Lawsuits, debts—plus expensive shopping sprees and vacations—loom over north Sacramento city-council candidate Allen Warren
The businessman and developer boasts blue-chip endorsements—and a track record of legal entanglements
Perhaps more than your everyday Sacramento political candidate, District 2 city-council hopeful and native son Allen Warren, who placed second in this past June’s primary, comes with an extensive track record of legal entanglements. He has a rich, 25-year history as a businessman and developer in north Sacramento, and has been endorsed by the Sacramento Metro Chamber and Mayor Kevin Johnson. But this year, creditors are suing him for millions in unpaid bills.
This is not to mention hundreds of thousands of dollars in liens that have been issued against his companies’ properties, or that he’s been sued for tens of millions of dollars over the past decade. Even his possible future employer, the city of Sacramento itself, has taken one of his companies to court for accepting loans but not finishing millions of dollars of work on a housing development.
The candidate, who spoke with SN&R at his Del Paso Boulevard campaign headquarters this past Monday, defended his record, reminding that “in all fairness, we’ve come through one of the worst recessions in our lifetime.”
Numerous companies have gone bankrupt since “the banking industry began constricting in 2007,” he added, including a handful of his own. But he pointed out that New Faze Development—which he owns but no longer oversees daily operations of—“made it through the depths of the recession.”
Warren himself, however, remains knotted in the recession’s tentacles. According to court documents, the Sacramento Superior Court recently ordered him to pay nearly $300,000 in outstanding personal credit-card debt and interest to Wells Fargo Bank. Many of these purchases were made in ’07 and ’08, during the height of the recession when Warren’s businesses were struggling.
These purchases defy the proverbial belt-tightening and include travel in Italy, Spain, Germany, United Arab Emirates, Philippines and Jamaica; getaways in Alaska and Napa Valley; and more than $50,000 worth of top-tier fashions at Julius clothing, according to May 2012 court transcripts.
While these debts are still owed, Warren insisted that he’s “paid off more consumer debt than most people have paid in 10 lifetimes.”
Currently, however, Wells Fargo is also suing Warren over repayment of another loan, as well as a line of credit and interest totaling more than $1.8 million. This case, which was scheduled to begin trial October 2, but has been postponed again until December, has already seen its fair share of turbulence.
Warren’s original attorney, Robert Whitworth, for instance, requested to be relieved as counsel this past spring, citing “a breakdown of communications” with his client. The candidate then went months without legal representation, was nonresponsive to court orders, according to Wells Fargo, and also failed to appear at a scheduled deposition (he’s currently participating in deposition and has retained new counsel).
Warren has stated that he’s had too many “distractions” to deal with the case this summer—and even suggested that race is a factor in the litigation.
Regardless of the facts in these cases, there’s no denying that the lawsuit and Warren’s business ups and downs are baggage. Or worse: It makes the candidate and North Sacramento native appear that he’s not so good at paying his bills, that he dodges accountability.
Wells Fargo made two loans to Warren—one for $800,000 in October 2005, and another $1 million “revolving line of credit” in August 2006. The bank says it gave Warren multiple postponements of repayment and also reduced the principal amount on one loan—but his debt remained unpaid four years after the final extension.
The loans became due in September 2008, Warren stopped making payments in November of that year, according to the bank, and Wells Fargo took legal action in August 2011. In March of this year, a judge referred the civil case to a trial setting.
Around this time, attorney Whitworth says Warren ceased communicating with him. The attorney, citing that he had “no [alternative] but to file [a] Motion to Withdraw as Attorney of Record,” filed this declaration to be relieved as Warren’s counsel on March 29:
“There has been a breakdown of communications between [Warren] and myself. To specifically state the nature of the breakdown in communication might prejudice defendant. On [numerous] occasions, our firm has sent letters to the client concerning this matter, which have gone unanswered.”
After Warren’s attorney quit, the candidate continued being nonresponsive to court orders for more than three months, according to the bank and court records.
For instance, on April 2, Wells Fargo filed a motion to compel Warren to provide additional responses and documents; he did not respond or file opposition.
On May 29, the bank served Warren notice to appear at a deposition for June 14. The candidate was a no-show and did not return phone calls, which led to Wells Fargo pursuing monetary sanctions against Warren—to which Warren was also initially nonresponsive.
Finally, on July 9, Warren’s new legal counsel, Mather-based attorney Douglas Kirkman, filed on July 17 a declaration opposing the bank’s request for monetary sanctions—and also pursued monetary sanctions in the amount of $8,500 against Wells Fargo.
In this July 17 document, Warren explains the departure of his original attorney, Whitworth, as well as his nearly 14-week absence:
He claims that Whitworth didn’t resign because of a “breakdown in communication” and says his former attorney simply could not handle the “magnitude of this litigation.”
It also turns out that Warren was “out of state” on “family vacation” during his scheduled June 14 deposition and for the subsequent eight days, and was only able to acquire “able counsel” on July 1, when he met with attorney Kirkman at a Mel’s Diner in Roseville, according to the court document. He says he was unaware of many of Wells Fargo’s filings and court deadlines.
Warren also wrote that he was “very surprised” by the bank’s attitude toward him.
“I have served on Wells Fargo’s Community Advisory Board and thought this matter would have been settled amicably because of my service to the bank,” he stated in the declaration.
Then, Warren added: “I am concerned that I have been a victim of the type of racial profiling which has recently led the bank to pay hundreds of millions in settlement to their other victims of racial profiling.”
Back at his campaign headquarters, Warren told SN&R that the litigation is “a situation that we hope to resolve” outside of trial.
A spokeswoman for Wells Fargo’s attorney at Ellis Law Group confirmed that the trial will again be pushed back, at the request of Warren’s counsel, until sometime in December. But she predicts it will still go to trial, adding that the two sides “don’t seem to be meeting.”
Warren maintained that he does not owe Wells Fargo. “I put money into an investment vehicle that was brought to me by Wells,” Warren explained. “It’s probably more complicated than we can get into, but the case will sort through it. I had millions and millions of investments in Wells; now what we’re talking about is the last $1.8 million.”
He insisted that this case, and his $300,000 in credit-card debit owed to Wells Fargo, “will come together” and he will be “vindicated.”
In court documents, Warren has conceded that he has had “great difficulty with multiple distractions” this summer, which prevented him from paying proper attention to his litigation. He was a victim of personal-identity theft, he says. His attorney was unable to deal with Wells Fargo’s “papering-up” and deadlines, and he couldn’t find a replacement.
There have also been myriad other possible distractions in Warren’s world this past year, not the least of which might be running for city council. Such as the city’s suit against Nuevo Partners and Warren’s Del Paso Nuevo development. Or, in August, when Warren agreed to pay off more than half-a-million dollars to Mechanics Bank for breach of a promissory note.
Warren is also being sued for $500,000 by SureTec Insurance Co. and is scheduled to go to trial next year, according to court records; Warren says he is in the “final stages of settlement and dismissal.” He also has two other major pending lawsuits, according to court documents.
These legal entanglements come on the heels of more than five years of business woes, including dozens of liens against his properties, unpaid city reimbursements and taxes issued against Warren and his companies. The candidate stated that he’s paid off most of his taxes; indeed, including a lien of nearly $750,000 to the Internal Revenue Service, according to news reports.
Warren has made a $54,000 loan to his city-council campaign, according to public records, and has raised a total of $122,955 this calendar year, through June 30.
Despite all these issues, Warren’s received endorsements from the Sac Metro Chamber, the mayor and, during the primary, The Sacramento Bee. The candidate insists this is because, at the end of the day, he’s still the right guy for District 2.
“These questions that you ask, they’re valid questions. But how does that impact somebody else’s life? They really don’t care,” Warren responded.
“The reality is most people have had issues with financial institutions or banks in one way, shape or form. They understand what has happened. It has not been easy. They understand how difficult it is to stay employed, let alone in business.”