Hearst mansion owner’s bankrupt LLC got a $150K federal bailout

Leonard Ross is asking a bankruptcy judge to let him accept six-figure handout from SBA

Los Angeles /
Jun.June 30, 2020 05:37 PM
The Hearst mansion’s fate is tied into bankruptcy court. (Credit: Istock)

The owner of the old William Randolph Hearst estate is trying to sell the mansion in order to escape from $67 million in debt and exit bankruptcy.

But that owner, an LLC controlled by litigator Leonard Ross, also received a $150,000 Economic Injury Disaster Loan from the Small Business Administration, claiming the Hearst estate is used as a small business.

Ross has asked federal bankruptcy judge Vincent Zurzolo to approve “TBH19 LLC” receiving the loan, which has already been deposited into the LLC’s bank account.

Zurzolo scheduled a hearing regarding the loan for July 21 in downtown Los Angeles.

Ross’s main creditor, Fortress Investment Group, has not filed a motion on the matter, and a message left with the New York City-based investment management firm Tuesday was not returned.

The plea to keep public assistance is the latest twist in Ross’s colorful legal career, and continued efforts to leverage a mansion he listed for sale in February for $125 million.

Ross has owned the 1011 N. Beverly Drive mansion since 1976, a property that was formerly home to Hearst’s mistress Marion Davies, and site of a “Godfather” film scene.

The loan also highlights the slapdash nature of government handouts amid the coronavirus pandemic. Economic Injury Disaster Loans can be given to small businesses of one person, though recent applications were limited to agricultural businesses.

According to a court declaration written by Ross himself, the Trump administration approved his LLC’s $150,000 loan ask on June 12, and deposited it into the LLC’s account on June 15th.

Ross acknowledged that his LLC was not to receive such monies under his bankruptcy orders without prior court approval.

“Due to a misunderstanding, debtor signed the final loan documents believing that the debtor had time to apply for the court’s approval. Debtor believed that it was just completing the loan application and the loan would not be funded” until later, reads the declaration.

And his small business?

“Debtor’s business is to lease the property for filming location, leasing, parties, and other social affairs,” the declaration notes, adding that the lifting of stay-at-home orders will let Ross, “lease the property beginning in July which is normally the beginning of the high season.”

TBH19 LLC’s leasing business includes renting the property to Ross himself.

“The property is rented by debtor not only to me and my family as a permanent residence, but as a temporary residence to others, and as a venue for special events,” per the declaration.

Ross claims the LLC made $3 million in 2018 gross rental income. The declaration does not specify how much of that rental income came from Ross himself.

The declaration also does not address what will happen to Ross’s leasing business if the property is successfully sold. Fortress has threatened to seize the property, and the creditor has also stated Ross is not contractually allowed to live in the mansion.

A message left Tuesday with Ross and his lawyer, Robert Yaspan, was not returned.

Complex legal and business matters are routine for Ross.

The lawyer graduated first in his law school class at UCLA and went into private practice with Barry Marlin, who was convicted in one of the largest ponzi schemes in American history.

Ross was never criminally indicted in the scheme, and in fact made millions of dollars suing insurance companies who would not cover him in civil lawsuits related to Marlin’s actions.

Ross’s personal legal matters also include a prior bankruptcy filing in 2010.

And in the midst of this current bankruptcy filing, Ross has sued Fortress and other creditors, which include the estate of Glorya Kaufman, for elder abuse.

Ross, who is 75-years-old, claims the creditors took advantage of him while he grieved his daughter’s death.


Related Articles

arrow_forward_ios
Nicolas Berggruen and the Hearst Estate (Hilton & Hyland, Getty)
Sold: Billionaire pays $63M at auction for Hearst estate
Sold: Billionaire pays $63M at auction for Hearst estate
Carl Reiner with the neighboring properties (Getty, Google Maps)
Carl Reiner’s neighboring Beverly Hills Flats homes sell for $16.8M
Carl Reiner’s neighboring Beverly Hills Flats homes sell for $16.8M
Griffon Capital’s Ron Kramer buys Beverly Hills estate in off-market deal
Griffon Capital’s Ron Kramer buys Beverly Hills estate in off-market deal
Griffon Capital’s Ron Kramer buys Beverly Hills estate in off-market deal
Michael Shvo and 9200 Wilshire renderings (Shvo, Getty)
Shvo signs Mandarin Oriental to Beverly Hills residential project
Shvo signs Mandarin Oriental to Beverly Hills residential project
Sportswear founder sells another $20M LA home
Sportswear founder sells another $20M LA home
Sportswear founder sells another $20M LA home
Mohamed Hadid and 901 Strada Vecchia Rd (Getty, Realtor)
Hadid ordered to pay $3 million in damages over Strada Vecchia mansion
Hadid ordered to pay $3 million in damages over Strada Vecchia mansion
Mohamed Hadid and renderings of the project (Getty, Hilton & Hyland)
Embattled Hadid relists Beverly Hills site for $250M
Embattled Hadid relists Beverly Hills site for $250M
Charles Fries (Getty)
Beverly Hills estate once owned by Paramount Pictures, Charles Fries, lists for $25M
Beverly Hills estate once owned by Paramount Pictures, Charles Fries, lists for $25M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...