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Tuesday, November 12, 2019  Spokane, Washington  Est. May 19, 1883
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News >  Spokane

Marshall Chesrown, bankrupt developer, faces new financial fights

Marshall Chesrown, pictured in 2008, had high hopes for his Spokane Kendall Yards development. (File)
Marshall Chesrown, pictured in 2008, had high hopes for his Spokane Kendall Yards development. (File)

A trustee wants to recoup more than $2 million that bankrupted real estate developer Marshall Chesrown gave to family and friends as his fortunes were collapsing.

The legal efforts, for example, target at least $1.3 million Chesrown transferred to his son, Scott Chesrown, in the years leading up to his $72 million personal bankruptcy filing.

The trustee also wants to recover $233,795 Chesrown used to buy a Liberty Lake home for his mother, Jeannine McLaughlin.

The collection efforts are the latest twist in a bankruptcy that was filed in South Florida two years ago.

Chesrown moved there as part of his quest for a fresh start. He owed $72 million to banks, businesses, investors and tax collectors – 430 in all.

He estimated his net worth at about $514,000 – a shockingly small sum for the driven Spokane Valley native who befriended the likes of football legend John Elway as he built an automotive sales empire in Colorado.

The case has drawn close scrutiny by trustee Nicole Testa Mehdipour, who opened a broad investigation of Chesrown’s finances and filed five separate lawsuits to recover money for the creditors.

In addition to seeking money from Chesrown’s son and mother, Mehdipour also wants to recover $77,000 from Rishon Ludders. She is listed in court documents as Chesrown’s former girlfriend in Coeur d’Alene who received two checks – one for $52,000 and one for $25,000 – from Chesrown in 2010 and 2011.

Mehdipour wants $100,000 from Spokane attorney John R. Layman, who accepted a check in that amount from Chesrown. Layman is the fiduciary of a trust fund Chesrown established.

Another target for money recovery is Kevin Westfall, who invested in Chesrown’s real estate projects. Mehdipour wants Westfall to return $371,872 he received from Chesrown, including two checks totaling about $98,000 several months before the bankruptcy filing.

Mehdipour claims in the legal actions filed this week that the payments and transfers occurred too close to Chesrown’s bankruptcy filing, which left hundreds of creditors with unpaid invoices.

Westfall and Chesrown, both auto industry veterans, have since gone into business together. They founded a company called Vroom and arranged tens of millions of dollars in outside financing in 2013. Vroom is an online site that sells certified used cars and trucks across the country.

During his bankruptcy filing in 2013 Chesrown declared that his personal finances had been reduced to a $9,500 retirement fund; $1,030 in cash; and a few personal belongings. He reported he shared an apartment with a woman in Florida.

Today he is working as the chief operating officer of Vroom in the Dallas area with Westfall and others.

Lawyers for the people involved in the Chesrown bankruptcy, including trustee Mehdipour, either declined interviews or did not return phone messages.

Chesrown made a splash in the Spokane-Coeur d’Alene area in 1999 after he sold his successful Colorado car dealerships to AutoNation and leveraged the proceeds to branch into other businesses.

He sunk tens of millions of dollars of his personal wealth, along with money from eager lenders and investors, to bankroll high-end developments such as The Club at Black Rock. That project became synonymous with the luxury makeover of Lake Coeur d’Alene.

Other projects included his Legacy Ridge housing development in Liberty Lake and his purchase at a bankruptcy auction of the property near downtown Spokane that he named Kendall Yards.

As the housing market crashed and the recession ruined Chesrown’s plans, his projects were taken over by others.

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