million value. A later filing by the trustee recommended they give up a $90,000 leased Porsche sports car and their $3.2 million home in Palm Desert, which is in foreclosure.

Foreclosures pile up

The couple's condominium off Del Mar Heights Road is also in foreclosure. They borrowed $550,000 against it in September 2007, as they were launching the Sotheby's affiliate.

But most of the couple's debt stems from business activities, according to their filing.

One of their companies, Dyson Development, bought 454 acres of land near Anza in central Riverside County between September 2005 and July 2007, according to First American, a title company. The purchases totaled $26.8 million and depended heavily on loans, according to First American.

The Dysons' purchases included a track where racehorses trained for competition. They planned to develop a resort at the track and homes nearby.

The chairman of the Anza Valley Municipal Advisory Council, a group that reviews development proposals for the Riverside County government, said the Dysons bought options to purchase an additional 2,000 acres nearby. But there had been little visible grading or construction, said council Chairman Tulvio Durand.

"I go by there every now and then, and I don't see anything going on," Durand said.

Full article, w/ ref to previous story, and numerous reader comments: http://www.northcountytimes.com/articles/2009/02/05/business/za5d54a517d...