In February of 2006, The Inlander published a 3,300-word story titled “The Man from Black Rock.” It starred Marshall Chesrown, the man we predicted could push Spokane past the tipping point to finally become a thriving city.
Chesrown started out as a car salesman, but transformed himself into a millionaire developer. He turned 650 acres of Coeur d’Alene real estate into Black Rock, a luxury development and golf course aimed at the ultra-wealthy. He purchased a 78-acre strip of railyard land near downtown Spokane and named it Kendall Yards, planning to turn it into a densely packed community of commercial and residential development.
Back then, The Inlander described Chesrown as charismatic, energetic, enthusiastic and mysterious. He was “ready to write the next chapter in his charmed life,” the profile read, and was “armed with what appear[ed] to be a golden touch.” It was appropriate that he wielded a literal golden shovel to break ground on Kendall Yards.
The Inlander had one thing right: 2006 was a tipping point. It was the year when the housing market began to teeter. By 2008, the country had collapsed into the deepest recession in nearly 80 years.
Chesrown’s Black Rock properties sank into foreclosure and lawsuits, and he lost them to the bank. The Kendall Yards project stalled for years. In 2009, with the soil still bare, Chesrown sold the property to Greenstone Homes.
Last month Chesrown filed for personal bankruptcy, owing nearly $72 million. He has no income. His list of creditors runs 85 pages. On top of that, he lost $30,000 gambling in Las Vegas.
Real estate development also is a gamble. Hit the jackpot, like Chesrown did, and become a multimillionaire. But when the luck turns as Chesrown’s did, entire empires collapse.
Rob Brewster can relate. As downtown Spokane began its renaissance in the late ’90s, 28-year-old Brewster began buying historic properties, like the Holley Mason and Hutton buildings, and renovated them. “I did it because I thought it was fun and good for the community,” Brewster says.
He developed the boutique Montvale Hotel and neighboring restaurants. At one time, he dreamed of creating a 32-story tower in Spokane. But the recession hit, layoffs drove office vacancies, and banks stopped lending.
“We weren’t able to refinance,” he says. Brewster entered the Spokane real estate market at about the same time as Chesrown. Their assets hadn’t had enough time to mature in order to weather economic catastrophe, Brewster says.
To that, add plain old bad luck. “In 2010, American Express mistakenly thought I was deceased, and all of my credit scores went to zero,” Brewster says.
Venture after venture went bankrupt. He lost the Holley Mason and Hutton buildings. Taxes hadn’t been paid on the other businesses in the Montvale Hotel’s building, and the Washington state Attorney General’s office, suspicious of Brewster’s management decisions and financial transactions, convinced a judge to hand the building over to a bankruptcy trustee. Catacombs and Scout, the restaurants in the Montvale’s building, have been closed. (See page 31 for more.)
Today, Brewster says he’s a lot more cautious about places like Spokane.
“Spokane is very risky. It has all of the downside when the national market goes crazy,” Brewster says. “But it has such little upside.”
Dreams and Illusions
Greg Jeffreys, by contrast, was a developer who took different sort of risks. Legal risks.
“I don’t gamble a lot,” Jeffreys said. He said this in his sprawling underground split-level apartment, accessed from a downtown Spokane alleyway, while sitting beside stacks of poker chips.
It was January 2012. Jeffreys and associate Brian Main had received much of the blame for the tangled mess the Ridpath Hotel had become. A civil lawsuit claimed Jeffreys had helped to split up and sell off the Ridpath piece by piece, using wildly inflated prices based on false pretenses. Jeffreys called the charges against him “horseshit.”
But he maintained he had a plan for the Ridpath, promising much would unfold in the public eye by the summer.
That summer, much did. FBI agents raided Jeffreys’ bank accounts, his house and his apartment. Casino tracking records revealed that only a few weeks after he told The Inlander he didn’t do much gambling, he went to a Las Vegas casino and shelled out $100,000 in cash for “buy-ins” over the span of a month.
The indictment hit Jeffreys with 73 counts, accusing him of theft, conspiracy, Ponzi schemes, money laundering and fraud. He was repeatedly denied bail.
At one time, Jeffreys seemed like he could have had the impact of Chesrown or Brewster. A 1999 Spokane Journal of Business profile depicted Jeffreys as a self-effacing, self-made entrepreneur who started a subcontracting company right out of high school, built up a national construction group and aimed to top $500 million in revenue by 2005.
In fact, Jeffreys and Chesrown had attended University High School together. Chesrown found Jeffreys in Colorado in 1994 and hired him to help build an automotive dealership. It was a springboard for Jeffreys’ national success. The two became friends and owned adjacent properties. Today, according to bankruptcy documents, Chesrown still owes Jeffreys money.
But if the allegations against Jeffreys are true, he’s much different than Chesrown. Brewster and Chesrown, however imprudently, pursued dreams. Jeffreys sold illusions.
He purportedly tried to pass off a photo of his split-level Spokane condo as a nonexistent condo in San Francisco. The case against him claims he promised profits to investors in a warehouse in Denver, an apartment complex in Coeur d’Alene, an office building in San Francisco, apartments in Seattle, condominiums in Mullan, Idaho — projects that never actually existed.
Jeffreys’ case is ongoing. His attorney Mark Vovos says they have a defense. But even if he’s found innocent, Jeffreys will have to contend with scores of headlines and accusations when searching for future business partners.
Brewster and Chesrown may find it easier. Part of the bankruptcy system’s appeal is that it allows business owners to emerge from the ashes and rebuild. “I’m a hell of a lot better developer now than I was five years ago, ironically,” Brewster says.
Jack Pring, the Spokane Valley businessman who sold Chesrown the property that became Black Rock, says he still completely trusts and believes in Chesrown. “The guy has had a little bit of tough luck, but that doesn’t mean he can’t come back and get ’er done,” Pring says.
But even if they never develop another acre, Brewster or Chesrown have forever changed the region. The Holley Mason was slated to be torn down, and Brewster helped save it. The Montvale building had sat vacant for 25 years, Brewster says, but today it’s open and operating.
“Whether or not I own it, in the end, is basically irrelevant,” Brewster says.
Though Chesrown’s name has been purged from the history page of the Black Rock website, the gorgeous, expensive buildings his group built still exist. Homes, apartments and commercial buildings, though less dense and luxurious than Chesrown planned, are springing up in Kendall Yards. Chesrown didn’t build those buildings, but he paved the way — starting with that golden shovel.