Developer Can’T Shake Reputation Athol Project Helps Gary Callihan Build Support, But Critics Won’T Forget His Business Troubles

Developer Gary Callihan will go before the Kootenai County Planning Commission tonight, asking for a change in the county’s comprehensive plan that would allow him to build a major subdivision and commercial strip near here.

Callihan has been sued repeatedly over his land dealings in Eastern Washington and North Idaho. He has spent time in prison for credit card fraud. At least two of his companies have gone bankrupt, and another is defunct because of a battle among partners.

Callihan’s associate in the proposed Athol project, Panhandle Resources Inc. President Frank “Rowdy” Davis, said he hired Callihan to do the job knowing of his background.

“If there were mistakes that Gary made in the past, it certainly doesn’t affect how we do business now,” said Davis, who made Callihan secretary-treasurer of the company and manager of the Silver Village project. The development would place businesses and hundreds of homes east of Athol.

Jerry Mortensen, who owns some of the property on which the two men hope to build, said he has every confidence in Callihan.

“I’m aware that he doesn’t have a perfect history. But how many people do?” said Mortensen. “If you’ll sit down and talk with him, you’ll really appreciate how talented he is. I’ve never met anyone as tenacious as he is. And really knowledgeable.”

Callihan does have his critics.

Patricia Cully claims to have lost $400,000 in business dealings with Callihan.

“I’d certainly hate to see him get involved in something up there,” she said of the Athol project. “If there’s a right way and a wrong way to do something, in my humble opinion from past experience, he’s going to do it the wrong way.”

Athol City Council member Joel Jensen said he became uneasy when Callihan and Davis seemed reluctant to provide specific information when they applied to the city for annexation of the development. The two men later withdrew the annexation request, citing the city’s lack of interest.

Jensen was even more concerned when he read old newspaper reports about how Callihan had served a year in prison and had been sued repeatedly. Callihan has been accused in court documents of not paying off loans and of selling property to which he did not have clear title.

“We’re talking about people who have lost tens of thousands of dollars individually, to hundreds of thousands,” Jensen said. “I think the whole of Kootenai County ought to be a little leery.”

Jensen said he’s especially worried about small businesses that might get involved in the commercial development.

Callihan’s critics include people involved in lawsuits, most of them unwilling to talk about their disagreements for fear of even more legal hassles.

“There is no question I’ve made mistakes,” said Callihan, although he blames other people or circumstances for many of the problems that have come up.

Among Callihan’s recent troubles:

The Washington state attorney general investigated him, saying Callihan sold recreational property at Wilderness Lake Estates in Pend Oreille County that he couldn’t deliver because he hadn’t paid the underlying mortgages. Eighteen people said they lost more than $100,000 total in the deal.

Callihan has repaid $57,000, even though he said it was actually Cully and her ex-husband who owed it.

Cully said that’s because they had invested in some of the land - not knowing that Callihan still was in debt for it. Cully said she invested in land throughout the Inland Northwest that Callihan led her to believe he owned free and clear.

West Land & Timber Corp., Callihan’s firm at the time of the Wilderness Lake disputes, filed for bankruptcy in 1988. Callihan blames the bankruptcy on fallout from his divorce.

In December 1996, Sandpoint developer Joseph Lapham, title company owner Ivan Lippi and their wives sued Callihan and his partners in the Shelby Acres subdivision at Laclede. The partners allegedly took advantage of a clerical error to sell lots that legally were Lapham’s. Callihan claims he has paid his part of what was owed. A jury trial is set for Aug. 10.

In January 1997, Lapham started foreclosure proceedings in Washington’s Superior Court. He was seeking to free up property in hopes of getting money Callihan owed him when the land was sold, said Lapham’s attorney, Jed Morris.

Rocky Mountain Homesteads Inc., in which Callihan served as president and sole stockholder, filed for bankruptcy in Eastern Washington in July 1997. He listed debts of $258,000. Callihan said he filed for Chapter 11 bankruptcy so he could get approval to sell off parcels of land and use the proceeds to pay off creditors.

In May 1997, Ward Tifft of Sandpoint sued Callihan and others who were part of Mountain Pacific Land Co., claiming he wasn’t repaid for a loan made to Callihan in 1992.

Leo and Joan McGavick, who were partners with Callihan in Mountain Pacific, were awarded $24,089 in 1996 after they sued Callihan for failing to repay a $16,000 loan. Callihan said he did not owe the money.

Mountain Pacific, which also included partner Darold Sauer, has fallen apart. The fate of its jointly owned property, Ponderay Ranch at Sagle, is the subject of another lawsuit.

In March, Shirley Auble of Spokane sued Panhandle Resources for $2,086 in rent and secretarial services the company allegedly owes her for occupying office space in Coeur d’Alene. Callihan said he and Davis moved out before their lease allowed, but that they had an unwritten agreement with Auble to do so.

While Callihan’s troubled past might affect business people who deal with him, it’s not something that county officials take into account when considering comprehensive plan or zoning changes.

Callihan knows publicity about his legal problems might jeopardize the Athol project.

“In hindsight,” he said, “I wish I hadn’t gotten involved.”

Davis shook his head at that comment, saying he was a firm believer in letting go of past problems.

“I’m not going to let this take us down,” he said.

Map of area.