New owner of Wilkes' office told to pay up

9 Mar 2007 // The former headquarters of defunct Poway defense contractor ADCS Inc. will be auctioned at the end of this month unless the new owner starts paying the building's overdue bills.

First American Title Corp. intends to auction the headquarters March 29 on behalf of Union Bank, which is owed more than $12 million on the property.

ADCS founder Brent Wilkes – who was indicted last month on charges of bribery, money laundering and fraud related to the corruption case of former Rep. Randy “Duke” Cunningham – has not paid taxes on the building for more than two years. He had stopped making mortgage payments by last fall.

First American was slated to auction the building Feb. 2, but the auction was postponed after Wilkes told Union Bank he had found a buyer: Ironwood 12, a limited partnership spearheaded by Paul E. Smithers, Wilkes' former corporate attorney, and Alan Gold, a Poway real estate investor who once was chairman of one of Wilkes' charities.

In a document filed Feb. 2, Wilkes signed over the deed to the building. Gold, signing on behalf of Ironwood, agreed to take over the Union Bank loan. Ironwood also paid a documentary transfer tax of $3,300 on the property, which indicates that it paid $3 million to Wilkes, said David Butler, assistant assessor of San Diego County.

After more than a month, however, Ironwood has not paid the building's mortgage or back taxes, said San Diego County Treasurer and Tax Collector Dan McAllister.

Union Bank will not discuss the mortgage, citing client confidentiality. But the bank has allowed First American to proceed with the auction, scheduled for 10 a.m. March 29 at 250 E. Main St., El Cajon.

The back taxes now total $595,604, and the bill is rising by roughly $4,500 in interest and penalties per month, McAllister said.

“It's at a point now where this is in the ridiculous category,” McAllister said. “Nobody allows their taxes to rise to this point. For more than two years, the owners haven't bothered to return messages, answer written inquiries or respond to tax bills and notices.”

To resolve the tax issue, McAllister talked briefly early last month with Smithers, Ironwood's registered agent, who told him to call to Gold, the partnership's managing member. Since that time, neither Smithers nor Gold has responded to his requests for information about tax payments, McAllister said.

Smithers and Gold, chief executive of the publicly traded Biomed Realty Trust, also have not returned phone calls from The San Diego Union-Tribune seeking comment.

If the building is auctioned, the buyer will be responsible for the taxes, McAllister said.

Wilkes was indicted last month over allegations of bribing Cunningham in return for his help in gaining federal contracts. Cunningham pleaded guilty to conspiracy and is serving more than eight years in prison.

Wilkes has been in financial trouble since his name was publicly connected to the Cunningham scandal in summer 2005. His federal contracts dried up, his company went belly up and he stopped paying many of his biggest bills.

“Over the last 18 months my life has been made a living hell,” Wilkes wrote in an open letter to the media last month. “The investigation . . . (has) inflicted critical wounds on all of my business interests.”

Wilkes currently owes at least $682,412 to Merrill Lynch Financial Services, $252,228 to De Lage Landen Financial Services and $149,427 to Xerox Corp. Last month, U.S. Lawns filed a mechanic's lien worth $2,389 for unpaid maintenance work on the headquarters.

This is not the first time Wilkes has had problems paying his debts.

Wilkes' first known business, World Finance Group in Washington, D.C., closed in the late 1980s without paying its bills. First Interstate Bank sued for about $10,000, gaining a default judgment in Washington. The bank then had a police officer deliver the court judgment to Wilkes' mother's home in Chula Vista.

Nearly a decade later, after receiving no payments, First Interstate sued Wilkes in San Diego for the debt plus thousands of dollars in interest. Wilkes refused to pay, saying he had never been properly served with the original suit. But the trial judge believed the police officer's account that Wilkes had been served. By the time the case was resolved in 2000, Wilkes was ordered to pay the bank about $25,000.

In a second lawsuit, former employer Marvin I. Friedman sued in 1992 to get $54,000 that he had given Wilkes as an advance on his salary. Wilkes argued that the money was a “non-reimbursable draw” on his salary and denied signing the promissory note.

Two days before the case was to go to trial, Wilkes settled out of court, agreeing to pay Friedman an undisclosed amount.

Those suits came before Wilkes began getting federal contracts. His company, ADCS, obtained more than $100 million in federal contracts with Cunningham's help. Cunningham has admitted accepting $100,000 in personal checks and $525,000 in mortgage assistance from Wilkes.

Federal prosecutors say other inducements that Wilkes provided Cunningham include the services of two prostitutes in Hawaii and vacations in Idaho, Hawaii, Florida and Nevada.

At the time of Wilkes' indictment Feb. 13, federal prosecutors required him to submit a certified statement of overseas bank accounts.

Three former business associates of Wilkes' say he opened investment accounts in Belize in the 1990s, when ADCS was getting multimillion-dollar contracts from the federal government. One former associate, who declined to be identified for fear of being pulled into litigation, says the accounts were named Banyan, after a tropical tree.

Belize officials say a limited partnership named Banyan B was founded in 1995 and that a second partnership named Banyan B2 was founded in 1996. But they would not disclose the name of the founder of the Banyan partnerships.

An internal ADCS document shows that Wilkes traveled to Belize on Feb. 18, 1996, to file incorporation papers for an unspecified entity.