The Great Fairgrounds Swindle pt 2: Meet the Pirates!

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“Facilities Management West was formed by three multi-generational Orange County families with a love and passion for the Fair.”

–Guy Lemmon, FMW spokesman, May 10

“I want all the money beyond that!  It’s simple!  I’ve offered you all you’re gonna get!”

–Ken Fait, real FMW leader, June 22

“Who are you people?” the shaved-headed young man growled, glowering down at us.

“We’re just looking for Facilities Management West,” explained my research assistant, holding his ground.  “Isn’t this their address?”

“All we do here is make sausage!” the goon shot back, gesturing toward an easel displaying varieties of sausage products.

“Well, you sure don’t want to see sausage or legislation getting made,” I lamely joked, but no laughter was forthcoming.

“I said, who ARE you?” he repeated, glancing nervously toward the corner where some older suited gentlemen sat eyeing us suspiciously.

“We’re just citizens,” my assistant answered.  “Local citizens.  We want to see the people who are going to be running our Fairgrounds for the next 55 years.”

“This is the third time I ask, who are you guys?  I’m going to have to ask you to leave.  You’re not good for our business.”

We glanced around at the complete lack of customers anywhere near this small back-lot office  How were we bad for their business?  We shrugged and shuffled off, feeling like we were in an episode of  The Sopranos.  “F & S Gourmet Foods,” the sign read.  Suite B, right behind the big Arthur Murray Dance Studio you all see when you speed down Adams.  This was definitely the official address for FMW, Costa Mesa’s new business partner.

And no, there was no mistake.  A little more reconaissance and googling on that sunny Thursday afternoon revealed:

  • F & S Gourmet Foods are the makers of Benetino’s cheese-filled sausages, which are actually tasty little suckers by the by.  (They also own the trademark for Sabatino’s Chicago Sausage down on the Lido Peninsula.)
  • The trademark for these Benetino’s sausages was filed by Richard P Whitney Esq of Sainick and Cote (now Sainick and Whitney) at 190 Newport Center Drive.
  • Mr. Whitney also patented “Raffex Aromatic Petroleum” in 1990 for San Joaquin Refining Company, which is Ken Fait‘s main operation that funds all his other shadow & shell entities, up to and including the purchase of our Fairgrounds.
  • Sainick and Whitney share their Fashion Island address with the following other known Ken Fait-owned entities: Richard Dick & Ass., Waterpointe Homes, Meadows Realty and Meadows Management.
  • Sainick and Whitney [META alert!] are “Business Succession Planners” – the accepted euphemism for building “shell corporations.”  I.E., Fait has an in-house law firm that specializes in covering his tracks using various holding companies and LLC’s.

It was just another typical day in our quest to figure out who and what the hell Facilities Management West is, this amorphous jellyfish to whom we’re entrusting our Fairgrounds, with no public oversight, for the next three generations. Time and again, what appear to be independent companies and entities, some making real products, some merely “shell” outfits, all eventually lead back to tycoon Ken Fait and his San Joaquin Oil Company.

For a family like the Faits, which has been moving around hundreds of millions if not billions of dollars for generations, to be as invisible as they are on the web, is almost certainly a sign of internet scrubbing and obsessive privacy.  But they couldn’t scrub the site of the State Board of Equalization, which documents patriarch Newell Fait’s unsuccessful 1990 attempt to use a system of shell corporations to limit his tax liability. This PDF includes a flow chart showing what the Board determined:  old Newell Fait had created/acquired a network of holding companies completely owned by him through San Joaquin, some of which, like Meadows Realty, are still in operation – a common method of hiding corporate profits.

In the two decades since, Newell’s attorney son Ken has extensively built on and added to this network of shell companies, and Facilities Management West, created to run our Fairgrounds, will evidently be just another Fait holding company – far from the picture of “three multi-generational families with a love and passion for the Fair” that spokesman Guy Lemmon painted at the May 10 meeting.

(We saw another benefit to this setup in our last chapter on the contributions Allan Mansoor was forced to return, all ostensibly from different companies and individuals, but which all turned out to be owned or employed by Fait & San Joaquin.)

Ken Fait’s San Joaquin Refining Company, in Bakersfield, has been “processing local feedstocks into premium naphthenic oils for specialty applications” since the 1960’s.

As far as I know there’s nothing illegal about what we’re reporting here; I just don’t think OC citizens who value their Fairgrounds and its heritage as highly as they do would feel comfortable entrusting them to the mercies of an ill-tempered profiteer who spends so much time, money and energy covering up his interests.  And sure enough, even without any of this knowledge, opposition to the deal is running nearly 4-to-1 among the public, in this new OC Business Journal Poll[Vote yourself!]

Ken Fait shouting “I want ALL the profits!” Photo courtesy of The Pot Stirrer.

I had breakfast with some longtime Costa Mesa community activists, who recalled their puzzlement at hearing Council shills rave about Fait, and his lackeys Lemmon, Rich Dick, and Dave Pyle, as longtime pillars of the community.  The names did NOT ring a bell to any of them. And NOBODY involved with the Fairgrounds can recall a single instance of these well-heeled folks demonstrating their “love and passion for the Fair.”  (At least until Dick’s donation last week of a tractor to Centennial Farms, which at this point is sort of a donation to himself.)

Apparently it’s true that they’ve been living in Newport Beach and making boatloads of money for many decades; but they’re not the kind of rich people who give to the Boys’ Club, the Girls’ Club, the symphony, local hospitals, anything charitable – they have no “philanthropic footprint.”  They’re more the hermit-like, miserly type of rich people obsessed with secrecy and control.  Think Mr. Burns, with three Smitherses.

And on a deeper level, look into your heart and trust your instincts:  Should we make such an important deal with people named Lemmon and Fait? Should we get into bed with guys called Dick and Pyle?

Contrast this with American Fairs and Festivals.

Could it be more stark?  American Fairs was quickly put together by Jeff Teller, owner of the hugely successful OC Marketplace (a.k.a. swap meet) as soon as he knew Costa Mesa was looking for a partner to finance the sale and run the place.  Jeff’s concern all along was to keep as many current employees and vendors working as possible, and to EXPAND public control and oversight of the property (far from terminating it as FMW would.)  Some on the Council seemed taken aback at getting such a well-put together and viable proposal from such an unexpected source.

The Teller family, as Tel-Phil Enterprises, have been running the Marketplace since 1969; even before that Jeff’s father Bob was a concessionaire at the Fair. In the decades since, the Marketplace has provided a livelihood for thousands and been an irreplaceable part of the local economy (and will be endangered if FMW prevails.) Tel-Phil’s charitable works around Orange County are too numerous to mention here;  here’s just a touch.

Jeff assembled a most distinguished board for American Fairs:   Orange Coast College, which has a great interest in retaining access to the property, is represented by Coast Community Trustee Mary Hornbuckle;  other board members include Rush Hill, formerly Secretary of Education of California under Governor Reagan;  Bill Habermill, OC’s Supervisor of Public Education; and many other well-known local figures in business and education.

For most of the millions in funding that would be needed, Jeff approached Rick Julian, who has a stellar reputation as a developer who holds on to and improves properties that he invests in. Alone out of all the bidders in January’s auction, Mr. Julian had avowed his intention not to develop the property, but to maintain all its current uses and operations as well as a majority of current staff.  He responded enthusiastically, and American Fairs and Festivals presented the Council with a great proposal which was exactly what Councilmembers Foley and Leece – the two members who really wanted to “save the Fair” as we all know and love it – were looking for.

The American proposal, which I will post later in the week, was as far from the FMW deal as can be imagined.  It would have preserved all current uses – the Centennial Farm, the equestrian center, the Marketplace, everything the people love.  And it would have increased public control and oversight, getting us away from the capricious and dictatorial reigns of recent appointed Fair Boards.

But as things turned out – and we’ll examine more closely how it happened in future segments – the majority of the Council finally went with the guys who contribute to their campaigns; who list a small sausage office staffed with touchy hostiles as their official address; who insist on the freedom to do whatever they want to the property with no public input for 55 years; who offered a LITTLE BIT more cash to help with Costa Mesa’s deficit, but famously threw a fit when the Mayor timidly asked for a better percentage of profits without a cap.  This was a rotten decision for anyone who cares about the Fairgrounds our grandparents paid for with their tax dollars for us and our own grandkids to enjoy, and many of us are now hard at work trying to “blow the deal up,” to steal Jim Righeimer’s phrase.

So, why was the sausage thug so nervous about us being “bad for business?”

In retrospect, maybe F&S Gourmet Foods regrets their association with Ken Fait and FMW, and whatever favors they owe him. Maybe they have a good idea how controversial and unpopular the Fairgrounds deal will be as the public learns more about it;  and fear that THAT may imperil THEIR sales.

So let me just re-iterate:  Benetino’s Sausage products are really quite tasty, and Sabatino’s Chicago Sausage on the Lido Peninsula is to die for!  Meanwhile we will continue to examine the Fairgrounds Swindle from multiple different angles, as what it is:  a many-splendored clusterfuck.

stay tuned for the next installment, part 3:
Threats, Bribes, and Videotape.


About Vern Nelson

Greatest pianist/composer in Orange County, and official troubador of both Anaheim and Huntington Beach (the two ends of the Santa Ana Aquifer.) Performs regularly both solo, and with his savage-jazz quintet The Vern Nelson Problem. Reach at vernpnelson@gmail.com, or 714-235-VERN.