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Irvine heiress says partner in firm diverted millions

August 04, 2007|David Reyes | Times Staff Writer

Heiress Joan Irvine Smith's plan was to build a world-class equestrian park in San Juan Capistrano.

She leased land next to her 26-acre farm, the Oaks. She hired a park designer. Then she met Richard John "R.J." Brandes, a Newport Beach businessman with whom she entered into an agreement to develop and operate what was to be one of the West Coast's top equestrian centers.

Many shows were held, including Olympic trials in 2000 and 2004. Despite its apparent success, however, the 40-acre facility, Oaks Blenheim Rancho Mission Viejo Riding Park, formed in 1998, lost money, according to Smith. This week she filed a lawsuit against Brandes alleging that he fraudulently diverted at least $6 million from the venture.

Brandes did not return calls seeking comment made to his business office on Friday.

The founder and CEO of Belgravia Capital, a commercial finance and real estate mortgage bank, he is well-known in Orange County's philanthropic circles, as is Smith.

The facility they started, in addition to offering equestrian shows attended by celebrities, including Arnold Schwarzenegger, has hosted Rancho Mission Viejo's annual rodeo, which raises hundreds of thousands of dollars for local charities.

According to the lawsuit filed in Orange County Superior Court in Santa Ana, Brandes reported to both Smith and her accountant that the operation was losing money. When she asked to see the firm's books, however, he initially refused, then allowed only portions of the ledgers to be examined, the lawsuit says.

In July, Smith learned that revenues generated by the horse shows had "essentially disappeared" in 2002. The complaint notes that the accountant found discrepancies, including a string of insurance expenses that rose each year from 1999 through 2006. In addition, the lawsuit says, bills for labor and work performed elsewhere turned up in the facility's books, some of it allegedly involving Brandes' personal property including a residence, Arden Cottage, and various other enterprises.

Smith could not be reached for comment.

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david.reyes@latimes.com

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