By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
The Family Business
Donald Bren plays rough with a small businesswoman and his own kids—but the courts can play rough, too
You might assume that Donald L. Bren—Orange County's wealthiest person—sits with a permanent smile on his face behind the gates, the guards and the elaborate security systems that surround his Newport Beach estate. After all, wouldn't you relax if you pocketed more than $1.35 billion per year? Would you still crave another lousy million dollars if you'd already stockpiled $15 billion at the age of 76?
For Bren, the answer is obvious: Yes!
The indefatigable Newport Beach-based real-estate developer grapples with insecurities just like the rest of us. This isn't idle speculation. It's based on a series of intriguing court depositions and documents that have gone unnoticed by mainstream reporters.
Late last month, a California Court of Appeal in Santa Ana slammed the Irvine Co., of which Bren is the sole known owner, for its hardball conduct with the owner of Maki Maki, a Japanese restaurant at the billionaire's Irvine Spectrum property. Mafia loan sharks would be impressed.
According to the all-conservative, all-pro-business judicial panel, the company not only attempted to impose unjustifiably high rents upon restaurateur Katie Hyang-Hee Shinn, but also forced her into a "draconian one-way" contract. They say Bren's company helped wreck the restaurant's foot-traffic business by 40 percent after failing to swiftly remove nearby construction impediments, declaring Shinn in default, forcing her to mortgage her home and demanding $565-per-day rent penalties as well as a 6 percent stake in her business while seeking to evict her.
A lower court ruled that the Irvine Co. could not impose these terms on Shinn.
The Court of Appeal agreed. In a May 20 written opinion, Justice Kathleen O'Leary called the Irvine Co.'s arrangement with Shinn's KST Enterprises LLC "unmistakably one-sided," adding that it "shocks the conscience."
The ruling must have sent Bren's personal assistants rushing to a drug store for antacid tablets.
But the contractual principles and tens of thousands of dollars at issue in the Shinn case are nothing compared to the financial and psychological stakes in an ongoing family squabble at a Los Angeles courthouse. For the past several years, Bren has been trying to block two of his children (sired of out wedlock) from going beyond the annual Forbes estimate to discover the actual size of his fortune.
Under California law, child support is supposed to be 19.2 percent of the parent's annual income. Bren shelled out something in the neighborhood of .0001 percent of his annual dough (or $204,000 per year) to Christie Alexis Bren and David Leroy Bren while they were growing up with their mother, according to disclosures filed in the case. The kids claim they are entitled to more and want their lawyer, Hillel Chodos, to take a look at Daddy's financial books. Daddy said no and hired famed O.J. Simpson civil case lawyer Daniel Petrocelli.
In March, Los Angeles County Superior Court Judge Charles C. Lee ordered Bren to provide him the first two pages of his income-tax filing for 2006. Eventually, a reluctant Bren complied but demanded top-secret, national-security-type status—tossing the public from the courtroom, locking the doors, sealing the transcript and even redacting portions of the document he didn't want the judge to see. Chodos argued that the form is meaningless because Bren can hide so many of his assets or just not pay himself much from Irvine Co. coffers during the legal battle. But from Bren's perspective, further disclosure would be catastrophic—a disaster that, he says, should prompt the judge to ignore his legal obligation to place the interests of the children above all else.
In a March deposition, Michael D. McKee, one of Bren's corporate lieutenants, outlined why his boss thinks his income should be considered "a company-owned trade secret." According to McKee, "It is essential for the Irvine Co.'s economic interests and vitality that its confidential financial information remain private." Secrecy, he elaborated, "clearly works to the company's competitive advantage in the marketplace."
If the public learned the true extent of Bren's wealth, McKee argued, the information would "jeopardize" his boss' negotiating stance when dealing with "municipalities, regulators and other government agencies as well as home-builders, commercial contractors, retailers, tenants and labor unions, to name a few. . . . They would certainly use the information to their benefit in seeking concessions, exactions and assessments that would be costly and disadvantageous to the company."
McKee spelled out the fear of the world's 27th richest man. "Supporters of 'no growth' initiatives could use the information about the Irvine Co.'s income to justify limitations on development on the Irvine Ranch and to demand higher exactions as the price for additional development," he said.
It makes you wonder how much Bren is really worth—$20 billion? $25 billion? More?
To Chodos, the billionaire's excuses border on hysterical. "Bren goes to extraordinary lengths to evade discovery and has consistently been less than forthcoming," Chodos complained to Judge Lee in a brief filed last month. "He has a pathological desire for secrecy."
BLAZING SADDLE SORES
It has been nearly six months since indicted ex-sheriff Mike Carona resigned in disgrace to prepare for his upcoming corruption trial, and the Orange County Board of Supervisors has finally reduced the field of prospective replacements from 48 to nine and now to just two: Santa Ana Police Chief Paul Walters and former Los Angeles County Sheriff's Chief Sandra Hutchens.