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Rise and fall of Cal Neva owner, Ezri Namvar(Sacramento Bee, The (CA) Via Acquire Media NewsEdge) Mar. 9--CRYSTAL BAY, Nev. -- Judy Garland was discovered at the Cal Neva. Frank Sinatra once owned the place. So did billionaire Kirk Kerkorian. Plus a couple of guys named "Bones" and "Wingy." But of all the characters who have passed through the 83-year-old hotel-casino on Lake Tahoe's north shore, few can match the rise and fall of current owner Ezri Namvar. The Iranian-born investor from Los Angeles amassed a $1 billion real estate fortune but is on the verge of losing the Cal Neva after defaulting on a $25 million loan. His lenders say he ran the Cal Neva down and siphoned off cash for improper use. They're about to foreclose and had a court-appointed receiver take control in the interim. Namvar's partner in the Cal Neva, a Phoenix development firm called Namwest, is in Chapter 11 bankruptcy. And those are probably the least of Namvar's problems. In November, his bank, Security Pacific Bank of Los Angeles, was shut down by regulators. He's been dragged into Chapter 11 after failing to repay $400 million to hundreds of investors, mostly fellow members of L.A.'s affluent Iranian Jewish community. Some investors accused him of fraud, though no criminal charges have been filed. His total debts are more than $1 billion. The Cal Neva is a victim of "Ezri Namvar's crumbling financial empire," the lender, an affiliate of Los Angeles investment firm Canyon Partners, declared in court papers. Canyon Partners, whose executives include former California Treasurer Phil Angelides, is seeking to foreclose on the Cal Neva today, with the intent of selling it. The firm declined comment for this story, as did the court-appointed receiver. Namvar's representatives say the accusations against him are false, and the Cal Neva is doing as well as can be expected, given the recession. Bills are being paid and guests are being served. Namvar had a deal to sell the Cal Neva for $55 million -- twice what he paid four years ago -- but the buyer couldn't close because of the credit crunch. Even so, talks are continuing with four bidders, said Adrian Glover, asset manager for Namvar and the Phoenix partners. A sale would set the stage for a much-needed $80 million renovation. "It's not ? a five-diamond resort," he said. "We need the investors to take it to the next level." The Cal Neva Resort Spa Casino has a rustic feel, from the old guest cottages near the hotel tower to the peaked-roof, Tahoe-style lodge that houses the casino. The resort, which began as a log cabin built in 1926, straddles the state line. A slice of the main building, and the shallow end of the swimming pool, lie in California. The quirky location is something of a curse. Tahoe's north shore isn't much of a gaming destination. Its five casinos lack the glitter and critical mass found in Reno or the south shore. The economy and California's Indian casinos have made things worse. "The casinos up here are pretty marginal," said Bill Eadington, who lives a block from the Cal Neva and is a gambling industry expert at the University of Nevada, Reno. The Cal Neva is doing worse than most. Revenue from its casino, run under contract by a firm called Luna Gaming, fell 37 percent last year, according to Canyon Partners. That was twice the decline reported by all north shore casinos. Including the hotel, the Cal Neva lost $554,000 the first eight months of last year, court records show. The north shore casinos were quiet on a recent weekday, typical for winter. But the Cal Neva's small casino was dead. All 126 slot machines were silent. Its six gaming tables were empty, except for employees standing by, arms folded. Rick Talbot, casino general manager, said business has been better on weekends. "We're going to survive; the doors are going to stay open," he said. But he said it doesn't help that the gift shop is closed indefinitely and the restaurant's hours are severely curtailed. Namvar was seldom seen at the Cal Neva, he added. "Ezri -- he didn't put any money into the place," he said. The North Lake Tahoe Fire Protection District threatened to close the property in 2007 until the fire alarm was fixed. Canyon Partners said the resort gutted the housekeeping and maintenance staff, and waited two months to fix the casino's broken air conditioner last summer. Parts of the ceiling have caved in. Canyon Partners also said cash from the Cal Neva was used for "unapproved purposes," like paying one of Namvar's personal managers. Glover, Namvar's asset manager, said the Cal Neva wasn't run down. The layoffs were a prudent business decision, consistent with the downturn in occupancy. There were no improper uses of cash. Namvar, 57, couldn't be reached for comment. An associate said he isn't doing interviews "because of all these headaches." In November, about the time his bank failed, Namvar held a summit at the ballroom of a hotel he owns, the Los Angeles Marriott. In attendance were hundreds of individuals who had placed money with him to invest in real estate. Pleading for patience, he promised to repay the $400 million he owed them. But a month later, several investors filed an involuntary bankruptcy case against him. One investor said in court papers that Namvar ran a Ponzi scheme "targeting the Los Angeles Persian Jewish community." Namvar called himself an innocent victim of the real estate market collapse. But the case has created an uproar among those who came to Los Angeles after the 1979 revolution in Iran. "It's a very tight-knit community, but now the whole trust issue has exploded," said Pooya Dayanim, president of L.A.'s Iranian Jewish Public Affairs Committee. In 2005, Namvar's group paid $30 million for the Cal Neva, buying out a local businessman who had run the property for 20 years emphasizing wedding receptions. The new owners had bigger plans: a massive condominium conversion. They obtained the permits -- no small task at Tahoe -- but the project has gone nowhere. Now, others see potential in a renovated Cal Neva. Von Batesole, a Palm Springs businessman who wants to create high-end time-sharing, was prepared to pay $55 million in January but couldn't line up financing, court records show. He said in an interview he's still interested but at a lower price now that it's in receivership. He believes venture capitalists or hedge funds would back a deal for the Cal Neva. "The history of it is fantastic," Batesole said. Or at least colorful. Over the years, the Cal Neva has survived a devastating fire (1937), brushes with the law and owners like reputed hoods Elmer "Bones" Remmer and Bert "Wingy" Grober. Ronald Cloud, a Fresno banker and plumbing executive who owned it in the early 1980s, was fined a record $325,000 after investigators found some slot machines were rigged. Cloud eventually lost his gambling license and was convicted of bank fraud, and the Cal Neva closed for three years. The heyday was 1960 to 1963, the Sinatra era. He built underground tunnels throughout the property and a celebrity showroom that now bears his name. Sinatra lost his gambling license in 1963 after the FBI spotted mobster Sam Giancana, who was banned from casinos, on the property. Two years ago, Giancana's daughter Antoinette, co-author of the memoir "Mafia Princess," made her only visit to the Cal Neva. The 73-year-old Chicagoan left with some gift shop trinkets and a sense of closeness to her father. "What a bunch of great guys they were in their day ? the Rat Pack, my dad, Sinatra," she said. Lee Newman, a young airman stationed at Sacramento's former McClellan Air Force Base, dropped in one night in 1962 for Sinatra's nightclub show with Dean Martin -- and was startled to see Sinatra dealing blackjack afterward. Newman sat down next to Martin at Sinatra's table and promptly lost $10. Taking pity on him, Sinatra told Newman to take his seat and start dealing the cards. Newman won; Sinatra barely noticed. "I walked out of there that night with $200 in real silver dollars," said Newman, 67, who lives on California's North Coast. "That was a fun time." Call The Bee's Dale Kasler at (916)321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs. To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/. Copyright (c) 2009, The Sacramento Bee, Calif. Distributed by McClatchy-Tribune Information Services. 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