A Towering Figure: The Life and Business of Aaron Feldman

Friday, July 6, 2007 | On Dec. 19 at 4:30 p.m., Aaron Feldman, president of Sunroad Enterprises, met with San Diego Mayor Jerry Sanders. The city had recently issued a stop-work order on Feldman’s now-infamous Centrum 12 tower.

Less than 48 hours after that meeting, the head of the city’s Development Services Department gave Sunroad permission to continue working on the site.

Fast forward.

Two months later, on Feb. 26, Feldman paid the mayor another visit. Sunroad was in the midst of a public relations brouhaha over its tower, and Feldman was scrambling for a solution that didn’t involve cutting 20 feet off his latest building.

Four days after that meeting, Sanders personally asked the chairman of the San Diego County Regional Airport Authority, Alan Bersin, for help in solving the Sunroad problem. Bersin sent over one of his top officials, who worked with Sunroad consultants to draw up a proposal for the Federal Aviation Administration.

Twice Feldman approached the mayor. Twice the city helped Sunroad.

Aaron Feldman is a powerful man. He’s also an enigma. An intensely private man who rarely allows his photograph to be taken, he has quietly and resolutely built one of the region’s most successful and far-ranging business empires. He has done so largely away from the public eye, using a skilled cadre of lieutenants to amass a fortune in car dealerships, developments and real estate.

While Feldman and his associates are regular campaign donors and political gift-givers, the Sunroad president isn’t considered one of the region’s big political powerbrokers. However, the company’s latest projects have brought Sunroad and Feldman into the center of a political firestorm that has cast a pall over Sanders and fueled the debate over developers’ influence at City Hall.

Besides its most high-profile troubles, Sunroad has been active on other fronts. It has abandoned plans to convert 47 acres of industrial land into valuable residential land in Otay Mesa and has dropped out of a controversial coalition of developers aggressively pursuing wide-ranging land-use changes in the area. The company now plans to sell the land, which it had hoped would host 1,410 homes. And its early plans to build two hotel towers on Harbor Island have faced fierce opposition after receiving the same FAA hazard designation that dogged its Kearny Mesa project.

Feldman’s empire is built for the long haul. He started off small, using family money from Mexico City to finance a strip mall and moved on to aggressively pursue development projects that others might not have had the time, money or nerve to endure. And he got into the car business out of necessity: He wanted a quick, reliable cash flow while his real estate endeavors took time to mature.

Today, Feldman’s enterprises include hundreds of thousands of square feet of high-end commercial real estate scattered across the county, including some of the tallest buildings in Mission Valley; a prestigious country club in North County; a marina on San Diego Bay; and car dealerships on both sides of the border.

But Feldman’s ride from Mexican immigrant to San Diego tycoon has been shaken along the way. He has seen at least one investment fold and has fought through tough times. He has kept the Sunroad empire intact through the lean years and maintained a 100 percent stake in almost everything his company touches. In doing so, Feldman has amassed a personal fortune that one court-appointed expert estimated at more than $300 million.

He has garnered a reputation as a hardnosed, tenacious entrepreneur, who can be ruthless at times in his business dealings. He is admired by many, feared by some and known well by precious few outside his inner circle.

Success has given the Feldman family exclusive riches, the details of which have surfaced in Feldman’s bitter, ongoing divorce battle with his long-time wife, Elena: Feldman’s monthly income has been estimated at $1.1 million; the family owns a $13 million La Jolla estate, another $6 million home and properties in Mexico City and Acapulco. They employ several servants in the United States and Mexico. As of 2003, Elena Feldman had a rack of fur coats kept in storage at Neiman Marcus and $250,000 worth of jewelry including four Rolex watches. She asked her husband to provide her $20,000 a month for travel expenses.

Feldman has also been targeted along the way by hundreds of lawsuits and one class-action lawsuit involving more than 300 employees. His company has even grabbed the attention of the local FBI office, which made an unsuccessful pitch to headquarters in the 1990s to pursue a Sunroad investigation.

Still, 30 years after its inception, the company has emerged to employ almost 700 people, house some of the region’s biggest corporate names in its office buildings and show off its logo on countless license plates around the county. San Diego developers and industry insiders said the company has become even more ambitious in recent years.

“[Feldman] was always a fox and he was getting more foxy,” said Sanford Goodkin, a local real estate developer who worked with Feldman. “But the problem with foxes is that sometimes they out-fox themselves.”

Now, at the height of Sunroad’s success, its patriarch faces unprecedented challenges: He finds himself in the middle of a political scandal, a messy divorce and a batch of development projects that haven’t worked out as planned.

Aaron Feldman has never done an interview and never will, the company says. Instead, his close friend and long-time associate, Rick Vann, who heads Sunroad’s development arm, touted the company’s continued success and philanthropy in a recent interview.

“Aaron is a private guy, a very very private guy,” Vann said. He added: “He’s definitely not a shy person. It’s more of his credo — the way he’s conducted his business all his life.”

Vann said the company is committed to the community and that he and Feldman are proud of the projects their company has built in and around San Diego.

The company will certainly survive its recent travails, he said. “We’re going to take a hit but it’s not going to be the demise of the company, not by a long shot,” Vann said. “We’re a financially healthy company.”

The Family Business

Feldman, 64, has fathered four children. Feldman’s two sons, Uri and Dan, sit as top Sunroad executives and he has a daughter, Dalia. A third son, David, died of cancer.

Sunroad is a family business. Feldman’s father and uncle were both successful steel tycoons in Mexico City. His father, Angel, provided the aspiring businessman with the capital he needed to launch his venture north of the U.S.-Mexico border.

Aaron Feldman typically eschews partners, choosing instead to shoulder the projects himself through one of the dozens of Sunroad subsidiaries that fall under the roof of his principal holding company, Sunroad Enterprises.

He was educated in Mexico, Italy and France, and is described as being active in both the running of developments and dealerships. He comes into the office daily, works directly with his group of managers for each business and often seals deals himself. Colleagues know him as a tough, aggressive businessman and a skilled negotiator.

“If I wanted to hire somebody to negotiate, I’d want Aaron to do it,” said Rob Hixson, a senior vice president at real estate services firm CB Richard Ellis and chairman of the Otay Mesa Planning Group.

In the mid-1970s, the young Aaron Feldman scoped out various cities in the United States as targets for his business aspirations. Vann said Feldman originally considered moving to Houston, but came to San Diego, loved it, and decided to settle here with Elena.

In San Diego, he saw a bright path to the future, and selected the optimistic name for his new venture.

Vann, then the Mexico president of Estée Lauder, joined Feldman a year later and the two built a small strip mall on Convoy Street in Clairemont Mesa that would be their first modest foray into real estate development.

The Convoy project served the fledgling company well as a prototype, Vann said. As a fairly low-risk project, however, the strip mall was hardly a harbinger of development ventures to come.

Vann and Feldman had bought the property with plans intact and constructed what was essentially someone else’s vision. As Feldman and the company grew more successful and more confident, Sunroad’s philosophy evolved. The company capitalized on parcels of raw land upon which it could realize its own visions.

In doing so, Sunroad took the leap from being a builder of projects to being a land speculator, a developer and a landlord all in one.

With that new philosophy came increased risk. Feldman purchased property that, on its face, didn’t boast much value because of government restrictions. However, if the governmental process could be handled deftly — for example, industrial land could be converted to residential — the company could unleash new profits. Sunroad had entered into a complex game few developers play.

“There are fewer and fewer players on the raw land side. There’s some people who buy land, change the zoning and turn around and sell it,” Vann said. “We are a rather interesting company from the standpoint that we typically buy the land and massage it or change it or rezone it and then we continue with the vertical design income structure of a project and typically we’ll hold it long term. We’re not flippers. Our philosophy has never been to make a quick buck. We’re in this for the long haul.”

Massaging a piece of land to suit your needs, as Sunroad has found out of late, isn’t always easy.

However, until the company’s recent struggles, Feldman and his team appear to have had a masterful knack for real estate investment and development, becoming known as suppliers of high-end office space replete with public art and signature landscaping. Feldman’s only other major hiccup was a venture he personally pursued outside the Sunroad name to build a country club in Del Mar.

A consortium of 50 investors aimed to build an upscale club that would cater to the local Jewish community, though not exclusively. Vann said the success of the project depended upon the investors selling about 100 parcels of land to homeowners. The funds raised were then to be reinvested in building the country club and golf course.

The project fell apart.

The local real estate market slumped and the offers to buy the land parcels never came in. The bank got nervous and the consortium sold the land on to a buyer who, in Vann’s words, “got himself a heck of an asset.”

“Can you imagine not being able to sell lots in Del Mar for $300,000 today?” Vann said.

The same collapse in the real estate market spurred Feldman and Sunroad to diversify the business into ventures that did not rely directly on a sometimes panicky real estate market. Feldman’s move into San Diego’s lucrative car business would prove to be a crucial hedge for Sunroad in the difficult years for commercial real estate of the early 1990s.

“I can tell you it was a lean time for everyone in the real estate business at that time,” Vann said. “And I can tell you we’re damn proud to have survived it. When you look back on history as to the private developers in San Diego and how many of us survived, you can’t fill up the fingers of one hand with those of us who survived.”

Steve Cushman, a retired San Diego car dealer who was in competition with Feldman for many years, said Sunroad’s Pacific Honda was particularly popular at the time.

“That dealership was and is the No. 1 largest volume dealership in this county, and in the early 90s it was a very good time to be a Honda dealer. I’m certain that it was a very profitable dealership,” Cushman said.

Sunroad’s portfolio now features seven car dealerships, including Tijuana’s only Toyota outlet. The company is also currently developing a car dealership and office complex in Mexico City.

Feldman’s first foray into selling cars was destined to be a wild ride, a story of murder, emotion and intrigue preserved today in court documents and media accounts. The story was eventually featured in a television program as part of a series about prosecutors.

A Murder in Encinitas

The imbroglio over the office building in Kearny Mesa isn’t the first time Sunroad has had the media spotlight shone upon it.

In late 1985, Feldman purchased his first auto dealership, Center City Ford, from Ralph and Lula Mae Osborne. He subsequently renamed the business Kearny Mesa Ford.

When Feldman bought the dealership, the deal included the provision that the Osbornes would remain liable for any debts incurred while they had run the business, between 1980 and 1985.

In 1987, Salvatore Ruscitti, a career car salesman, and 22 former employees of Kearny Mesa Ford filed a lawsuit against Feldman and various Sunroad business entities connected to the car dealership.

Ruscitti was the lead plaintiff on the case and eventually gathered together more than 300 plaintiffs who joined together in a class action suit against Feldman and his company. The employees claimed that Kearny Mesa Ford and Center City Ford had systematically cheated them out of millions of dollars’ worth of sales commissions.

The Osbornes, who would have faced the bulk of huge liabilities should the suit succeeded, were very concerned by the lawsuit, court documents show.

Lula Mae Osborne’s son, Will Nix, who had been working at the dealership, had left shortly before Feldman took charge and opened his own dealership in Los Angeles.

Nix, who at one time lived with Ruscitti and had also employed him as a salesman at his dealership, was enraged by his ex-roommate’s investigation into his mother and stepfather’s former business, according to witness statements contained in court documents.

Those statements say Nix became even angrier when his mother began to show signs of psychological distress because of the suit. Eventually, court documents show, Nix decided to fix the problem with Ruscitti once and for all, and enlisted the help of friends to find and hire a hit man from the Mexican Mafia.

On Sept. 17, 1988, Ruscitti was shot four times in the face and abdomen at the front door to his home in Leucadia. He died.

A subsequent investigation, carried out by Special Deputy District Attorney Larry Burns, who is now a federal judge in San Diego, led to murder charges against Nix. In his grand jury investigation, Burns interviewed Feldman among several other witnesses.

In 1992, Nix was convicted of murder and conspiracy to commit murder and was sentenced to life in prison without possibility of parole. A year later, the class-action suit was settled for $180,000.

It became known as the Empire Motors case and things got so hot that Sunroad Enterprises sparked the law enforcement community’s interest.

A heavily redacted FBI document from the time shows that in 1990, the FBI’s San Diego branch asked headquarters to authorize a racketeering investigation into Sunroad Enterprises. The document cites information gathered by the Homicide Division of the San Diego Sheriff’s Department, though it doesn’t offer any solid details on what would be investigated or why.

“Although the information received to date was not determined to be sufficient to warrant FBI investigation, it did present ample details which indicate the possibility of criminal activity on the part of [redacted] and persons associated with Sunroad Enterprises,” the document reads.

The request to FBI headquarters to investigate Sunroad was based on evidence Ruscitti had reportedly gathered before his murder. The document states that Ruscitti had reported that Sunroad was apparently involved in “large scale criminal activity.”

“Ruscitti believed that Sunroad Enterprises was intentionally losing money and was in actuality a money laundering operation,” it reads.

Vann said he had no knowledge of the FBI document. A spokeswoman for Feldman said neither he nor his two grown sons knew of any FBI interest in their activities.

Burns, who conducted the investigation into the slaying of Ruscitti, played down the relevance of the FBI document and the investigation that led to it.

He said that, in the course of his investigation, many allegations flew around. Because Sunroad and Feldman personally had exposure to Ruscitti’s class action lawsuit, Burns said it was inevitable that fingers would be pointed at them in relation to Ruscitti’s murder and other illegal activities.

Though he said he remembered that money laundering had been brought up at one stage, Burns stressed that the accusation was probably the product of car dealership gossip and little else. And he said that any suggestion that Feldman or Sunroad had been involved in Ruscitti’s murder had been conclusively squashed during his investigation and during Nix’s subsequent trial.

“When homicide detectives are looking at a homicide, they need to be very careful, but in time we determined that Sunroad and Sunroad’s principals didn’t have anything to do with the murder,” Burns said.

A Stormy Marina and a Sunny Market

Feldman recovered well from the Ruscitti controversy. Though Sunroad’s name had been splashed through the newspapers, his car businesses flourished and by the mid-1990s he had a network of dealerships.

A decade earlier, Feldman had decided to diversify once more, this time into a marina project on San Diego Bay.

Feldman, who generally owns 100 percent of all his businesses, giving him full control, this time sought out a trio of partners to help him formulate a plan in response to a San Diego Unified Port District request for proposals to develop a marina on Harbor Island.

Bob Collins, a long-time San Diego marina operator at the time, was one of those three partners. “He needed us because of our track record with the port and because we had good financial statements,” Collins said.

Collins’ relationship with Feldman would later degenerate into a legal battle that lasted eight years.

Collins said Feldman aggressively pushed him and his partners out of the marina project. The partnership began to deteriorate after Collins suggested to Feldman that Harbor Island would be a perfect spot for a large, upscale hotel, Collins said.

As soon as he realized the potential for that hotel project, Collins said, Feldman started to edge out his business partners. Two of the partners were bought out early on, but Collins said he stuck around, rejecting Feldman’s initial offer of about $300,000.

Feldman eventually paid Collins more than $2 million for his share of the marina project, Collins said.

Collins said over the course of their 20-year business relationship, Feldman burned him several times and left him with the impression that he would get whatever he wanted, by fair means or foul.

“He uses any and all means to get his way. It doesn’t matter if it is 100 percent legal or ethical, that’s just his M.O.,” Collins said.

Feldman replied to Collins’ assessment of his business practices via his spokeswoman, in an e-mail: “Our relationship with Mr. Collins ended due to fundamental differences in our approach to doing business. Respect for others is one of our core values. We will not engage in an exchange of harsh words with Mr. Collins despite our differences.”

The idea for a hotel on Harbor Island has since become one of Sunroad’s recent trio of troubled projects, falling foul of the same FAA guidelines that have plagued the company’s Kearny Mesa tower.

But other disputes involving Sunroad were settled more amicably.

In 2000, Sunroad’s newly built Maderas Country Club in Poway was sucking up so much groundwater that local homeowners who relied on individual wells began to run short of water for washing and cooking.

The golf course’s enormous thirst for water was draining the local aquifer to such an extent that the local homeowners petitioned the city, and Sunroad, for help.

Tom Tremble has lived in Poway’s Old Coach neighborhood, the neighborhood most affected by water loss, for more than 30 years. He said Sunroad dealt professionally and courteously with the groundwater problem, paying more than $120,000 to have several local homes connected to the city’s main water system so that they would not be directly affected by the lowering water levels in their wells.

Niall Fritz, director of development services for the city of Poway, said Sunroad has served the community very well over the years. He said Feldman negotiated hard for a solution to the groundwater issue, but the settlement agreed upon has worked perfectly for the city and its residents.

Despite the setbacks, Sunroad flourished in the mid-1990s and into the 2000s. The buoyant commercial real estate market allowed the company to pursue several large projects across San Diego. Those included the Sunroad Corporate Centre in University City, which still houses the company’s headquarters, and three large corporate office buildings in Mission Valley that collectively comprise almost 300,000 square feet of top-of-the-line office space.

The plush Sunroad Corporate Centre is made up of four buildings, three of which are still owned by Sunroad. They house such tenants as Burnham Real Estate, consulting and insurance conglomerate Marsh & McLennan Companies and law firm Cooley Godward Kronish LLP, which represents Sunroad in the ongoing lawsuit over the Kearny Mesa tower.

By the early 2000s, the company had grown into one of the city’s biggest players in development. Feldman and Vann continued to search out profitable real estate ventures, following their philosophy of holistic development and taking risks along the way.

Other San Diego developers and associates of Feldman also began to see a change in the way Sunroad conducted business.

“They became willing to push the envelope even more,” said real estate advisor Gary London. “But at the same time, San Diego needs companies like Sunroad to force the city to take a more comprehensive look at land use, to challenge the city to take a look at its existing regulations, because they’re inadequate and inappropriate for the changing needs of our city.”

Getting Political

Like many developers and successful impresarios, Feldman also took an interest in politics as his business expanded.

Feldman’s donations are more about business than political belief. The recipients of his donations span the ideological spectrum, from conservative North County Reps. Brian Bilbray and Darrell Issa to South County Democrats Bob Filner and Juan Vargas. He donated to former San Diego Mayor Susan Golding’s Senate run.

“We do pride ourselves on having good relationships with politicians in general,” Vann said.

Despite the activity, which includes a decade and a half of hosting fundraisers, Feldman can’t vote in the United States. He never became a U.S. citizen, Vann said.

Feldman has also sprinkled gifts around to people in power. In 2002, he treated then-City Councilman Ralph Inzunza to lunches in January, April and October. He also gifted him a round of golf, which Inzunza valued at $51, in March.

As the District 8 representative, Inzunza was set to play a key role in determining the development blueprint for Otay Mesa.

In November 2004, as Sunroad prepared to enter into an agreement with the city of Chula Vista to open a Toyota dealership, Feldman gave then-City Manager Dave Rowlands a round of golf in the Johnny Miller Golf tournament valued at $130. Rowland eventually cut the ribbon at the grand opening of Toyota Chula Vista.

It is this intersection of business and politics that has brought Feldman to the fulcrum of public attention once again.

In 2005, he and his employees supported Sanders’ 2005 run for mayor and held one of Sanders’ largest fundraising events. Feldman’s Sunroad Asset Management also buttressed the campaign for Sanders’ 2006 ballot propositions with $10,000.

He also hired Tom Story to be a lead Sunroad executive. Story previously served on the staff of former Mayor Dick Murphy and was a deputy director in the city’s Development Services Department.

When Sanders granted Feldman the right to continue working on the 180-foot tower near Montgomery Field in December 2006, the political connections between the two men took center stage.

City Attorney Mike Aguirre in recent months has hammered Sanders’ political ties to Feldman the fundraiser. He also brought criminal charges against Story. (Aguirre was later thrown off the case by a judge who found the ethical wall between his civil and criminal divisions to be lacking.)

Yet, for all the attention, local political consultants from both parties say Feldman is hardly one of the region’s leading political benefactors.

“I’ve been aware of him for a while, but he’s not on my top 100 people I would call,” said political consultant Chris Crotty.

“Prior to this, if you were to ask me the top 30 names of fundraising in San Diego, he would not be on that list,” said John Kern, a political consultant.

Now, the Sunroad name has become a political toxin.

Sanders first said he didn’t remember Feldman’s fundraiser; he later recanted. He’s moved from opposing Aguirre’s lawsuit against Sunroad to now publicly blasting the company.

In Otay Mesa, Sunroad was part of a coalition of developers in an unusual agreement in which it paid for the city’s consultants in exchange for an audience in front of the City Council.

Two weeks ago, Sunroad dropped out of the coalition. Last week, the Mayor’s Office notified the developers it would be paying for the consultants.

The city is also reviewing the appropriateness of continuing an arrangement that has Sunroad raising $1 million over five years for a firefighting helicopter.

A Trio of Troubled Projects

Besides its most high-profile troubles, Sunroad recently abandoned the plans to convert its industrial land into valuable residential land in Otay Mesa. The company had owned the property, which sits almost adjacent to Brown Field airport, for years and, with its partners, had pumped millions of dollars into an attempt to have the property rezoned from industrial to residential.

Had it been successful, Sunroad would have followed its previous model and capitalized on the land’s newfound wealth. Now the company is looking at selling the property in its existing state.

Sunroad’s hopes of building two hotel towers on Harbor Island have faced early opposition after receiving the same FAA hazard designation that brought attention to its Kearny Mesa project.

Vann said the company was still in the very early stages of that project and said criticism surfaced only because of the current political situation.

“There is no plan. There’s a rough schematic of a project that may occur three, maybe four years from now,” he said.

And, of course, there is Sunroad’s troubled tower in Kearny Mesa. The company has said it will bring its project into compliance with the FAA, but the building remains a hazard to local pilots, who in certain weather conditions must circle into Montgomery Field Airport at a higher altitude than they did last year.

Meanwhile, Sunroad has just begun to try to reclaim its public image, purchasing ads in the Saturday and Sunday editions of The San Diego Union-Tribune saying that the company has always tried to do the right thing for its hometown.

While saying that many of its community contributions have been done anonymously to stay out of the limelight, Sunroad is now boasting a philanthropic record that includes $100,000 for a children’s computer lab at the Serra Mesa Library and a $250,000 pledge to the University of California, San Diego, that spurred the hiring of famed Mexican Nobel Laureate Mario Molina to study climate change. Feldman has also given to various Jewish causes, including $800,000 to the San Diego Jewish Academy.

Feldman’s donation to the fire helicopter earned him the San Diego County Fire Chiefs’ Association Maltese Award for “unselfishness, honor, and commitment to public safety.”

Vann denied that the Kearny Mesa tower has tainted Sunroad’s other projects. He said he hopes the company’s projects will be judged on their merits, not by the current political struggles.

“It’s clearly possible, but I would hope that wouldn’t be the case,” he said.

And as the company faces life after Centrum 12, Feldman’s lengthy divorce continues. Elena Feldman has accused her husband of cheating her out of her fair share of the family’s fortune and, to date, Aaron and Elena Feldman have spent nearly $9 million on fees for lawyers and specialists relating to the separation.

Aaron Feldman now resides a few miles from Elena, in a home overlooking the bluffs of Bird Rock in La Jolla.

After three years, the divorce will be heard in court in August.

In the court of public opinion, Sunroad’s trial continues.

— Staff writer Nina Petersen-Perlman contributed to this report.

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