March 29, 2017 - Mercury Times
http://www.mercurynews.com/2017/03/29/keith-kim-oakland-fire-landlords-rollercoaster-past/
OAKLAND — More than two decades before four people died in Monday’s four-alarm San Pablo Avenue inferno, landlord Keith Kim was a rising star in Oakland, saving a storied potato chip company, a beloved bakery and hundreds of jobs.
“Keith Kim may be one of the best investments Oakland ever made,” glowed a 1996 article in one Bay Area newspaper.
But a series of failures and bad business decisions would later tarnish his Robin Hood image.
The feds indicted him in an odd insider trading case. His much ballyhooed Granny Goose venture turned stale and hundreds of jobs were lost. Under his leadership, the Merritt Bakery floundered. He owed millions of dollars in unpaid income taxes. A foray into the dot-com boom, after some initial success, brought more financial trouble. Years later he would go bankrupt.
After quietly operating development deals for several years, Kim, 55, was thrust back into Oakland’s spotlight Monday when his three-story, multi-unit residential building at 2551 San Pablo Ave. went up in flames. Low-income tenants, many renting from various nonprofits aligned with the building, shimmied down fire escapes, climbing from sheets tied together and hung from windows, and were plucked out of the burning building by firefighters.
Three days before the massive blaze, a fire inspector toured the building and found numerous fire-safety violations, including a lack of fire extinguishers, fire sprinklers and clearly marked exits in all areas of the building, and smoke detectors in all living spaces. City records show 18 complaints filed against Kim’s property within the past five years, including deferred maintenance, rodent infestation, electrical issues, structural deficits and a lack of heat. A tenant called it a “death trap.”
Residents filed multiple restraining orders against Kim and his associates claiming they bullied residents and sent thugs into the property to evict them.
Kim, who has not spoken publicly since the fire and did not return calls Wednesday, earlier told this newspaper that he decided to evict his tenants after learning of the Dec. 2 Ghost Ship tragedy, where 36 people died in a fire in a warehouse with its own code issues.
Councilman Noel Gallo said several property owners, including Kim, have ignored building, fire and safety codes, putting residents at risk.
“It’s a catch-me-if-you-can attitude, from East Oakland to West Oakland,” Gallo said. “He should’ve known better based on all the properties he owns, his years in Oakland, his experience with development. There’s no excuse for that behavior.”
Golden Goose
Born in Seoul, South Korea, Kim came to the United States as a 10-year-old with his mother and two brothers, according to a 1994 article in the Oakland Tribune. After graduating from Stanford with a degree in economics, Kim moved to Sacramento in 1985 to take an insurance job. It was there that he bought his first house and launched his real estate career in 1989.
He came to Oakland and started a construction company to work with his real estate firm, building homes and developing small apartment buildings, according to the Stanford alumni magazine.
Kim purchased the San Pablo Avenue property in 1991 for $525,000, and started turning heads.
In 1994, at age 32, Kim purchased Oakland’s Merritt Bakery and Restaurant, saving 80 jobs and keeping the local institution from bankruptcy. However, the already-struggling business failed to thrive under his leadership, and he eventually sold the bakery back to its original owner 19 months later. The bakery was damaged in a fire in 2013.
In 1995, Granny Goose announced it was closing the Oakland potato chip plant, costing the city between 350 and 400 union jobs. With the help of a $2.25 million loan from the city, Kim kept it open, buying the parent company for $4.75 million.
“I don’t want to be hypocritical,” Kim told a newspaper at the time. “I’ve made a ton of money out of this. But is that my only motivation? No. There are 600 jobs, and that means 600 families. That’s a tremendous responsibility.”
It was around that time that Kim met Simon Cho, a property owner and developer in Oakland. Kim impressed him immediately, Cho said.
“He was a very bright young man, very business oriented,” Cho said. “I liked him.”
Cho said he encouraged Kim to aim his ambitions high: “Set your goal for the mayor of Oakland or governor of California,” Cho recalled telling him. “I always encouraged him in that way.”
And local politicians took notice. Former Oakland Councilman Ignacio De La Fuente sang Kim’s praises over the potato chip deal.
“It’s a message that the local city government and small businesses can create a partnership for the benefit of both,” De La Fuente said at the time.
Kim’s rescue of Merritt Bakery and Granny Goose were heralded in March 1996 when he was named businessman of the year by the San Francisco Korean Chamber of Commerce for saving jobs and boosting the regional economy. But, in fact, Kim’s troubles had already begun.
Federal charges
By 2000, the celebrated Granny Goose deal was cooked. The company owed $37 million, including $2.2 million to the city of Oakland, and was insolvent, but Kim faced bigger problems.
The year before, Kim attended a Colorado retreat hosted by the Young President’s Club, an exclusive organization for the nation’s top young executives. He learned that one participant couldn’t make the meeting because her company, Meridian Data, was about to merge with Quantum Corp. The club rules required members to keep such business discussions confidential, but Kim left the meeting and bought stock in Meridian. He made $832,000 when the deal closed two months later.
Kim was indicted in 2001 and convicted the next year by a federal jury for making a false statement to the Securities and Exchange Commission, which was probing the deal.
Also during 2000 and 2001, Kim shorted the IRS and California Franchise Tax Board more than $12.2 million in income taxes, bankruptcy records show.
Dot-Com
As the dot-com bubble grew, Kim joined internet incubator Brainrush. The company, now defunct, assisted new websites, including MySimon.com.
Kim pitched the business venture to his childhood friend, Michael Chung, and convinced Chung to invest $1 million, according to court records. When CNET bought mySimon in 2001 for $700 million, Chung asked for his money. He alleged in a lawsuit that Kim lied to him and told him the sale lost money. Chung claimed that Kim actually used the proceeds to pay back a personal loan to the Brainrush majority shareholder.
As the bubble burst, Kim returned to real estate. In 2003, Kim partnered with Cho to acquire two acres, which they hoped to turn into 154 condos with 10,000 square feet of retail space in Koreatown. The project fizzled after a third partner joined the deal. They eventually sold part of that land last year, Cho said.
Councilman Larry Reid remembers Kim being a City Hall presence in the mid to late 1990s, when he owned Granny Goose.
“Keith kind of disappeared then he resurfaced” recently with a West Oakland development, Reid said.
Kim as a tenant
From August 2009 to February 2010, Kim and his family rented a Piedmont home. Landlord Justin Sterling sued the family in April 2010 claiming they failed to maintain the Sierra Avenue property, pay for utilities or even set up trash service. Sterling also alleged that Kim hid his criminal conviction and financial status when filling out the rental application.
The Kims countersued, saying the house lacked heat, had inadequate plumbing and electrical wiring, and had bad odors and trash piling up. Kim claimed the landlord sent a large tattooed man to evict his family.
In September 2011, with lawsuits and tax debt mounting, Kim and his wife, Janice, filed for bankruptcy, claiming only $45,000 in assets, while accumulating more than $13.7 million in debt. The father of four claimed he was making $6,200 a month as a consultant. No real estate was claimed on the bankruptcy filing.
In 2013, Kim’s business, Mead Avenue Housing Associates, took out a $2.9 million bank loan against the dilapidated San Pablo Avenue property.
That same year, Kim partnered with Jabari Herbert to develop a 417-unit apartment complex at 500 Kirkham St. in West Oakland. On Tuesday, the day after the San Pablo Avenue fire, the Oakland council voted to transfer those development rights to Panoramic Interests, LLC.
On Wednesday, state Sen. Nancy Skinner, who recently participated in a special hearing on affordable housing safety issues in the wake of the Ghost Ship fire, condemned Kim.
“Unfortunately, this tragedy once again highlights a circumstance where building owners are aware of the derelict condition of a property,” she said, “and despite complaints did not take remedial action to ensure safe and habitable conditions for their residents.”
http://www.mercurynews.com/2017/03/29/keith-kim-oakland-fire-landlords-rollercoaster-past/
