Did businessman deceive in real estate scheme?

Batzi Kuburovich

Investors who say they were cheated out of their homes and life savings by “a very slick” businessman occupied a sizable portion of the courtroom Friday inside the South County Courthouse in Morgan Hill, where supporters and accusers seated in opposite sides of the audience created a clear fissure.

Gilroy resident Goyoko “Batzi” Kuburovich was taken into custody March 23 on allegations of embezzling more than $1.6 million through real estate grand fraud. If convicted, investigators say Kuburovich could be facing up to $4.8 million in restitution and fines and possible jail time.

Those who claim to know Kuburovich better, say the allegations couldn’t be further from the truth.

Opting to voice her two cents after initially declining to comment, a close friend of Kuburovich, Michelle Aver of San Jose, approached the Dispatch to share a story she said exemplifies the “good Christian man” who was recently charged with four felonies.

Aver recalls running errands at Office Depot with Kuburovich some time ago. Upon exiting the store, Kuburovich realized the clerk had undercharged him by $63, according to Aver.

“So he walked back into the Office Depot and paid the $63,” said Aver, one of 10 people who showed up Friday to support Kuburovich. “I have no doubt in my mind he didn’t do this.”

A lengthy investigation chronicling Kuburovich’s alleged dishonest business transactions, embezzlement and the settling of debts with money that was not his own spins a different story.

Between 2005 and present day, Kuburovich “actively solicited persons to invest hundreds of thousands of dollars” through a company called AZ Custom Smart Homes, LLC, of which he was a managing officer, records show.

However, “rather than these funds being invested through AZ Homes as was represented to the investors, the suspect deposited these funds into his personal bank account with Silicon Valley National Bank and Heritage Bank,” according to court documents.

A case file obtained by the Dispatch breaks down the following findings:

• The loss of money and value of property resulting from Kuburovich’s alleged acts is approximately $1.6 million. The total amount of restitution and fines that could be awarded is $4.8 million.

• In 2005, Kuburovich “talked” victim and Morgan Hill resident Alan Hamblin into investing $250,000 with AZ Custom Smart Homes, LLC. Kuburovich then allegedly deposited these funds into his personal bank account, instead of the AZ Homes corporate account. Within a few days, Kuburovich allegedly used the entire $250,000 to pay off a pre-existing line of credit with Heritage Bank. Court documents state “the suspect’s use of Hamblin’s money was not related to … any legitimate business purpose with AZ Homes … the suspect knew that Hamblin, a self-employed truck driver, was unsophisticated in real estate matters. The suspect also knew that Hamblin had inherited hundreds of thousands of dollars from the sale of his parents’ home.”

Despite repeated requests and pleas from Hamblin for the return of his investment, Kuburovich failed to return Hamblin’s money, investigators allege.

• In January 2009, Kuburovich allegedly, and without authorization from AZ Homes, transferred a land title in Arizona to Hamblin, even though Hamblin had not contracted for any such transaction, according to court documents. The title belonged to Roger McKinley (whose daughter lives in San Martin); the majority manager of AZ Homes. This is one of three illegal property title transfers that Kuburovich allegedly committed while working at AZ Homes, according to court documents.

• In 2007, Kuburovich allegedly used the exact same “blueprint” method of embezzlement with another victim, a firefighter named Bill Ferguson, who “suffered a similar fate as Hamblin,” according to court documents. Ferguson lost $187,500 in what he thought would be invested in Arizona property; however court documents show Kuburovich deposited the money into his personal account.  

• Investigators state it is “entirely reasonable to believe that the total loss suffered by the victims in this case will be in excess of $1.6 million. As the publicity of Kuburovich’s arrest becomes continues to spread, investigators believe more victims will come forward.”

Past conflicts, new charges and “shell companies”

Kuburovich is the former co-director of medical marijuana dispensaries with locations in Gilroy, Morgan Hill and San Jose that were permanently shut down after law enforcement officers raided MediLeaf offices and founders’ homes in December 2010. The new grand theft allegations Kuburovich faces are completely separate from suspicions of alleged money laundering and illegal pot sales associated with his now defunct MediLeaf business. That case is still under review for possible charges according to spokesman Sean Webby with the DA’s office.

As of Kuburovich’s April 6 arraignment, he is now at the crux of a completely separate investigation.

Wearing an off-white collared shirt, tie, dress slacks and reading glasses, Kuburovich appeared in court Friday morning on charges of grand theft over $250,000, and three counts of aggravated white-collar crime. He was accompanied to his hearing Friday by Steve Manchester, a San Jose criminal defense attorney, and Jim Roberts, who is no longer Kuburovich’s criminal attorney but represented Kuburovich and MediLeaf last year.

Roberts now represents Nata Limited Partnership; an alleged “shell company” (a company that exists but does not actually have any business or assets) that is “acting as the alter ego” of Kuburovich, according to court documents.

Kuburovich purchased his $660,000 Eagle Ridge home in Gilroy under the name of Nata LP. Kuburovich made his daughter, 22-year-old Kristel Kuburovich, a general partner of Nata when he and wife Patricia filed for bankruptcy in May 2010 after the bank foreclosed on their Morgan Hill home, according to Santa Clara County Deputy District Attorney Victor Chen.

When asked for a statement concerning the four felony charges levied against him, Kuburovich said legal counsel has advised him not to publicly comment on the case.  South County Superior Court Judge Kenneth Shapero postponed Kuburovich’s hearing Friday to 2 p.m. April 16 inside Department 23 at the San Jose Hall of Justice.

Split opinions: Friends, alleged victims weigh in

One of Kuburovich’s courtroom supporters Friday finds the accusations hard to believe.

“It’s a total surprise. It doesn’t speak to the Batzi I know. There may be a hidden side to him that I don’t know, but I sure haven’t seen any of it,” mused retired Morgan Hill resident Dennis Trimble, 71. “If he was a scoundrel, I would have known it by now.”

Trimble continued to describe Kuburovich as a “hard working” and “ambitious man” who “has his fingers in a lot of pies.” Albeit, in the 10 years that Trimble has known Kuburovich – a friendship that includes mutual business ventures – “I’ve never heard of him doing anything that would make him suspicious,” Trimble noted.

One argument brought up last week by Kuborvich’s former attorney Jim Roberts, and again Friday by Trimble, is that losing money in real estate meltdowns is nothing unusual.

Trimble, who said he lost more than a million dollars in a land investment several years ago, “spent years sorting through paperwork trying to figure out why it failed.”

“It just failed because of economic times,” Trimble resolved. “And times are a lot worse now. You get involved in any kind of a business deal, there’s risks involved.”

For others who allegedly lost “hundreds of thousands of dollars” when Kuburovich declared bankruptcy and left his investment partners “high and dry” with mountains of bills, the glass is beyond half-empty.

Kevin Keifer, a San Jose native who attended high school with Kuburovich in Campbell and later allegedly lost $50,000 to him in a Hawaiian real estate Ponzi scheme, said people like Aver and Trimble “never met (the real) Batzi. They must be talking about someone else.”

Kuburovich’s wife Patricia, alternately – who has also been advised not to publicly comment on the case – had one adamant statement to offer:

“I pray for Kevin,” said Patricia, who sat next to her husband during the hearing. “He just wants someone to blame.”

Given the opportunity to respond several minutes later, Keifer and Tammy Rix coined Patricia as “a very sweet” but “very naive” woman.

When asked to comment on Aver’s characterization of Kuburovich as “a good, Christian man,” San Martin resident Tammy Rix shook her head.

She said her late father, Roger McKinley, lost the deed to his Arizona home when Kuburovich unlawfully transferred the title to someone else. Kuburovich and McKinley once worked together at a company called AZ Custom Smart Homes, LLC.

“One of the last things my dad said before he passed away was, ‘get the house back,’” said a somber Rix, standing in the courthouse foyer Friday morning. “For me, this is very personal. (Kuburovich) deserves to go to jail.”

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