The Medina mansion that bankrupt real-estate magnate Michael R. Mastro moved out of late last month has an outdoor swimming pool that tumbles...
The Medina mansion that bankrupt real-estate magnate Michael R. Mastro moved out of late last month has an outdoor swimming pool that tumbles into a waterfall at one end. Beyond it, across a large lawn, lie 176 feet of Lake Washington beachfront.
One of the home’s upstairs bedrooms has been converted into what amounts to a big walk-in closet or dressing room, with a built-in dresser island.
The house is one of the most contentious assets in Mastro’s complex bankruptcy proceeding. The court-appointed trustee in the case finally got the keys to it last week, after a long legal tussle.
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Mastro paid $15 million for the house four years ago. Trustee James Rigby said he’ll list it for sale later this week for $9.9 million. Agents are lining up for a look, he said.
But just who will get the proceeds of any sale remains to be decided.
Meanwhile, Rigby is pushing Mastro to turn over gold coins and bars worth more than $330,000 that he contends also should go to Mastro’s many creditors.
Rigby’s claims on the gold are off-base, said James Frush, one of Mastro’s lawyers.
Mastro, 85, a longtime, prolific real-estate developer and lender, was pushed in July 2009 into what probably is Washington’s largest bankruptcy ever. He has filed documents listing more than $570 million in debts.
Rigby was appointed by the court to identify and sell Mastro’s assets and distribute the proceeds to his creditors. In several lawsuits, he has accused Mastro of hiding some assets and maneuvering to put others beyond most creditors’ reach; Mastro has denied those charges.
One of those assets is the 7,000-square-foot mansion. A walk-through Tuesday revealed Mastro and his wife, Linda, left it in good shape. Roses and dahlias were blooming in the garden off the kitchen.
The spacious, two-story living room faces the water and a large dock capable of accommodating several boats. A big media room/library is paneled from floor to ceiling in dark wood. A curved staircase leads to bedrooms upstairs.
The basement includes a sauna and wine cellar. A two-bedroom apartment sits above the garage.
It’s far from certain that the creditors Rigby represents will get any of the sale proceeds from the mansion. Several Mastro business associates, backed by Mastro, contend they should get the money because they accepted the house as collateral for $12 million they loaned Mastro in early 2009.
Rigby contends that loan is a sham.
He also has repeatedly charged that Mastro is using concealed assets to support an extravagant lifestyle. In the months after he entered bankruptcy, the Mastros vacationed in Italy, Paris, New York, Palm Springs, Switzerland and Jackson Hole, Wyo., according to documents filed with the court.
Frush, Mastro’s lawyer, contends those trips were paid for with money Mastro earned after entering bankruptcy, or with other resources that are legally off-limits to his creditors.
Rigby contends the gold is yet another concealed asset. Mastro didn’t reveal its existence, he said, and he learned of it only a few weeks ago.
“This is money that belongs to the creditors,” Rigby said.
Invoices introduced into the court record show Mastro bought the gold from a Minnesota dealer in three installments:
• 100 Swiss 1-ounce bars, purchased in March 2009 for $99,000.
• 100 Canadian 1-ounce coins, purchased in September 2009 for $107,000.
• 107 Canadian 1-ounce coins and two smaller coins, purchased in January for $125,000.
Rigby said he learned of the purchases by subpoenaing records from the dealer. It should have been reported earlier in the bankruptcy case, Rigby maintains in court papers, and it should be turned over to him now.
The gold’s whereabouts are unknown, he said.
Frush said Mastro no longer owned the Swiss bars when he reported his assets to the court in September 2009. He said the other batches of gold were bought either by entities that aren’t covered by the bankruptcy, or by Mastro with money he earned after the Chapter 7 filing.
Mastro’s creditors include about 200 investors he called “Friends & Family,” mostly Western Washington residents who had invested a total of more than $100 million with him in return for pledges of interest payments of 8 percent or more.
Since their investments were not secured by real estate or other collateral, they will be the last to collect. Rigby has said that, even under a best-case scenario, they won’t get more than a small fraction of their money back.
Eric Pryne: 206-464-2231 or email@example.com