Local builder finds no shelter from the storm

After losing bankruptcy appeal, pleads guilty to wire fraud, money laundering

By RICHARD HANNERS / Whitefish Pilot

A 39-year-old Whitefish man pleaded guilty June 30 in federal court in Missoula to nine counts of wire fraud and money laundering.

Building contractor Bren-don Retz's plea came 3 1/2 months after his bankruptcy appeal was turned down by a federal court in Helena.

According to court records, Retz allegedly used his credit cards to obtain $197,000 through his family's Flathead Valley resort. In September 2003, Retz allegedly used the cards five times as if he was purchasing lodging at the North 40 Resort on Highway 40 and then transferred the money to his business account at Glacier Bank in Whitefish.

Retz faces up to 20 years and a $250,000 fine for five counts relating to use of the credit cards and up to 10 years and a $250,000 fine for four counts relating to transferring the money.

His plea agreement notes that Retz paid back the credit card companies prior to detection by the victims or any investigation by the federal government.

Armed with a business degree, Retz formed Timberland Construction Inc. in 1994 and was the sole shareholder until June 2001. At that time, he made an oral agreement with California real estate magnate Donald Abbey to create a new company, Timberland Construction LLC.

With more than 30 years of experience in the real estate business, Abbey is the sole owner of Abbey Company, a commercial real estate firm he founded in 1990. The billion-dollar company's portfolio encompasses 5 million square feet in 50 properties that serve 1,200 tenants.

Last year, Abbey committed $3.5 million of his own money for the restoration of the Beta Theta Pi chapter house at Pennsylvania State University, where he played starting-fullback for the Nittany Lions. He was drafted by the Dallas Cowboys after he graduated in 1970, but he chose to attend graduate school and enlist in the Navy.

Abbey's initial interest in Montana was to build a multi-million dollar home on Shelter Island, a small island on the west side of Flathead Lake near Rollins. According to court records, Abbey wanted to form a partnership with the contractor so he could have more control and be able to look inside the contractor's books.

"Retz hoped and believed that Abbey would, in essence, take Retz under his wing and teach him how to become a successful businessman," the federal bankruptcy court concluded.

According to an operating agreement executed in March 2002, Retz was to be Timberland's day-to-day manager with an annual salary of $40,000 and a share in the new company's profits — but Abbey was to have a say in major financial decisions.

Abbey's concerns about Retz began with a chance encounter at the Bellagio resort in Las Vegas. Wondering how Retz obtained the resources to be on the "comp" casino floor, Abbey traveled to Montana in July 2003 to check things out.

That's when Abbey learned that Retz's brother Ryan had been hired as Timberland's controller and was living in a house on Woodside Lane that Abbey believed belonged to the company.

Abbey later testified he also learned Retz had appointed Whitefish attorney Thomas Tornow to be Timberland's authorized agent in Montana. A quick look at the books before Ryan Retz refused to talk indicated that $50,000 had been transferred back and forth between Retz and Timberland.

Shortly afterwards, a draft audit report by Deloitte & Touche identified overcharges on the Shelter Island project. Abbey began withdrawing financial support to Timberland in order to protect his $10 million investment.

Retz testified that he initially wanted to charge Abbey for labor and equipment with a 10 percent profit, but that later Abbey offered Retz a parcel of land on Shelter Island in lieu of the 10 percent profit. Retz told the bankruptcy court the deal was not in writing because at the time Abbey didn't want the public to know about his plans for a subdivision on the tiny island.

As relations deteriorated, Retz sued Abbey in August 2003 seeking a temporary restraining order to stop Abbey from interfering with his financial obligations and for breach of contract.

Retz's attorney in the wire fraud case, John Smith, said his client at that point tried to raise money to fund a settlement proposal with Abbey by using credit card charges at the North 40 Resort.

As Retz's financial situation grew worse, he filed for Chapter 7 protection in bankruptcy court in February 2004. Properties in the Whitefish area linked to the bankruptcy included the industrially-zoned site at Second Street and Edgewood Drive and lots in the Copperwood, Creekwood, Riverside and Lakeshore Drive areas.

Dragged into the bankruptcy proceedings was Retz's suit against Whitefish entrepreneur Leesa Valentino. He claimed she owed him $200,000 on a $1.2 million home that wasn't finished because of design deficiencies, not work by Timberland. The court, however, agreed with the custodian-receiver that the Valentino litigation had gone on for too many years and was too complex for Retz to ever win.

Retz appealed the bankruptcy court's denial of his Chapter 7 discharge in 2007. The four appellate judges, armed with 28,000 pages of documentation, were not swayed by Retz and ruled against him on March 31.

Bankruptcy provides a way for debtors to get a fresh financial start, the court noted, but the opportunity is only available to the "honest but unfortunate debtor." Retz, the bankruptcy court had noted, "was not a credible witness."

The appellate court agreed, claiming Retz made false oaths with fraudulent intent, providing "little more than lip service" to the bankruptcy forms he was expected to fill out. The court also claimed Retz took unauthorized money from Timberland "and then went on a spending spree."

Among the extravagant purchases Retz made was two expensive watches, two Harley Davidson motorcycles, a 2003 Corvette, a 2004 Chevrolet truck, a half-interest in a 1988 BMW, a 1984 Cadillac and a helicopter with a hangar from Whitefish businessman Paul Bloomquist.