President Since December : Gordon Elsey III to Leave Wespac Post
Wespac Financial Corp., a Newport Beach-based real estate investment firm that has raised $165 million in 11 years of operation, announced Monday that Gordon Neil Elsey III, who has been the firm’s president since last December, will step down but remain president of a subsidiary. He will be succeeded as president of the parent company Sept. 1 by Edwin J. Migge.
Migge comes from August Financial Corp., a Long Beach real estate investment firm where he was senior vice president responsible for the acquisition and management of more than 65 commercial and industrial properties valued at more than $350 million. Prior to that he was chief operating officer of Orange Coast Developers and Kern Development Corp. in Newport Beach.
Elsey took over as president and chief executive officer at Wespac last December when Wespac Trusts II and III were sustaining large losses. He and Wespac Chairman Janet Deckard loaned the corporation $5.2 million in cash and notes to cover lost principal and “lost opportunities”--earnings a consultant said the trusts would have made with proper investments.
Subsequently, Wespac filed a $31-million lawsuit against the Los Angeles-based investment banking and securities brokerage firm of Morgan, Olmstead, Kennedy & Gardner, alleging fraud, misrepresentation and breach of fiduciary duty in the brokerage firm’s handling of Wespac’s investments.
Wespac Vice President John Pruitt said that Elsey wants eventually to sever his employment with Wespac and spend all of his time running Elcor Capital Corp., his privately owned real estate company in Phoenix.
But Pruitt said Elsey will remain at Wespac as president of Wespac Trust I until he liquidates an estimated $140 million worth of properties in that trust that the trust’s investors agreed to sell last April.
Pruitt said Elsey’s decision to focus on the liquidation of the trust was not prompted by a sudden decline in the value of the trust’s stock, which has fallen to $8.25 from $9.50 a share over the last three weeks in a burst of selling.
‘Misinformation’
Ed Wren, who trades Wespac stock in the Los Angeles-based brokerage firm of Bateman Eichler, Hill Richards, said apparently some “misinformation” spurred the decline in the stock value of the oldest of Wespac’s three real estate trust funds.
“My own guess is that some of the people (investors) thought that the liquidation could be faster,” Wren said.
Pruitt denied that the liquidation was slow but said apparently there have been false reports that the properties which make up Wespac Trust I have been selling at a loss. Refuting those reports, he said that the trust has realized a $6-million profit on the sale of eight properties since April.
Pruitt speculated that the trust’s slipping stock value may be linked to the cancellation of the trust’s stock dividend reinvestment option. He said the reinvestment option was terminated as a matter of course when the trust began to be liquidated.
