California brokerage navigates scandal under new leadership

Former Lyon Real Estate CEO pleads guilty to secret videotapings

By Matt Carter, Friday, March 18, 2011.

Inman News™

One of California’s largest real estate brokerages, Sacramento-based Lyon Real Estate, is moving forward under new leadership after its former CEO pleaded guilty to charges related to video recordings he made of encounters with four prostitutes without the women’s consent.

Michael Patrick Lyon, who stepped down as CEO of Lyon Real Estate in September, was sentenced to two years in prison Monday after pleading guilty to four felony counts of electronic eavesdropping. The sentence was suspended and he could serve a one-year jail term under house arrest or at the county jail, the Sacramento Bee reported.

Lyon, 55, took a leave of absence from Lyon Real Estate in September, amid allegations that he had made secret video recordings of guests at several properties he owns using hidden cameras in bedrooms and bathrooms.

Three weeks later, former Alain Pinel Realtors President Larry Knapp took over as CEO of the brokerage, and Lyon transferred his shares in the company to a trust benefiting his children.

Knapp, a veteran real estate industry executive and past president of the Sacramento Association of Realtors, said that Lyon hadn’t been involved in the company’s day-to-day affairs for some time when Lyon stepped down.

For the last several years, he said, Lyon Real Estate President and Chief Operating Officer Jean Li had been running the company. When Knapp stepped in as CEO, he said, he found he was taking charge of a well-organized and well-run organization.

"I have run large real estate companies for more than 25 years, and I was impressed what a great job Jean Li has done running this company for the last several years," Knapp said. "That’s why (Lyon’s departure) had as little impact on the company as it has. We work beautifully together — we think a lot alike — and the transition has worked out beautifully." 

The intensity of media coverage that erupted when the allegations against Lyon became public had a greater impact than Lyon’s decision to step down as CEO, Knapp said.

The Sacramento Bee and other local newspapers ran dozens of stories about the scandal, and the national news media picked up on the story. After he was arrested but before he was convicted, Forbes ranked the charges against Lyon and the ensuing controversy as one of the top 10 "CEO Screw-Ups of 2010."

Knapp said Lyon Real Estate lost about 45 agents as a result of the controversy, leaving the company with about 900 agents. Two Lyon Real Estate executives left to join a rival Coldwell Banker brokerage, and one of the executives brought along a number of agents, Knapp said.

But departures and doubts about the company’s future have largely evaporated since October, Knapp said, and Lyon Real Estate has been successful in recruiting new agents who are fully aware of the scandal.

Lyon Real Estate remains the dominant player in the Greater Sacramento market, he said, with the largest market share among area brokers.

The brokerage was the nation’s 37th largest in 2009 in terms of dollar volume, handling $1.9 billion in sales, according to statisics compiled by Realtor Magazine.

Distressed properties are a big part of the market, Knapp said, and the brokerage had the foresight to begin cross-training agents in short sales two or three years ago. Today, he said, 700 of 900 Lyon Real Estate agents have training in short sales.

Although Lyon "plays no role whatsoever" in guiding the company, Knapp said there are no plans to change the company’s name, which was founded in 1946 by William L. Lyon. 

"Any expert would tell you, ‘Don’t take a highly regarded 65-year-old brand name and play around with it too much,’ " Knapp said. Lyon Real Estate, he said, is "a hugely well-recognized brand in the Sacramento area. We think changing the name would be a mistake."

Knapp’s real estate career dates back to 1969, when he began as an agent and worked his way up to become president of Coldwell Banker of Northern California in 1985. He was named Western U.S. senior vice president for Cendant operating arm NRT Inc. in 1997, directing acquisitions and mergers of independent and boutique real estate brokerages in Northern California.

Knapp also served for seven years on the board of the National Association of Realtors (NAR), where he was appointed to NAR’s Executive Committee in 2008 and 2009.

Lyon hoping for detention

When Lyon cut his ties to the company last fall, the FBI and Department of Justice had just wrapped up a 16-month investigation into the allegations against Lyon first raised by his estranged wife, Kimarie "Kim" Lyon.

But the Sacramento County district attorney and sheriff launched their own joint investigation, which culminated in Lyon’s arrest on Nov. 10, when sheriff’s deputies executed a search warrant at his home, the Bee reported.

Investigators claimed Lyon made secret video recordings of friends and other visitors to properties he owns for at least two decades, but that in many cases the statute of limitations had run out for filing criminal charges. The criminal charges against Lyon related to video recordings dating back to March 2009, the Bee said.

A former employee and a family friend filed a civil suit against Lyon on Oct. 21, claiming he’d used hidden cameras to film them as teenagers while they were nude or partially dressed, the Bee reported.

Lyon originally entered a not guilty plea to the criminal charges on Jan. 12, before working out a plea bargain with prosecutors, the Bee said. The civil suit against him is still pending.

The Bee also reported that Lyon hopes to spend a year in home detention rather than jail as a part of a plea bargain with prosecutors.

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Demolition done right

9 tips to match tools to the task

By Paul Bianchina, Friday, March 18, 2011.

Inman News™

Flickr image courtesy of geishaboy500.

If your next home improvement project requires a little bit of demolition first, it’s nothing to be concerned about. Proper demolition requires choosing the right tools — most of which you probably already have in your toolbox — and using some simple safety precautions and a good dose of common sense. Here are some suggestions for matching the tools to the task at hand.

Personal protection: First and foremost, match your personal protective gear to the demolition work you’re doing. For any cutting operations, wear an approved pair of safety glasses. If you’re generating dust, wear a dust mask or a respirator. Use gloves for protection against sharp materials, and wear the proper shoes and clothing.

Carpet: Use a utility knife with a new, sharp blade to cut the old carpet into manageable pieces first. This makes it easier to handle, and easier to get up off the tack strip. Roll or fold the carpet to remove it from the room.

Rip the pad up by pulling it off the staples. Remove the staples from the floor with a staple removing tool, small pry bar or pliers, or just hammer them down. Use a flat bar to pop up the lengths of tack strip.

Drywall: To remove an entire wall of drywall, use a utility knife to cut the tape at the corners. Use a hammer to break a line through the drywall between studs, then pull the drywall away from the wall in large chucks. Use a hammer to remove the nails, or a screw gun to remove screws.

To cut out a smaller piece of drywall, use a drywall handsaw or an oscillating tool equipped with a drywall blade; check for obstructions in the wall, and don’t cut too deep.

Trim: To remove trim such as baseboards and casings, first use a sharp utility knife to cut the paint along all the seams and joints. Starting at one end, wedge a thin pry bar behind the trim, and slowly pry the trim away from the wall. If you place a metal drywall taping knife on the wall behind the bar and pry against that, you’ll prevent damage to the wall.

Once the trim is off, don’t hammer the old nails through the front. Instead, use pliers or end cutters with a rolling motion to pull the nails through the trim from the back side.

Doors and door frames: Remove the door from the hinges first. At the bottom of the hinge there’s a hole; tap a long, slender nail into the hole to drive the hinge pin up and out of the hinges, then remove the door. Remove the door casings as described above, which will expose the joint between the door frame and the studs. Use a reciprocating saw with a metal-cutting blade between the frame and the studs to sever the nails holding the frame in place.

Wall studs and plates: Use a reciprocating saw with a metal-cutting blade, and cut between the bottom of the stud and the top of the lower wall plate, which will sever the lower nails. Pull the bottom of the stud out and away from the wall, then pull it down off the upper nails.

Cut the upper nails off with a reciprocating saw. The alternative is to cut through the stud in the middle, then pull both halves off the nails in the plate. Once the studs are out, use a large crow bar to pry the bottom plate up off the floor. If desired, you can pass the reciprocating saw blade between the bottom of the plate and the floor to sever the nails.

Grout: Grout can easily be removed using a special grout blade in your reciprocating saw. Hold the saw at a low angle relative to the floor, and let the blade do the work of sawing out the grout. If you have an oscillating multi-tool — or want to use this project as an excuse to go buy one — you can equip it with a special grout blade and make fast work of cutting out the grout lines.

Debris removal: The end result of all that demolition work is always the same — debris that needs to be removed. Large debris such as lumber and plywood should be cut into manageable sizes as needed. Remove or bend over exposed nails. Smaller material can go into trash bags. Use heavy-duty or "contractor grade" bags to prevent rips and tears, and all the related spillage. To make it easier to load the bag, place it into a garbage can first.

Dust containment and removal: Use plastic sheeting over doorways to contain the dust in the room where you’re working. Use thinner painter’s plastic to keep dust off furniture and counters. If the room you’re working in has an exhaust fan, don’t use it — they’re designed for vapors, not heavy airborne dust and particles. To prevent a lot of the dust from getting airborne, vacuum it up using a shop vacuum instead of sweeping it.

Remodeling and repair questions? E-mail Paul at paulbianchina@inman.com. All product reviews are based on the author’s actual testing of free review samples provided by the manufacturers.

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An economic tale of human nature, forces of nature

Commentary: Cycling through the post-catastrophe 'counter-panic'

By Lou Barnes, Friday, March 18, 2011.

Inman News™

Fukushima Daiichi nuclear power complex. Flickr image courtesy of daveeza.

This week was more about human nature than economics and markets.

When Fukushima looked catastrophic, the fearful bought Treasurys and 10-year yields fell to 3.15 percent from 3.55 percent in six days, taking mortgages to 4.75 percent.

Since Japan is now merely awful, the stock market drunks are back in charge, fright-money coming out of bonds and rates rising on the happy thought of war with Libya. Go figure.

In the U.S. economy, little has changed. A spurt in manufacturing activity has the blind watchers of traditional patterns buzzing, and for once they may be right: It is possible that the U.S. competitive gap with the world is closing.

As for the rest of the economy … the Fed’s post-meeting statement said the "recovery is on firmer footing." Fair enough. No footing is firmer than flat ground, and stripped of revisions that’s what the new-data trend was: core consumer price index, industrial production, starts and permits for new homes, mortgage applications, unemployment claims … all flat.

The Fukushima story began without the benefit of competent media. Anybody with history compulsion, let alone nuclear obsessive-compulsive disorder, knew Saturday morning that seawater injection and hydrogen explosion meant meltdown.

CNN for the next four days chopped off any nuclear expert in the first sentence and went back to footage of crying babies and the tsunami. Monday’s markets were quiet; not until Tuesday morning trading in Asia did the "nuclear glow" dawn, and the Nikkei crashed 15 percent in five minutes.

I did not find the first capable TV account until Tuesday evening — on MSNBC’s "The Rachel Maddow Show," of all productions.

Compounding the media weakness is the historical inability of Japanese institutions to pass negative news from the field to leadership, and these guys are taking top trophy from Michael DeWayne "Brownie" Brown, the former leader of the Federal Emergency Management Agency who took a fall amid the Katrina wreckage.

Every bit as bad: The determined optimism near stock markets, an astounding number of analysts claiming that rebuilding will be good for Japan and the global economy.

All that you need to know: If not one CH-47 pilot could hover for the 15 seconds necessary to dump a bucket on target … that place is hot. However, that hard radiation is not moving: There is no Chernobyl graphite-fire volcano to move it.

Long-term contamination will move, perhaps not in human-harmful doses to the public; yet, possibly enough strontium and cesium to make plants and grazing animals inedible for a long time, in a large area.

In terms of scale, Russia’s land area is 6,592,800 square miles. All of Japan is 145,903 square miles. The Chernobyl exclusion zone is 3,560 square miles. Fukushima’s extent cannot be known now, but don’t expect to find anybody on a beach towel near there for a long time.

Follow the money. Japan’s finances are the weakest of all large nations — in John Mauldin’s observation, "a bug in search of a windshield." Debt is 200 percent of gross domestic product, and going higher. Windshield found. Japan’s deepest financial problem is demography.

It is one of the oldest of all nations, vaunted savings rate dropping to zero, and its population five years ago began to shrink outright. In the last week or so, prospects for immigration there have not improved, nor for conception.

In post-catastrophe we all tend to fall into counter-panic, desperate to prevent recurrence. Ban nuclear power altogether, when resistance to new-build is responsible for the hazards of so many overage plants?

Embrace the rising price and environmental damage of fossil fuel, or the impoverishing mega-cost of renewables?

Rebuild … what? The towns on Honshu’s north shore lie on compact river deltas, the mountains beside them perfect magnifiers of tsunami. Rebuild only above this apocalyptic high-water mark? Or live behind new 100-foot-high sea walls? How quaint. Lovely.

Build for another 9.0? Or figure you’ve taken the once-a-millennium shot and build (again) for a 7.9? Or for a 9.5?

Leadership everywhere, not just Japan, constantly fails to look around corners, freezes in emergencies, and then overreacts once it’s all over.

Yet the individual collective keeps moving, goes to work, tends kids, brushes off, smiles, and looks to a better day. I could draw an allegory to a mortgage and housing meltdown, but … nah.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@pmglending.com.

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