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Melchiori takes the Fifth on asset transfers offshore

By   /   Wednesday, December 19th, 2012  /   6 Comments

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Embattled contractor Mark Melchiori pleaded his Fifth Amendment right against self-incrimination when asked questions about money transfers and offshore accounts during a Dec. 19 bankruptcy hearing at the U.S. Trustee’s office in Santa Barbara.

During a ninety-minute hearing, Melchiori invoked the Fifth Amendment in response to questions about whether he transferred money between his company and his personal bank accounts, whether he holds any offshore accounts or assets, and whether a divorce from his wife was used to hide money owed to his company’s creditors.

The hearing was an opportunity for creditors of bankrupt Melchiori Construction Co. to ask questions about the company’s finances. In an unusual move for a bankruptcy hearing, Mark Melchiori was accompanied by Joshua Lynn, a criminal defense attorney. According to Lynn, Melchiori is also the subject of a criminal probe launched by the Santa Barbara County Sheriff’s Department. No charges have been filed.

Melchiori Construction Co.’s largest creditor is Santa Barbara Bank & Trust, which alleges that it is owed $9 million. An attorney for the bank asked Mark Melchiori whether his company had used any proceeds from a victorious lawsuit settlement against the developers of Chapala One for purposes other than repaying creditors. Lynn, Melchiori’s attorney, broke in: “He’s not going to answer that.”

Melchiori then confirmed: “I’m going to take my attorney’s advice and exercise my rights under the Fifth Amendment,” Melchiori said.

Melchiori and Lynn gave similar answers when the bank’s attorney asked whether Mark Melchiori maintained any personal offshore bank accounts or assets. When the bank’s attorney asked Mark Melchiori about the status of an appeal of a legal decision against Chapala One’s developers, Mark Melchiori said it was stalled. “The bank has refused to release the funds to help us,” he said.

Sam Williams also sought to question Melchiori. Williams said he was representing the U.S. Department of Labor in a civil investigation into Melchiori Construction’s pension plan. Mark Melchiori answered several routine questions, but when Williams asked whether any money that was supposed to be deposited into employee retirement plan accounts was used for other purposes, Lynn stopped Mark Melchiori from giving further answers. Williams tried to ask Mark Melchiori several other questions about what became of the company’s retirement plan money, but Lynn cut him off.

“We’re not going to answer any more of Mr. Williams’ questions today. We’re done here,” Lynn said.

Earlier in the hearing, U.S. Bankruptcy Trustee Jerry Namba, who is tasked by the Justice Department with uncovering any assets that might be available to creditors, looked over electronic documents on his laptop and sought to ask Mark Melchiori whether he’d moved company funds to his personal accounts.

“It was very difficult to follow along with distributions made from the company to yourself” and two other Melchiori Construction employees, Namba said.

Mark Melchiori pleaded the Fifth.

Lynn and Mark Melchiori said that Ed Kearns, the attorney who is handling bankruptcy cases for Mark Melchiori and his company, could not be at the hearing because he was tied up as a witness in a courtroom in Los Angeles. During the hearing, Mark Melchiori said that Kearns has agreed to take a 2007 Chevrolet dump truck and two other vehicles as payment for his services.

The swarm of bankruptcies, lawsuits and potential criminal charges surrounding Mark Melchiori signal a tumultuous decline for one of the region’s top general contractors. It built many notable projects in the Santa Barbara area, from Chapala One to the corporate headquarters of Santa Barbara Bank & Trust’s parent company to the celebrated renovation of the Granada Theatre.

Starting with an Emergency Operations Center project for the county of Santa Barbara, subcontractors began to complain that they weren’t being paid on time and sometimes not at all. Melchiori Constriction experienced similar problems with a $6 million Ocean Sciences building at UC Santa Barbara and was terminated from the project about half way through.

The company filed for bankruptcy in October after facing dozens of lawsuits. In late November, Mark Melchiori filed for personal bankruptcy.

Earlier this year, Mark Melchiori divorced his wife, Heather. After the divorce, Mark Melchiori’s stepmother filed a lawsuit accusing the couple of using the divorce process to transfer assets to Heather Melchiori’s name and shield those assets from creditors. Earlier this month, Rabobank sued Heather Melchiori, who has not filed for bankruptcy protections, for $1.3 million in unpaid business loans.

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6 Comments

  1. Former Employee says:

    FYI, 3 of the 5 comments above are from Mark family, one his henchman (or woman). Every time an article has been written about his horrid treatment of people and businesses these same family members jump in and make up more lies than have already been told. Bottom line is he screwed numerous people and businesses over the years and payback is finally here in the form of the US government. The party is over Lina and Anthony. Move on.

    Highly-rated comment. Like or Dislike: Thumb up 14 Thumb down 2

  2. Local says:

    So……Mark answered 3 times that Melchiori Construction did not hold offshore accounts right? The 4th question is do you personally hold assets or offshore accounts and that is when he pleaded the 5th right? If so…..Mark himself has sheltered his assets from his bankruptsy.

    Like or Dislike: Thumb up 3 Thumb down 2

  3. Linarosa Vendrasco says:

    Hidden due to low comment rating. Click here to see.

    Poorly-rated comment. Like or Dislike: Thumb up 1 Thumb down 4

  4. Civil Servant says:

    i was also at the hearing, which was recorded. Mr Melchiori was asked 3 times the same question about whether or not he had any off shore accounts or did he transfer any money off shore. he answered all three wtih NO.

    only on the 4th question did his attorney step in and tell him not to answer any more questions.

    Like or Dislike: Thumb up 2 Thumb down 2

  5. Dusty F says:

    When greed and Ego outpaces talent and ethics this is what you get. We will see what the investigation finds and the courts decide. Whatever happens, it is sad for the family, community and the employees that counted on an honest employer for and honest days work and retirement

    Like or Dislike: Thumb up 4 Thumb down 1

  6. Anthony says:

    Hidden due to low comment rating. Click here to see.

    Poorly-rated comment. Like or Dislike: Thumb up 1 Thumb down 5

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