West Oakland Councilmember Involved in House-Flipping Scheme 

Public records show that city Councilmember Lynette Gibson McElhaney, who represents a district impacted by gentrification, used her social justice nonprofit to finance for-profit house-flipping deals in Oakland.

Page 2 of 5

In April 2013, Richmond Neighborhood Housing Services made another $75,000 loan to Nakatoma Acquisitions to finance the purchase of a residential property on Carberry Avenue in the Idora Park neighborhood of North Oakland, not far from the Ayala house. The Carberry house — a small storybook structure built in the 1930s — had been owned by an elderly couple. When the couple died in 2013, their children quickly sold it to Nakatoma Acquisitions for $565,000 — a significant discount in a hot Oakland location, in which the average home price has hit $700,000. Nakatoma Acquisitions replaced the sewer lateral, added new coats of paint, put a new roof on, and then quickly put the house up for sale, asking $699,000. It sold to a young couple in August for $720,000, allowing Nakatoma Acquisitions to earn $155,000 on the flip.

We spoke with the new owners of the house — two lawyers with a newborn baby. The couple, whom the Express has agreed to not identify, said the property wasn't marketed as an affordable home under any kind of government or nonprofit program. They had never heard of Richmond Neighborhood Housing Services and dealt only with Nakatoma Acquisitions through a real estate agent.

"You could see they were asking a lot more for it than they had done in terms of work," said one of the new owners about Nakatoma Acquisitions.

The most recent deal we found between Richmond Neighborhood Housing Services and Nakatoma Acquisitions was a September 2013 loan for $75,000 secured by a mortgage on a large house located at 2559 Oliver Avenue, a few blocks from the Oakland Zoo, just below Interstate 580. According to Alameda County records, Sun West Mortgage Company foreclosed on the house in 2012. Nakatoma Acquisitions then bought it from Sun West for $261,0000 in July 2013. The house is still owned by Nakatoma Acquisitions, and today it sits vacant. On a recent visit, one of the glass panes next to the handle on the front door had been punched out, indicating that someone may have recently broken in. Trash crowded the entranceway.

Public records show that Nakatoma Acquisitions, LLC was incorporated in 2011. Its principal owners and managers are Richard Reese and Ruben Gressett. Reese is a long-time real estate investor in the East Bay with a checkered past. Gressett owns a termite extermination company, and it appears that his involvement in Nakatoma Acquisitions was mostly to provide money through his family's trust to finance property purchases. Gressett's company also appears to have done pest inspection work on properties owned by Nakatoma Acquisitions.

Seeking answers, we attempted to contact Reese, but were met with silence. For years he has operated out of a Castro Valley P.O. Box in the UPS Store on Redwood Road. From public records, including court documents, we obtained multiple email addresses and telephone numbers used by Reese over the years, and attempted to contact him, but got no response. We then called the attorney listed as the agent of service for Nakatoma Acquisitions, Steven Miyake.

Miyake told us he is Reese's attorney. We asked about Nakatoma Acquisitions, but Miyake said he couldn't provide us with any information about the company. We asked Miyake what sort of business Nakatoma Acquisitions is, and whether it was formed to develop affordable housing. "I'm only familiar with the for-profit aspect of it," he said.

We asked if he knew anything about the company's dealings with Richmond Neighborhood Housing Services or if he knew Gibson McElhaney. "No, nothing," he answered. We asked him where Reese was, and if he would pass on our contact information along with a request that Reese call us.

"I'll ask him and get back to you Friday," Miyake told us weeks ago, "but if you don't hear from me, it's because my client doesn't want to talk to you."

We heard nothing after that.

Public records and interviews paint a picture of Richard Reese as a hard-driving real estate investor who has burned bridges with former clients and colleagues while seeking a fortune in Oakland property. Over the years, he has been sued multiple times and had a restraining order lodged against him, court records show. He also has brought numerous civil actions against others.

In 2002, Reese and his then-business partner David Shepard incorporated a limited liability company called Banana Bug that they used to buy and sell real estate in the Bay Area. But Banana Bug, LLC apparently didn't make out well during the real estate boom of the 2000s, and the company ceased operations when the market blew up six years ago. The California Franchise Tax Board suspended Banana Bug's license to do business after it failed to file a 2008 tax return.

Reese and Shepard's relationship had already disintegrated by then. As their real estate business was collapsing, Shepard sought a restraining order in Contra Costa County against Reese, alleging that Reese had become "unstable" and had made threats of violence.

Comments (23)

Showing 1-23 of 23

Add a comment

Subscribe to this thread:
Showing 1-23 of 23

Add a comment

Anonymous and pseudonymous comments will be removed.

Latest in Feature

Author Archives

Most Popular Stories

Special Reports

Holiday Guide 2018

A guide to this holiday season's gifts, outings, eats, and more.

Fall Arts 2018

Our Picks for the Best Events of the Fall Arts Season

© 2020 Telegraph Media    All Rights Reserved
Powered by Foundation