An El Dorado Hills animal rescue foundation has accused two large banks and their attorney of orchestrating the fraudulent transfer of 36 horses, 14 of which were pregnant, from the squalid and now-infamous Whispering Pines Ranch in Susanville to the Grace Foundation in August, 2011, ignoring a bankruptcy filing that protected the horses as assets of ranch owner Dwight Bennett.
The ensuing high-risk births and care for the foals and mares, some of which are feral and have yet to give birth, has cost $870,000 thus far, and nearly bankrupt the foundation, which is currently $400,000 in debt and spending $50,000 per month on the horses, according to Grace Foundation Director Beth DeCaprio, who added, “Projected through 2013, the cost is close to $2 million if we can’t place them.”
Bennett willingly gave up his first and worst-off 20 horses to the Grace Foundation in April 2011. While rounding up the starving and dehydrated Whispering Pines horses, the Grace Foundation volunteers encountered the remains of at least 28 less-fortunate horses and a couple of dogs, some in apparent burial pits, others rotting on the ground in plain sight.
Bennett argued in blog posts that the dead horses were poisoned. He was nonetheless eventually charged with 70 counts of animal cruelty.
He might have run afoul of the law again. Members of the Lassen County Narcotics Task Force arrested a Dwight Bennett and two other men on July 6 after finding methamphetamine, marijuana, morphine, hydrocodone, and anti-anxiety medication, along with drug distribution paraphernalia in their vehicle, according to the Lassen Times Website.
Lassen County officials reached on Sunday would only say that no Dwight Bennett was currently in custody.
Also on July 6, Grace Foundation attorney Stuart Leviton filed a lawsuit naming the banks, their legal counsel, Orange County attorney Tim Ryan and Bennett, seeking “at least $2 million,” and according to accompanying press releases, up to $20 million, for “services rendered, fraud, breech of fiduciary duty, malpractice and punitive damages.”
The following Monday, July 9, DeCaprio and a mix of two- and four-legged supporters staged a noisy demonstration at a Folsom shopping center that contains Well Fargo Bank and Bank of America branches, to draw attention to their situation.
Both banks issued similar statements in response to the lawsuit, denying fraudulently transferring the horses to the foundation, citing legal documents that indicate the foundation actually received the horses from Lassen County.
The Bank of America response also stated “at no time did the Bank of America have any ownership interest in the horses or the property.”
“Which makes the fact that they gave them to us that much worse,” said DeCaprio, who confirmed that the foreclosure of the ranch is still tied up in bankruptcy court, leaving ownership of the ranch and its assets, including the horses, in “legal limbo.”
The banks donated a combined $40,000 to the foundation in August 2011, and recently offered another $400,000, which DeCaprio refused, in apparent contradiction to a figure she cited in a late May fundraising e-mail as the cost of caring for the horses, a claim she now admits was severely understated.
Early cost estimates were “mainly just (the cost of) feed,” she said. “I was trying to keep costs down to get them (the banks) to take it. We were all on the same team back then.”
Her board of directors subsequently demanded a comprehensive accounting of all the costs associated with Susanville horses, including the indirect costs of the difficult births.
The estimate rose from $300,000 to $400,000 in May, then to $500,000 in June, according to foundation e-mails, peaking at $870,000 in July, according to the lawsuit.
“These numbers clearly do not add up and provide a critical mind with insight into what is occurring in this case,” said Ryan.
DeCaprio explained that the increased price tag reflected medical expenses, portions of foundation salaries and repayment of donations earmarked for other projects, borrowed with permission from the donors.
A $60-per-day, per-horse boarding fee is also included this time around, as is the cost of birthing stalls, camera equipment, an ultrasound machine, higher utility bills for the on-loan RVs where volunteers and staff hold night birth monitoring vigils, and expensive medications, all billed at cost, she said.
The latest costs all passed muster with bank auditors who visited the ranch in May, said DeCaprio.
“They (the banks) need to pay for the cost of their lies to this organization,” she added.
The lawsuit was filed in El Dorado County Superior Court, and describes a parallel series of bankruptcy and superior court proceedings between July, 2011 and January, 2012, assembled from court records, according to DeCaprio.
It also includes a paper trail of DeCaprio’s desperate and ultimately futile attempts to seek financial relief through Ryan, who by late 2011, was acting as foundation legal counsel, according to the lawsuit.
Ryan’s actions on behalf of the banks are detailed critically, and depict what DeCaprio alleges was a betrayal of the foundation that she never realized until she saw the court records.
DeCaprio likened Ryan to a puppetmaster, controlling the actions of everyone involved in the interest of the banks, which by late-summer were paying the feed bill for the remaining 36 horses and wanted them off the ranch.
She accused Ryan of orchestrating the fraudulent transfer of the horses to the foundation, failing to notify the foundation and the court-appointed receiver of Bennett’s bankruptcy filing, and of failing to notify the bankruptcy court of the transfer.
In a series of e-mails to the Mountain Democrat on Friday, Ryan insisted that his actions on behalf of the Grace Foundation were made in good faith, and that the lawsuit’s allegations that he was “less than forthright” to the bankruptcy court and the foundation “are flatly contradicted by the transcript.”
He promised a counter suit for “trade libel,” seeking $5,000,000 in damages plus punitive damages from DeCaprio, citing “grotesquely and verifiably factually inaccurate claims” in the lawsuit.
He named the superior court and bankruptcy court judges that approved the removal of the horses, notwithstanding the bankruptcy, then condemns Leviton for not bothering to understand the “exceptions to the automatic stay set forth in the bankruptcy code,” which allowed the removal of the horses from an unsafe environment such as Whispering Pines, a “filthy, carcass-infested, likely disease-ridden ranch wherein up to 30 horses starved to death,” he said.
Ryan also announced plans to file a motion for sanctions against Grace Foundation legal counsel Stuart Leviton for failing to verify the facts of the case and the details of the pertinent laws.
“An attorney has a duty to verify that he or she has a good faith belief that the facts as set forth in a complaint are true,” he said, “and a duty to have a good faith belief in the legal theories set forth in the action.”
Informed on Saturday of Ryan’s stated intent to file a libel suit against her, DeCaprio replied, “Let him, and make him prove it … and Tim, you can explain to me how you’re not responsible for this. If not you, Tim, then who?”
“The sad thing is that we’ve done everything right,” she added. “We did right by those horses … we took the kicks.”