Nice article Patch. Tip of the iceberg though. Let's watch to see where the tentacles lead back inside Sonoma Valley Bank. Who knew what and when did they know it? Questions have been raised about the nature of loan underwriting and whether gifts and special favors played a part creating additional conflicts of interest that were responsible for failing the bank and destroying shareholder value. Keep the eye on the ball. It may be raining now, but it may prove to be a very hot and cruel summer in Sonoma Valley for those who up until now, refuse to comment.

For this "malcontent blogger", the "gruel" is thickening.

Video footage of Belvedere Towers can be seen burning on YouTube keyword: "Sundowner Casino Reno" its former name as local Reno residents know it. "Belvedere Fire" sdhould also work.

This is only the beginning. The stockholders of Sonoma Valley bank are finally going to find out just what kind of deals were made with Bijan by Brian Melland and Sean Cutting that sold the investors all down the river. Check out the YouTube Videos that detail the crime spree: http://youtu.be/oX-VfHttlLA

You can YouTube keyword: Sonoma Valley Bank for more parodies explaining various aspects of the drama as I understand from sources.

I still don't understand why the Directors loaned $30+ million of our Sonoma Valley deposits to these out of area characters from Marin for projects on the 101 Corridor. Any underwriter could see Criminal records for Glann Larsen in Marin County, the "arson" ruling on the Belvadere Tower Reno fire, countless failures of projects in Santa Rosa Fountain Grove just Google or search the Press Democrat. What underwriting was done? Or was something else motivating? Huge incentives, bonuses, everybody getting fat when it was blowing and going? We had plenty of opportunities in The Springs for revitalization but they didn't recognize "the people" bypassed that for the big dollars. Swim with the sharks...wind up bait.

This guy's bank loans are in 6 failed banks including: IndyMac the Nation's largest bank failure on record, PFF Bank (now USBank), Vineyard National Bank, United Commercial Bank, Sonoma Valley Bank, and Charter Oak Bank-Napa. Use of straw buyers to inflate values and straw borrowers to front and circumvent legal lending limits are common. His primary failed projects are the Belvedere Towers in Reno, SSE LLC (storage units on Santa Rosa Ave in Santa Rosa), Courtside Village affiliates including Park Lane Villas and 101 Houseco LLC, and the Petaulma Greenbriar Apartments in Petaluma as reported on in the May 29, 2011 Press Democrat.

The next shoe will fall in the banking arena as those investigations are wrapped up. The Insurance Fraud Felony charges are just the tip of the iceberg here. Stay tuned.

Petaluma Patch picked up on this story. See today's article diving into the method of carving up projects into pieces, flipping and inflating values to artificially manipulate more loans out of Sonoma Valley Bank and several others including PFF Bank (USBank), and United Commercial Bank all of which are now failed.

Ralph:
You will also see a story on this on Mill Valley Patch. Jim Welte, the Mill Valley Patch editor, is the one who provided the majority of the information, with editors in Sonoma and Petaluma also providing content.

SONOMA VALLEY BANK~~~Famous ex-President Sean Cutting quotes, this one from the March 2, 2009 Press Democrat article when asked why the bank applied for TARP bailout funds: "My feeling is when you get passed the cookie jar, you take a cookie,” Cutting said.

Just absolutely LOVE that one. So does that mean when a borrower (Bijian Madjlessi) offers gifts and favors like private jet rides to Vegas, Reno, San Diego, Newport Beach and Vancouver to ride on a 92ft yacht, you "take a cookie?" Borrow the "Tahoe Cabin" for a party weekend? Or if a borrower offers to invest into a side business (Fuerza Energy Drink) of a loan officer, you "take a cookie?" Was this the mantra and culture at Sonoma Valley Bank? Set from the top down? Who knew what and when? SAR's (criminal referrals) filed on this activity?

SONOMA VALLEY BANK~~~Former Bank Director Steve Page (Exec of Infineon) said in a Lettter to the Editor, that the January 23, 2011 Press Democrat article was based on"thin gruel." Since then the May 29, 2011 Press Democrat article on shena...nigans with Petaluma Greenbriar Apartments loan partcipation was published, and the largest borrower with Sonoma Valley Bank (Bijian Madjlessi) is now carried on the AP wire for his Tuesday May 31st arrest for 4 counts of felony insurance fraud, one of the largest fraud cases in California's history.

What is Magnusson Innovations Inc (Fuerza Energy Drink)? Did SVB Loan Officer (BM) accept cash investments in his venture from Madjlessi? Did the Directors know about these activities and was it reported as suspicious activity as per bank regulation? Is it really like ex-President Cutting was quoted in the March 2, 2009 Press Democrat when asked why the bank applied for TARP bailout funds: "My feeling is when you get passed the cookie jar, you take a cookie,” Cutting said. Are these just cookies the insiders are entitled to?

Seems like the "gruel" is thckening?

What is all of this quid pro quo dirty banking? Money, gifts, favors and ridiculously high small town salaries and bonuses. Where are the local newspaper reports? Is the Patch the only local site covering this enormous rip off? Something stinks. Small town shareholders have no voice.

WHERE THE HECK IS THE OUTRAGE !!!

One thing I learned from watching those youtube cartoons was that the bank allowed this "developer" to set up credit lines in others names and then run up huge loans sticking poor saps with the bill. If I have that right it is THEFT enabled by conflicted bankers, pure and simple.

Yes, I hear that but I am talking about having unsophisticated subcontractors signing blank loan pages that the developer fills out later. Then the developer brings the docs to the bank and takes out far more than he told the poor schlubs he was going to, secured by condos he talked them into buying in their names because he had to show sales to get more bank loans which he promised to pay them the money he owed them from. And once the pidgeons went down that track they were screwed. If they threaten to sue the scammer says "go ahead and nobody gets their money back." And it appears the bank facilitated this activity, if I have it straight. It's quite complicated to the average guy.

Well typically to be a Chief Lending Officer or President one would have 15+ years in banking. Sonoma Valley Bank though turned to cronies and family friends to fill key positions without interviewing top candidates or using a recruiting firm. A few years as a broker at a large Financial Institution and 3-4 years as a community bank lender does not typically deem one qualified according to bank recruiters and experts in the field. SVB though brought in the failed team and declared them a sucessor after just a year of two at a Board of Directors retreat. Sources indicate the Board was not all in favor.

Tons of changes occurred at about this time in 2004-2005 and BOOM in comes Bijian Madlessi the four time felony fraud arrest and largest borrower "known to bank management"

Sonoma Valley Bank connections and conflicts to Bijian Madjlessi---photos and videos posted on this article.

A better explanation of the Reno Sundowner/Belvedere shady and not quite arm's length tax purchase of bijan's foreclosed condos.

http://www.therenorealestateguide.com/reno-real-estate/washoe-county-tax-sale-and-the-belvedere

Sonoma Valley Bank~~It's mindboggling what went on inside those fours walls at that bank at the expense of more than 1300 shareholders, our community, customers, and employees. The closest to this Bijian Madjlessi moved on to Rabobank and Sonoma Bank or retired to their Kimberly/Sun Valley or Hawaii vacation homes. Some are selling their homes and moving to Napa trying to escape but the failed Charter Oak Bank is "blood on their hands" so they will not be able to hide over the hill either. The rest of the Directors roam our community with smirks on their faces in denial and indefference to the community victims. They pose for photos in cross town publications at Grand Openings, and promote their various events and advertise their businesses. Supporting their tight circles and cronies. Do they even feel remorse or responsibility for their actions?

Whether the other local papers decide to provide coverage or not, The Truth will come out and is unraveling now. Justice will prevail. And all those responsible will face those they have damaged and who suffer without jobs, retirement funds, college education for their children and grandchildren. The Days of Judgement are close at hand but not by us, by Higher Authorities.

SVB--What happened to fell The Angels from a good little community bank? What changed? Basehitter turned Homerun hitter? Swim in a small pond then wander out to the open ocean shark infested waters?

Incentive programs boosted risks and loss of a couple tough Directors who had the courage and intellect to stand up and declare "the Emperor has no clothes?". Other key control compliance and credit administration positions retired set a recipe for disaster.

Accountants, Loan Review, Appraisers, all failed to rotate for fresh set of eyes as required by Sarbanes Oxley courtesy of Enron but the bank did not practice sound principals

Director and Executive Officer fiduciary responsibility breaches. Enter Bijian Maglessi who easily manipulated weak controls, incented risk taking and fat bonuses for Execs. And some level of ignorance and willingness to be led astray from prudent standards.

Sonoma Valley Bank--All bank related local media archives have been duplicated including blogged comments, and photos for future reference. Concern had been raised regarding certain Press files not having searchable functionality after upgrading websites.

Rest assured Sonoma Valley, every article, quote and rebuttal blog has been retained and remains accessible.

Sonoma Valley Bank--If Petaluma Greenbriar was a condo conversion project, why were no improvements made? How were construction draws disbursed and who inspected them and approved work orders? Where was the money funneled to?

If appraisals were done based on "as completed" valuations and no improvements were done as projected then effective LTV's must have been off the charts well north of 100 percent?

Where was credit administration?

Sonoma Valley Bank--Diversification-Concentrations Risk Mgmt seems to have escaped SVB Execs and Directors. Basic financial principles. Bijian Madjlessi and partner Glenn Larsen had affiliated loans over $40 million exposed to the bank. Too many eggs in one basket.

Negligent risk management and Credit Risk Mgmt. Ineffective internal limits to mitigate risks.

Sonoma Valley Bank--Legal lending limits suspect since 25 percent of capital never got above $6 mill. Participant bank partners were Community Bank Napa (now Rabobank) and Charter Oak Bank. However each of them never got above $4 mill each. So total $14 million if fully participated still leaves $26 million over extended beyond the legal lending limit.

How can this go undetected by mgmt, loan review, accountants, examiners? Was it structured to avoid?

Sonoma Valley Bank--101 Houseco LLC was extended to facilitate purchase of defunct IndyMac project related to Courtside Village. The loan was "unsecured" $8.7 mill (funded by TARP proceeds essentially) an assignment of a note and lien. House and Bijian didn't forclose n gain clear title as SVB mgmt agreed so the final settlement months later (according to County Recorder filings) resulted in additional monies and prolonged exposure.

Where was Credit Administration? How does an "unsecured" loan get funded? Was House qualified? If not a real estate transaction, this raises more question for legal lending limit as "non-real estate" loans are limited to 15 percent or about $4.5 mill???

Again how do these transactions get through?

Departure of a key loan officer was coincidentally close in timeframe. Are these events related? Cause to terminate?

Sonoma Valley Bank--So if 101 Houseco LLC was knowingly approved by SVB Directors and they knew Bijian was fronting House as a shell, buying OREO at pennies on the dollar, then they knew Bijian was creating a Loss-Share claim to the FDIC gurantees and taxpayers ultimately covered losses?

If the FDIC would have understood Bijian to "derive benefit" and attribute the deal to the very person who tanked it, less than arms length transaction...wouldn't it stand to reason they may have prevented the deal or at least balked?

Yet SVB Execs supported and financed the deal using TARP monies?

How ironic, the responsible borrower, walks away after washing his hands with FDIC Loss Share claims AND TARP funds?

Does Congress and the current Administration really think this creates jobs and stimulates economic growth? I'll bet SIG TARP and FDIC IG would beg to differ with SVB?

Cronyism is rampant. These people sit at Chamber of Commerce, Rotary, and Fundraising Events side by side at the table, dividing and conquering all that is done in Sonoma from Staples stores, to new Hospitals invoking imminent domain to Infineon traffic flow.

The "hubris" these circles operate with is about to be changed. Our entire Valley is about to gain National attention but not for wine but for underhanded negligent acts and a certifiable "shark attack."

In fact, when you try to find anything about Sonoma Valley Bank all I came up with was this party
for a new bank opening. Recognize anyone?

http://www.sonomanews.com/Web-2011/SONOMA-LIFE-Rabobank-Opening-amp-Sweetheart-Auction-and-Gala/

Rabobank opening had photos of Cutting with old crony ex-Director Steve Page (Infineon) and a random photo of ex-Director Suzanne Brangham. Sources indicated ex-Chairman Bob Nicholas of famous family turkey op was also seen working the crowd to name a few.

It was like a frat-house reunion.

Where are the articles about the Cease + Desist order? Fiery shareholders meeting, Op Ed pieces, Bank closures, changing of the guard from Switzer to Cutting, and famous quotes like "all developers loaned to on the 101 corridor were well know" and "when they pass the cookie jar you take a cookie."

Where is the famous Lynch interview of Cutting and Switzer a week after failure where they claimed they were victims? Well The Fed Investigators and the Bloggers already have all that archived.

The local print media cannot erase the past. That would bring a great imbalance to the force. The TRUTH shall set them free.

I like your Star Wars reference. Riddle me this.

WHO is the SITH LORD ???

Who is the orchestrator of this conspiracy ? And why did they do it ?

Every time I write a post on Sonomanews.com in regards to the SVB, they remove it or fail to post it. They really do believe they are in a bubble and no one will read anything outside their little pack of lies.

I wrote in the Sonoma News under Sean Cuttings glorious photo:
Thats a very nice photo of Sean Cutting. Will this be cropped for his mug shot after he is arrested for insider deals that sank Sonoma Valley Bank? Nice that he can smile so brightly after destroying the shareholders and wiping out their investments into Sonoma Valley Bank. I wonder if the Champagne glass has Fuerza Energy drink in it?

Ahhh The Sith always two there are...Master and apprentice. Hard to say really who played The Chancellor...It lies between the handling Officer, The Senior Lending Officer and the CEO. But the Directors Loan Committee approved as did the full Board and the Compliance Officer doesn't appear to have filed SAR's with The Jedi Council.

Greed-Ego leads to denial-cover, denial and covering leads to Fear and Fear leads to The Dark Side it does.

Much Fear is present in The Force.

More photos added as visual aids of the players behind the Sonoma Valley Bank connections to Bijian Madjlessi.

SVB--SSE LLC (aka Sonoma Storage Emporium) demonstrates another pattern and practice of poor construction disbursement administration. This approx $15 mill loan was participated w Charter Oak Bank of Napa and short-sold around December 2010 for about 30 cents on the dollar. Not enough to save Charter Oak.

Poor administration apparently allowed cost over runs and left the 3rd floor areas cold shell and unfinished. With that volume of un-leaseable space the NOI and cash flow rendered the project challenged to ever really perform.

Why was this never finished? Where were funds used if not for the project? Was the construction budget followed? Proper third party inspections? Another construction project and with Madjlessi with similar Admin issues to Petaluma Greenbriar. Courtside Village shares similar incomplete characteristics.

SVB~~Courtside Village affiliates (aka Park Village, 101 Houseco LLC) are an oasis in a vast sea of emptiness off Sebastopol Rd. The phases SVB financed has approimately 60 units counting on a recent field trip, and only a handful (Maybe 6) are occupied. The rest are papered up windows with brown wrapping paper. The shells are mainly cold with unfinished walls, various supplies still in storage, wires hanging, etc. Construction again if only particially complete. This pattern for SSE, Petaluma Greenbriar, and Courtside Village all suggest weak administration on construction to ensure projects are completed on time and expenditures are not diverted to other unrelated ventures. Partially complete projects have little chance of generating sufficient revenues to pay bank loans.

Were inspections done properly and signed off, were construction budgets followed and any alterations approved by appropriate authorities? Were periodic valuations reflective of partially complete and questionable completed.

Sonoma Valley Bank~~Loan Governance~~Lending Officers have limits but larger loans need the Senior Lending Officer or President and beyond that the Directors Loan Committee (Downing-Chairman, Brangham, Switzer, and Sangiacomo). For the largest 10%-20% of the borrowers its typical to go to the Full Board for approval. Sources indicate SVB was anything but typical and most all the lending authority rested in the Directors Loan Committee. and virtually no loans were sent to the full Board. This tight knit group listed above, made all the lending decisions. Hence all the Bijian Madjlessi deals would have been approved by this group. However, sources also indicate after the major issues were identified in late 2009, Regulators forced the hand and required all the decisions to be made by the full board to assign proper liability and responsibility where it lay.

The 101 Houseco LLC deal (post TARP bailout) and specifically the attempt to mend errors of an "unsecured loan" as seen in the County Mortgage Records, all would have been well known to and required approval of the entire Board. This means Page, Pistole, and Hitchcock were also on the hook now with no excuse that they "didn't know" and had nothing to do with direct loan approvals.

So on what premise would the Full Board have approved an "unsecured loan" well in excess of the legal lending limit of 15% of Capital knowing they already had the SSE LLC, Courtside Village, and the Petaluma Greenbriar Apartments.

Cyrus Massoumi · President at ADEPTO, INC
I am Bijans Nephew. Far from defending him - I think that the Marin IJ is missing on reporting on the more hazy activities of Menlo Oaks. The Press Democrat story is not adequately reported - according to the article by P.D. the bank lost tens of millions on loans Bijan defaulted on - a huge sum for a small bank - this most likely caused them to default.
On a personal note: My grandfather - Bijans father in law passed away in January. My grandmother tried to kill herself a week later. Bijans wife Beguneh - (who if she underwent psychological evaluation would most likely be diagnosed as a psychopath) - rushed to the hospital right after the attempted suicide - (I was the one that found her). --- After this Beguneh alienated my mother and took my grandmother back to their $13M french style house in Mill Valley. ---- They for months were desperately trying to manipulate my grandmother in order to manipulate my grandfathers will. My grandfather was a business man and educated - my grandmother did not have those luxuries. ----- The day after my grandfather died Bijan offered my mother his "in-house" lawyers in order to help with the "estate planning". ------ They are thieves and the scum of the earth - I have been in their house many times and they live in utter luxury. They have a son Michael who barely knows how to communicate at the age of 24 who has an unlimited credit card which he spends $10,000 a month buying sushi and clothes -

Sonoma Valley Bank--Bank Directors can and often are held personally liable for negligence and Wrongful Acts resulting in FDIC losses. FDIC lost est $10.1 mill and Treasury $8.7 mill in TARP loans.

Not only does FDIC sue against the D+O insurance policy but sues Directors and Officers personally in civil courts to recover. There are some deep pockets on SVB's team including prime vineyards, and successful business ventures.

Insiders are often insured by D+O insurance equating from 50-150 percent of Capital and the FDIC and TARP alone hit that mark in losses suffered not to mention shareholders Class Actions which intentions were already quoted in Press Democratic articles late January and are suspected to be well underway.

SONOMA VALLEY BANK--Directors selling out and loading up the wagons. Chairman of the Loan Committee and the Chairman of the Board both are said to have multi million $$ properties listed for sale in the wake of the bank failure. Ironic timing given market lows and recent breaking news.

Dale Downing (Sonoma Market) ex-Loan Committee Chair is said to be headed to Napa already moved his golf membership. Also ironic since toxic Bijian Madjlessi loans approved by Downing were significant contributors to Charter Oak Bank (Napa) failure February 2011.

None of this posturing will shelter assets from pending Civil suits. Both Federal Authorities and shareholders are aware and tracking their moves.

My above comment was for Bob. But what? Some are leaving town? wow. really? As far as I'm concerned the total lack of local news coverage except for here indicates something very bad went down. Why not report on this? Why pull stories and comments? After all, over 1,000 stock holders lost everything. I know, I know. They gave a lot to charity .... just like Madoff and Milken.

Sonoma Valley Bank--What changed between 2001 to 2006? Cutting in, Martinez out, strong Credit Risk-Compliance Officer retired, outspoken directors Chicken Jerry and Nelson out. Greedy incentive program in. Then enter "Sandman" Bijian Madjlessi.

Wow. Just look at these facinating and quite seasoned biographies courtesy of Reuters.

http://www.reuters.com/finance/stocks/companyOfficers?symbol=SBNK.PK

Sonoma Valley Bank~~May 17, 2010 SEC Proxy 14a shows ex-CEO compensation at $854k and ex-SLO/President at $409k. Average comparable salary for a similar size and complexity bank in Northern California acording to recruiters and other comparable SEC filings, reveal the excessive nature of these compensation packages. Senior Lending Officers earn average of $150k while President/CEO's earn approx $200k. SVB Officers consequently were earning more than 2x-4x the average all the while, shareholder value was dropping. Only until the last few quarters did Exec Mgmt offer any relief from these exorbitant compensation packages. Too little, too late.

Sonoma Valley Bank~~Contracted Richardson and Co. a small accounting firm out of Sacramento every year since 1993 (17+ years?) to do the financial reporting. Acording to sources this small firm has limited (if any) other financial instituion clients (banks) and limited (if any) other publically reporting companies required to do complete SEC reporting. The post-Enron Sarbanes-Oxley regulations suggest prudent practice to rotate accounting firms (as well as independent loan review, etc.) every 3-4 years yet SVB used the same firm for 17 years straight? Objectivity and quality should be called to question given the very limited nature of the experience with banks and with publically reporting companies.

Why was a larger more sophisticated firm rotated in? Why not follow prudent practice to rotate accountants to help ensure indepdence? Shareholders have given rise to question disclosures in depth and quality in various news articles in the IT and PD both over the past few years leading up to failure.

Sonoma Valley Bank~~The SEC Proxy shows Suzanne Brangham as Corporate Secretary but reference materials also suggest Mary Deiter-Smith acted in an Assistant Corporate Secretary and also another name recently has surfaced as acting in a Corporate Secretarial role namely Christi Coulston (currently with Westamerica in Marketing)?

What interesting information were they made privy too regarding briefings regarding Bijian Madjlessi, Loan Handling Officers, Credit Administration, Loan Workouts, forbearances, etc. These people may play a key roles in investigations going forward?

Sonoma Valley Bank~~Chairman of the Audit Committee and designated Financial Expert for the Board of Directors Robert Hitchcock had a degree in "History" from UC Davis. No designated CPA credential or other readily recognized accounting background.

Why didn't Hitchcock question the 17-year run for the Bank's Accounting Firm? Why didn't he suggest any rotation? What conversations took place in the Board regarding Sarbanes Oxley and rotation or even Financial Expert designation for that matter?

Most Community Banks designate a Financial Expert as an Accountant with CPA credentials or at least an expertise in public filings, SEC reporting, proficiency in reading and understanding financial statements and notes to fiancials.

Could this be some of the reason the shareholders complained routinely about lack of transparency?

How is it the "Out of Area" lending went unreported and undisclosed for so long?

SVB~~~Director Pistole is President Elect for Sonoma Valley Rotary Club 2010-2011...makes sense with Cutting, Switzer, et al actively involved. How do the breaking Bijian Madjlessi stories impact this tour of duty? What if further inquiries come about? The gruel thickens yet again...and the circle of friends squeezes tighter.

Sonoma Valley Bank--Where did Juan Martinez go? Solid construction lender well liked by customers with SVB since 92 promoted to EVP Senior Lending Officer 2001 when Cutting arrived but left less than 2 yrs later 2003. Coincidence? Pond not big enough for both?

Sources also indicate Melland (primary handling officer to Bijian Madglessi largest customer now arrested on 4 felony counts of fraud) felt "passed over" when Cutting came in. This underlying resentment was present as late as 2007. Did it manifest into retaliation or become motive for other "wrongful acts?"

Sources suggest Martinez was even more liked than Switzer? Switzer hand picked Cutting as his successor and announced to Directors at a retreat. Calculated?

Controls for valuations, construction budgets, disbursements all were said to be sound under Martinez' watch.

Did Cutting have the construction experience? Melland? There were no other ranking officers in lending? Was this the point of no return?

Sonoma Valley Bank--Glenelly Inn is another example of an SVB loan, widely reported as suspected of diverting revenues and falling $100k's delinquent in taxes to the point tax foreclosures were enforced for nonpayment.

Its hard to believe if years delinquent that this loan performed as agreed? Why was this tolerated? "Wrongful Acts" known to bank management.

What credit administration was prevalent to monitor tax payments? Was the loan structured, risk graded, reserved for, and accounted for prudently? Or was the unsafe + unsound practice of "extending and pretending" employed to mask true performance?

Was this loan indicative of other "nonperforming loans" like the 10 Maple Street LLC project built and sat empty for years a majority of the square footage vacant?

Ironic Rabobank occupied that same empty building when Cutting moved over fourth quarter 2010?

Sonoma Valley Bank--Suzanne Brangham (MacArtur Pl and Saddles, formerly Ramekins) voting ex-member of the Directors Loan Committee was probably the most experienced construction-rehab developer on the Board. Research revealed she is responsible for constructing over 70 projects around the Bay Area.

Why wouldn't she exercise more prudent controls on these Madjlessi valuations, construction budgets, disbursement schedules, inspections for progress, etc? Why wouldn't she have limited exposures to these risky projects? She should have known better given her experience. Best practices and war stories both.

Sonoma Valley Bank~~Melland's departure in February 2010 is worthy of exploration. Did Fuerza Energy Drink conflicts with Bijian Madjlessi have anything to do with it? Cutting, according to sources, credited Melland with being "a big part of SVB's profits and success over the years" and was said to be against his departure. Were Regulators or the Board of Directors driving the departure?

If Directors or Exec Management were made aware of shenanigans with Melland's side business Magnussen Innovations (Fuerza) they would have been bound by banking guidance to file SAR's. But if the Directors chose to "overlook" these "Wrongful Acts" that are inconsistent with the Bank's Ethics Policy (liberated off the bank's website before it was taken down in the wake of the failure) which prohibit such side businesses and certainly soliciting gifts or accepting investments from a bank loan customer.

Did the Directors attempt to sweep this under the rug by simply firing Melland or encouraging him to leave the bank?

If Wrongful Acts went unreported, then all the Executives and Directors having knowledge and failing to report SAR's, all themselves likely violated laws requiring referrals. Wrongful Acts can be any suspicious activity whether its "proven" or not, and then referrals are to be made and proper investigations can be made by Federal Authorities and the DA, aggregated with other reports from prior years or other banks to establish patterns and practices.

Sonoma Valley Bank~~Unsafe and Unsound concentrations of Commercial Real Estate credit risk were observed in SVB reviewing Uniform Bank Performance Reports (Call Reports) and comparing to peer groups and against Federal Financial Institution Examination Council (FFIEC) prescribed guidelines dated December 2006 (right about the time the Bijian Madjlessi relationships surfaced). Why didn't the Loan Comittee and Board establish limitations consistent with Regulatory guidelines? Typically Construction Lending was limited at 100% of Capital while SVB averaged over 200% for December 2009 and June 2010 at failure. More than 2x average exposure. The other Best Practices measure of concentrations risk for Non-Owner Occupied Commercial Real Estate is 300% of Capital. SVB operated with over 750% of Capital while the peer group (similar size and complexity banks) operated at 210%. That's over 3x the average peer group exposure deemed reasonable.

Where were internal limits? Why weren't limits established and managed to? What mitigants were in place? What strategies for corrective actions were in place and if any, what were implemented? How did the significant concentrations to Bijian Madjlessi get through the Risk Management Systems of the bank?

Significant concentrations were centered in 1-4 Family Mortgages likely the Bijian Madjlessi condo conversions, the Courtside Village and other Petaluma Greenbriar projects.

Sonoma Valley Bank~~Executive Management was quoted in the IT as saying generally: "We were almost there when the regulators pulled the plug...our financials turned the corner." This simply is not true. SVB charged off $23 million in losses for YE2009 and another $5 million though June 30, 2010 before failure. But the unseen exposure was the volume of non-performing still laying on the balance sheet after the losses. At year-end 2009 another $22 million were considered the worst past-due or "Nonaccrual" which means over 90+ days past due, and NOT well secured or in process of collection. That suggests in the next quarter or two significant losses wre again anticipated as the "Pig works through the Python." The percentage of nonaccrual loans to total loans represented 16% at failure w peer only 3%.

There was only remaining Capital of $18 million at both YE09 and 2Q10 so the pipeline of continually deteriorating loans exceeded the entire capital base by $4 million so in effect the bank was insolvent. Execs claimed the bank turned a corner and showed profits for the second quarter but it was break even and that was supported by one time accounting entries like Deferred Compensation refunds and other one-time window dressing. The reality was the financials had NOT taken a positive turn and there were sizeable anticipated losses poised on the balance sheet that were going to cycle through very soon. This is not indicative of a stabilized financial institution.

Sonoma Valley Bank~~Executive Management was quoted in the IT as saying generally: "We were almost there when the regulators pulled the plug...our financials turned the corner." This simply is not true. SVB charged off $23 million in losses for YE2009 and another $5 million though June 30, 2010 before failure. But the unseen exposure was the volume of non-performing still laying on the balance sheet after the losses. At June 2010 another $39 million were considered the worst past-due or "Nonaccrual" which means over 90+ days past due, and NOT well secured or in process of collection. That suggests in the next quarter or two significant losses wre again anticipated as the "Pig works through the Python." The percentage of nonaccrual loans to total loans represented 16% at failure w peer only 3%.

There was only remaining Capital of $18 million at both YE09 and 2Q10 so the pipeline of continually deteriorating loans exceeded the entire capital base by $21 million (double) so in effect the bank was insolvent. Execs claimed the bank turned a corner and showed profits for the second quarter but it was break even and that was supported by one time accounting entries like Deferred Compensation refunds and other one-time window dressing. The reality was the financials had NOT taken a positive turn and there were sizeable anticipated losses poised on the balance sheet that were going to cycle through very soon. This is not indicative of a stabilized financial institution.

Sonoma Valley Bank~~Executive Management was also quoted saying Liquidity was "good." Frankly, looking at the key liquidity Industry measure of Loans-to-Deposits SVB carried nearly 88% at December 2009 and climbed to 100% at time of failure while the peer group averaged just 80%. This resulted in SVB climbing from the 62nd percentile up to the 82nd percentile in a short period. Regulators hardly would have considered this level rich enough under the circumstances.

To make these statements about Liquidity, and the Asset Quality numbers above in noncurrent, nonaccrual, losses, etc. in the local Press, at Shareholders meetings, and in SEC public filings, not to mention at open Shareholders Meetings, were tough to imagine because the numbers reported to regulators at that time were good.

Sonoma Valley Bank--"We were victims" "All developers were well known to mgmt". "These weren't sub-prime borrowers." Quotes from Switzer and Cutting interview.

If they claim victims, why are all other Northbay Banks still standing? Exchange loaned out of area to Roseville construction and suffered but didn't fail. Other Northbay Banks had exposure in the same markets as SVB yet survived.

Why? Greed, unsafe and unsound concentrations in Commercial Real Estate, Weak underwriting, poor credit administration, conflicts of interest between Loan Staff and Borrowers (gifts and Fuerza), denial to retract when issues arose, "allowing the tail to wag the dog" meaning Bijian was so large a relationship he "controlled" the Bank dictated terms and nobody stood up to him for fear bonuses would cease. Greed was the difference.

Sonoma Valley Bank--OK...does Bijian Magjlessi seem like a "Prime Borrower?". So perhaps these loans that failed SVB weren't by definition "subprime" but sources indicate principal paydowns were sparse if ever, interest only, even "evergreen loans" never paying complete interest yet SVB rolled over remaining accruals and capitalized it. Evidence of add-on little subsequent loans is evident in County Recorder filings. This is unsafe and unsound banking practice.

So what did SVB Execs consider Prime Borrowers to look like? Over-inflated net worth's from suspected appraisals? Properties carved up and flipped (according to APN Maps and title recordings)? Shell game of LLC holding companies so complex none at the bank understood? Straw Buyers and Straw Borrowers to mislead bankers, the Board, regulators, and Loan Review staff?

Or is a Prime borrower one that flies the loan staff on his private jet, party's on his 92ft Horizon Yacht, or invests in a loan officers side business Magnussen Innovations-aka Fuerza Energy Drink?

Or provide for growth sufficient to earn fat cat bonuses and the $425k for Cutting and $950k for Switzer. OK to turn a blind eye then? Claim a victim?

Sonoma Valley Bank--Switzer was routinely quoted "all our loans are in Sonoma Valley and our foreign loans are in Shellville" according to sources.

Interpreted "we ONLY lend local." What changed and when? How in the world did the entire capital base get bet on two seemingly unknown developers Madjlessi and Larsen (despite the pleas from Cutting and Switzer all these out of area borrowers were well known).

Economics of the 101 corridor are vastly different from Shellville.

Sonoma Valley Bank--Who introduced Bijian Madglessi to SVB or did he "let himself in?"

SVB was typically a "character lending" community bank relying on well known customer base. This "base-hitting" business model proved successful. Never take too many chances never get too far outta the box.

Did Switzer bring Bijian in? From aa friend at another Bank? Did Cutting bring him in from the San Francisco International Banks he came from? Did Melland find him slithering around perhaps a friend of Cary Calkin handling officer at failed PFF Bank?

Or as sources indicate, Bijian cased the joint and called one day and Melland just happened to answer?

If Bijian walked in off the street did anyone stop to ask "why here why now, why so far from the 101 corridor? Prudent bankers would have been more skeptical. Safe and Sound bankers would have done better underwriting.

Was the lure of fat growth and bonuses that great?

Sources indicate Bijian invited the Senior Loan staff on a plane ride and schmoozed from the first meeting. Were Cutting and Melland that "hypnotized" by this crooners song and dance?

Sonoma Valley Bank~~A tight network of loan brokers operates in Sonoma and several are said to have referred business to Sonoma Valley Bank over the years. Not only suspected Bijian Madjlessi but also other deals from Southbay investors on various commercial buildings around Sonoma downtown. Some of these loans said to be non-performing some of which are now in foreclosure or contract dispute status. It calls to question the referral system Sonoma Valley Bank had in place, the underwriting or lack thereof they had, and the characters they dealt with. What fees were paid for these referrals and was there any "claw-back" or hold back arrangement in place to allow for deterioration, credit quality, performance status? Or were referals simply paid for the initial introduction? This ties back to the Executive incentive program suspected of only reawarding growth without any recognition for "quality."

What are D&O policy limits and coverage restrictions? The total losses for shareholders is $50-70 Million market cap plus over $10 million FDIC loss upon closure and add on $8.65 US Treasury TARP loan, which was given directly to Bijan apparently, no?

I'm still trying to reconcile why the SVB President/Board would give the above mugshot forebearance on $7MM out of $11MM days before closure rather than foreclosing? Were they aware of how booby trapped Petaluma Greenbriar was with value killing parcel line redraws and covering up ?

And what about the last minute assignment obtained by SVB to apparently perfect the Santa Rosa Courtside Village TARP loan folly ? Did any money cross the table to get Bijan's cooperation ?

And why on earth would anyone loan all that TARP money to this sucker without a lien, in the first place, and have to be forced at the last minute to correct it ? Wouldn't it be amazing if their WAS a fly on the wall ?

That's exactly right. They were all working it out together. Everyone got a piece of the action. From Bonuses that were not earned to exorbitant Salaries that were not earned to Vacations, Jet place rides and then straight up bribes to a fake energy drink that was just a way to launder the payments. The whole group was working it together with Bijan every step of the way and he bragged about his control over the bank because of it..If a few individuals had not come forward, they would have all slid this under the "economy" rug and walked away with the loot. That was their plan even while the bank was crashing they were taking everything they could get.
Just think about how much would have not been known while the bank was failing and the losses were being pushed on the FEDS and shareholders. Bijan almost got away with not having to file the security for the 9 million in TARP money, Brian Melland was walking away with the multiple $50,000.00 so-called investment checks in exchange for pushing the loans and so on and so on... they all had a stake in it right up the ladder to the top..

SVB--Loan Officer Melland's "Fuerza Energy Drink", is said to have his personal ownership, and Bijian Madglessi and Glenn Larsen (Bijian close confidant and related SVB borrower) as owners.

Other investors in the initial round may not have known 3 of the shares are conflicted through Melland?

Side investments were unethical according to SVB Ethics policy and create conflicts and even legal breaches?

Was this triangle of unethical behavior disclosed to Cutting? (Mellands Supervisor). Did he sanction the activity? Did Switzer know (Cuttings Supervisor) Did the Board approve?

Did the Board later fire Melland or encourage his departure w severance? Was a SAR filed? If not why? Cover? Intimidated?

SVB--Where was Credit Administration while these Bijian Magjlessi affiliate loans were made? Why didn't internal reports tie these loans Central Information Files (CIF) or Loan and Deposit systems? Did Execs intentionally mis-report to avoid legal lending limits? Its to hard not to imagine Melland and Cutting didn't know Bijian held 49 percent in these straws?
The Loan Committee (Downing, Switzer, Brangham, Sangiacomo, and Nicholas) all had to have known these large loans to SSE, Courtside Village, and Petaluma Greenbriar were Bijian backed. As character lenders they "HAD" to know and trust who was backing them (Bijian). Otherwise they never would Approve. If they were Bijians projects who else would they think they were dealing with?

So they knew? Knew the players, backers, legal lending limits, disbursements, lack of progress on construction-rehab projects, and still approved? Never sounded the alarm?

If rumors are right, paying to perfect liens and forgive millions in loans just days before the bank closed appear
highly unusual and suspect. And then they said publicly "we were shocked" and "the bank died to soon." Talk about ZERO credibility.

Why did they continue to do favors right up to the last? What was the leverage? Must be really foul.

SVB--Settlement disbursements for perfecting 101 Houseco LLC would have been readily available in Title Instructions and recorded by wire or check. Even if shell-straw LLCs were used, internal Credit Memos approved by the Board would describe any additional payoffs to Bijian or his affiliates.

Originally, according to sources, its believed Jim House (Houseco) bought a discounted Note with recorded lien. This Note was collateral and an assignment thereof taken. However this may not have qualified for higher RE secured lending limit. After purchase House and Bijian agreed w SVB to foreclose on Bijian interest, take title in House name, then pledge lien. One problem, Bijian was the tail that wagged the dog. He muscled SVB Execs (with some leverage) and stalled. Regulators must have been furious citing poor collateral perfection so "the deals were cut" to satisfy Bijian months later after much wrangling. This is where the corrective measures were recorded in County Records.

SVB~~Switzer was quoted in the IT stating "We were victims of the economy" and "all the experts said it couldn't happen here" referring to real estate meltdowns. Switzer incinuated the professional financial investor mentality was somehow "it could never happen to us" referring to just short of two decades of boom markets.

However, for any student of finance, experienced bankers especially that lived through the California, New England, Texas/Oklahoma, Farm Crises, and S&L debacles of the 80's-90's and certainly for Switzer with over 30 years experience and a former OCC-treasury Regulator he would have to understand financial and economic cycles and they aren't all BOOM YEARS! Cutting is a USC MBA grad as well certainly he must also understand we don't live in bubbles...they burst on average every 7 years and we were on a 15+ year run. We were ripe for a downturn.

SVB~~Sonoma Valley Bank was the only Northbay Bank failure. Noone else were "victims of the economy" as Execs claim. Looks a little silly to hear our hometown hero's say such things when noone else failed.

Charter Oak Bank-Napa swallowed $5 million in toxic asset/Bijian Madjlessi (SVB) losses of the $13 million that choked them to death February 2011.

Napa Community Bank (now Rabobank) also took the toxic pill from SVB participating in some of the Bijian Madjlessi deals but Rabobank came along before things came to a head and they are large enough to absorb them. But this begs to question, if Rabobank owned a piece of Bijian, they must have known how ugly it was...yet they still hired Cutting and Gorham both from Sonoma Valley Bank? Something is remiss here. A NBBJ Press Release when Cutting signed on with Rabobank Sean Dowdall, Rabobank communications manager said " “There were a lot of elements to what happened at Sonoma Valley Bank,” said Mr. Dowdall. “We think Sean knows the community very well. With the criteria we are looking for we think he is a great fit.” YEAH ya think? Just what did he mean here? Wrongful Acts, Bijian's fraud? Whatta think...did he know about Fuerza Energy Partnerships forged with the Bank Loan Handling Officer and Bijian? Was he referring to "intimidation" by Bijian some control he appeared to have over Bank Management? Other conflicts of interest?

Do you think Rabobank knows now? After Bijian's fraud coverage?

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.

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

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.

Bijan is busy as a beaver.

http://www.corporationwiki.com/Nevada/Reno/nevada-belvedere-llc/46909739.aspx

He works so hard.

http://www.corporationwiki.com/California/San-Rafael/bijan-madjlessi/41711979.aspx

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

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."

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.

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?

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.

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?

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.

A blockbuster is about to be reported on this story. I wonder who beside Bijan has rolled? <crickets chirp>

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.

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

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...

Above the Fuerza van it says "No time for laundry?" A laundering vehicle? Oh my.
Didn't Bob Newkirk allude to this above?

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.

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

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