The Verdict is in…..

California voters will soon demand access to the medical records of all potential elected officials and those seeking re-election prior to casting their votes at the polls. You ask why….well, Friday in a San Francisco Court Room, an attorney made it clear that unknown medical conditions of our elected officials can result in criminal activity.

Speculation is sure to grow in the coming weeks and months whether Ms. Hayashi is alone in her medical condition, as what we have seen out of Alameda County in the past two to three decades might lead a large portion of Alameda County to question the medical stability and judgment of their elected officials.

It appears safe to say that Ms. Hayashi’s political career is seemingly over. The No Contest plea for thief in conjunction with the revelation that a serious medical condition has impaired her judgment closes all elected public service doors. What levelheaded California resident would vote for a person who might steal from California and/or their residents without a word of remorse, then seek sympathy for their stupidity by claiming a medical condition that no one knew of, or is there evidence present the condition actually exists?

There appears little question a medical or personality disorder may exist of some sort, as her initial defense to the charges revolved around a “distracted shopper” theory. However, in court Friday that theory seemed to have gone the way of Ms. Hayashi’s overall judgment….and vanished!

Studies show most politicians have a higher degree of narcissism then the general population. This self-absorption results in a blurred view of the world around them, and hinders their ability to understand they are equals to those who have elected them to office. Therefore, when politicians break the law, as many of their constituents have in some form or another…from speeding tickets, DUI’s, thief, drugs and beyond, elected officials would probable score substantially more points with their constituents if they reflected the human aspect of their bad decisions (poor judgment)….that being accountability, remorse and the wisdom of the consequences.

When the voters of California start electing people who have the wisdom to accept their mistakes, own up to them, make right for them and learn from them, we the people of California may again be honored to be the State other State’s look up to….not the State for which many make the butt of their jokes….I feel confident Ms. Hayashi will make Lettermen’s top 10….just for starters.

What will 2012 hold for Alameda County?

As 2011 nears a close, Alameda County politicians, both past and present continue to set new lows in public service. Assemblywoman Mary Hayashi from Alameda County (18^th District) is fighting for her political future…most saying she will lose that fight…as she faces felony charges in San Francisco for shoplifting.

As Ms. Hayashi attempts to extract herself from this self inflicted damage, the people of Alameda County should ask the question, do the politicians of Alameda County indeed believe the legal system or the people they serve are so out of touch with reality to indulge the defense of “texting while shoplifting”.

As defenses to civil and criminal allegations go, it is indeed creative, though only a truly desperate narcissist would attempt transference and projection to their cell phone(s). Undoubtedly a first…but surely not the last for an Alameda County politician (past or present) desperate to blame a third party for their stupid (and perhaps criminal) behavior.

We the people of California can only hope that 2012 brings change (for the better) in those that we elect to guide this state. As we look around the State of California, the people of Alameda County should do a bit of soul searching. Many of California’s problems and scandals have some roots in Alameda County, and with politicians (past and present) from that region of the State.

It would appear many of California’s problems lead back to Bill Lockyer and the Treasurer’s Office. Perhaps Mr. Lockyer and his political resources, cronies and groupies should focus on the State’s financial problems, and not with self naming public trails, buying his wife a political career, or helping cronies who have done the State of California wrong.

Unless the voters demand accountability, politicians will continue their narcissist behavior and project responsibility for their incompetence and failings onto any unsuspecting party….or possibly an electronic device. George Orwell’s worst nightmare….the point which Big Brother has no one to blame other then Big Brother…not even Hal 9000 saw this coming!

Happy New Year!

Blowback in Alameda County?

As we continue to research, investigate and report on past and current Alameda County politicians in our efforts to shed light on the Back Story’s, we were not anticipating much in the way of blowback. Though what we have reported on so far is almost entirely from public records and sources, it appears those who have to date been mentioned in the Back Story may want to silence us, or at least control what we research or disclose.

A source close to Bob Knox advised us he recently hired a Marin County Attorney who specializes in criminal defense and white collar crimes to file a Personal Injury Claim. The claim was recently filed on behalf of Robert G Knox, RG Knox Company LLC, and CPC Holdings Inc. naming the Defendant in the case as “John Doe 1.” It is our understanding a claim against a “John Doe” reflects that a plaintiff is seeking to hold an unknown party responsible for a perceived injury. John Doe claims in the political environment have a long legal precedent of being viewed as “fishing trips.”

At this point, we have no information on what Mr. Knox’s claims or cause of action maybe, though it is notable that each of the plaintiffs has been mentioned in prior installments of the Back Story.

A source, who crosses paths with Bob Knox in the business world, indicates Mr. Knox is extremely unhappy with The Back Story.

We have also begun to see Bill Lockyer and his wife Nadia close ranks as it relates to our efforts to research and report on Alameda County. We have made two request of Bill Lockyer’s office, with no reply. Our request to Nadia Lockyer’s office was answered by her Chief of Staff implying they might consider answering our questions if those involved with The Back Story would first reveal themselves.

Nadia, how would the identities of people involved with The Back Story help you better answer questions related to your job as an elected official in Alameda County?

To date we have provided parties mentioned in The Back Story a professional courtesy and respect to address our questions in private, allowing them time to carefully reply. We may reconsider that approach in the coming months.

Perhaps Bill Lockyer, his wife and Bob Knox should take a lesson from Gavin Newsom. Mr. Newsom was the only UC Regent to openly embrace an invitation to discuss the issues of UC students at a recent Regent meeting. The balance of Mr. Newsom’s fellow board members abandoned the meeting after they faced pointed questions from students.

In closing this installment, we only need to read the front page of most major newspapers or Google current events to understand that the lack of governmental transparency and attempts to silence those that seek answers and/or peacefully protest is a road filled with endless political land mines, here and aboard. 

California Foreclosure Scandal - Tip of the Iceberg

As California Attorney General Kamala Harris debates her next move on the 50 State settlement proposal surrounding the nation-wide foreclosure scandal, we want to impart information from a recent court case that sheds further light on the problem facing Kamala Harris. We imagine this particular court case is just the tip of the Iceberg as it relates to the foreclosure scandal as a whole within California.

As referenced in prior installments, Ms. Knox and a co-tenant investor procured a residential investment property located in Alameda County. Court records specify Ms. Knox’s co-tenant investor demanded termination of their business relationship and the prompt sale of the co-owned property. The co-investors demands were based on the uncovering of unauthorized use by Ms. Knox of the property in question as collateral for a loan. (See prior installment)

In spite of Ms. Knox agreeing to sell the co-tenant property as requested by her co-investor, Ms. Knox concealed the fact she had no intention of signing a listing agreement therefore rendering a sale impossible. Court records and an independent source confirmed this. Both co-tenants must sign a listing agreement per California Law to allow for active marketing and sale of a property.

Court records and Ms. Knox’s own testimony reflect that while concealing her intentions not to sell the property, Ms. Knox sold a real estate option and non-compete agreement to a neighboring property owner. This option and agreement were sold without the approval or knowledge of the co-tenant investor or Bank of America, the Bank holding the mortgage on the property. The option was a right of first refusal. Ms. Knox was paid a substantial amount of money for the option and non-compete agreement.

A non-compete agreement is such that a property can no longer be operated for its intended purpose for a certain period of time. The right of first refusal option makes listing and marketing a property nearly impossible. Such an option must be disclosed, therefore telling any prospective buyer a third party holds a right to match your offer. Therefore, no interested party would waste their time or money with due diligence, knowing a third party would have the contracted right to match his offer.

As a result of the above events, the co-tenant property was foreclosed on by Bank of America without any attempt on their part to seek an understanding of the problems that lead to foreclosure. There is no evidence Bank of America was aware of Ms. Knox’s activities. However, in light of the fact, Bank of America was aware of Ms, Knox’s unauthorized use of the property to collateralize a loan, Bank of America was on notice.

The co-investor’s entire investment was lost, and no funds from either the non-compete agreement or option for right of first refusal were distributed by Ms. Knox to her co-investor.

The Back Story has been informed the Alameda County District Attorney, the State Attorney General, Bank of America and the FTC have been notified of this matter.

Rosegate Assisted Living - KMJ Associates

In an earlier installment it was noted that Ms. Knox (Kati L Knox) and her San Leandro based business were the subject of a civil court proceeding in Alameda County. Though court records reflect alleged claims of real estate fraud, two specific mortgage related loan claims caught our attention.  In light of the mortgage crisis and on-going nation-wide investigations by local District Attorneys and State Attorney Generals, we felt reporting on this matter was in the public's best interest.

Here’s what we know: Court records reflect that Ms. Knox personally acquired a $100,000 Equity Line of Credit (ELOC) using a co-tenant (two or more owners of a property) investment property as collateral, for a down payment on her (new) personal residence in Danville. Court and public records reflect Ms. Knox neither asked nor received approval from her co-tenant investor to use the co-tenant property as collateral. Furthermore, as supported by public records, Ms. Knox did not inform Bank of America (the source of the ELOC) when acquiring the loan that there was a co-tenant on the collateralized property. Moreover, court records indicate Ms. Knox does not recall filling out a loan application. We asked Bank of America about Ms. Knox’s claims. They made it clear every loan of any amount requires a loan application, and co-tenant (co-owner) disclosure is a key part of any real estate loan application. Most, if not all, loan applications do have truth in fact clauses (aka perjury clauses).

Sources and records indicate that when Ms. Knox’s co-tenant investor uncovered the unauthorized loan, Bank of America was contacted via the co-tenants attorney seeking an explanation. Bank of America replied almost immediately indicating the loan would be promptly repaid and closed, which it was. 

The second matter relates to a loan from a current employee of Rosegate Assisted Living. After reviewing court records and determining this employee testified under oath and is currently listed on Rosegate’s website, we will refer to him by name; Darryl Chin (Mr. Chin).

Both Mr. Chin and Ms. Knox admitted Mr. Chin contributed money towards the “project”, in the amount of $30,000. Mr. Chin also admitted under oath that he and Ms. Knox were dating at some point.

Now where this transaction seemingly goes wrong is in who or how it was repaid. While under oath Mr. Chin and Ms. Knox had completely different answers on how the funds were repaid. Ms. Knox indicated that Mr. Chin’s employer; KMJ Associates (Rosegate Assisted Living) repaid the $30,000 in funds. However, Mr. Chin stated the funds were repaid via “Kati Knox’s personal check”. Clearly one of these parties is misleading the courts for reasons that are yet not clear.

According to court records Ms. Knox also admitted concealing from Mr. Chin the $100,000 ELOC she acquired.  Ms. Knox stated, “It wasn’t something I talked about”. It appears Ms. Knox intentionally concealed the $100,000 ELOC from both her co-tenant investor and Mr. Chin, as well apparently concealed from Bank of America the fact she had investors other then herself.  Ms. Knox also admitted she did not notify Bank of America she was using the funds from the ELOC as a down payment on a personal residence. Such information is required on loan applications, per Bank of America policy.

We found no evidence to indicate how Mr. Chin’s $30,000 contribution was used, or if it was even used towards the real estate transaction, as there is a key disagreement on an important part of that arrangement…the repayment of the funds. However, such a transaction between an employer and employee whereby a personal relationship has or does exist between a superior and subordinate has the potential for a very interesting sexual harassment claim.

We attempted to reach Mr. Chin regarding this matter. He failed to respond.

Rose Gate Assisted Living - San Leandro

This installment of The Back Story will focus on Rosegate Assisted Living, the San Leandro California elder care facility owned by Kati (Kathleen) Knox (Ms. Knox) and KMJ Associates. Rosegate has been discussed in prior installments, so we felt it a fitting time to look deeper into this company.

In our review of Rosegate, we spoke to multiple sources, surfed through the internet, and researched public records. Our efforts resulted in a surprising and very unpleasant discovery.

Apparently, Ms. Knox’s grandmother was a resident of Rosegate and under the care and direction of Ms. Knox’s staff. For reasons that appear driven by gluttony for financial gain, Ms. Knox asked her staff to substantially reduce the level of care and service provided her own grandmother, while continuing to charge for the higher (contracted) level of care and service. The substantial reduction in the level of care and service was not authorized by any party holding the power to act on behalf of Ms. Knox’s grandmother.

The breached contract was discovered and Ms. Knox and the Rosegate staff were queried regarding their actions. Multiple sources indicate Ms. Knox’s justification for Rosegate’s breach of contract was based on Ms. Knox’s belief Rosegate has the right to run a “social experiment” on a resident without consent or authorization of the patients family or a doctor. Sources indicated Ms. Knox’s grandmother was quickly removed from the Rosegate facility by the authorized representative of the family.

Public records and multiple sources reflect when Rosegate’s staff and Ms. Knox were asked to hand over files related to this matter, as required by law, Rosegate refused to do so. The Department of Social Services(DSS) demanded Rosegate honor the legal rights of the patient’s family (in this case Ms. Knox’s own family) to obtain the files. Rosegate refused the demands of DSS and Rosegate was subsequently cited under California Code of Title 22. With the threat of further citations and potential loss of their license, Rosegate provided what they claimed to be a patient’s file as required. In fact, what apparently was provided was completely void of the legally required medical records and documents as required under California Title 22. The DSS subsequently cited Rosegate for a second time. We at The Back Story would be of the opinion that Rosegate’s violations of Title 22 were an attempt to cover-up more serious violations of possible (financial) elder abuse in conjunction with breach of contract.

The DSS was very coy and evasive when we sought further information on any ongoing investigation in to this matter.

We found on Rosegate’s website a tag line that states “We treat our seniors like family.” If for any reason this tag line defines Rosegate’s mission statement, or any part of their mission statement, then there would be a pressing concern for current and future residents.

We made attempts to discuss this matter with Ms. Knox, however, no reply or comment was provided. 

R.G. Knox Company LLC

We are back after a month of preparation for our next round of installments. Our absence has been spent delving into the finer details of earlier stories.

In prior installments, we touched on Bob Knox’s new investment banking firm, R.G. Knox Company LLC, located in Park City, Utah. This is the investment firm that at present is approved by the California State Treasurer’s Office to provide and underwrite investment activity of taxpayer funds.

It was brought to our attention the website for R.G. Knox Company LLC has a very conspicuous public misrepresentation which after investigation looks as if it were intentional. The website states “R.G. Knox Company, Established 1975.” In fact, public records from the State of Utah reflect R.G. Knox Company LLC was registered in 2005….NOT 1975. Further evidence of this intent to mislead clients arises from SEC Filings prepared, signed and filed by Bob's wife, Karla. These filings state for the record R.G. Knox Company LLC was not an active company until 2007. Ms. Knox is a registered CPA in California and Utah. Her involvement in this matter has been referred to the California and Utah agencies that oversee CPA's and their certification.

A source contacted Mr. Knox in an effort to sort out this matter. Bob stated he "started the company in San Francisco in 1975.” Well, last we checked San Francisco is NOT in Utah. Zion’s Bank (for whom Mr. Knox was recently employed) was contacted to determine their involvement, if any, with R.G. Knox Company LLC. As a publicly traded company, as well a bank, Zion’s has strict reporting requirements which must be followed. Any such involvement with R.G. Knox Company LLC must be publicly disclosed. Zion’s Bank did not appear to have any such records.

What we at The Back Story found very fascinating is Mr. Knox’s Utah based investment-banking firm was formed and active during a period of time for which he was an employee of Zion’s Bank in their investment banking division. This may raise relevant questions concerning conflicts of interest, self-dealing, and perhaps insider trading. The SEC, as well federal laws have strict guidelines for officers and employees of publicly traded banks and investment firms. Acting on behalf of your own private firm while an officer/employee of a publicly traded bank/investment firm is an area of interest in this post Madoff era.