Before the big crash of 2008, Gilmore Erickson seemed to control two of the more promising condo tower sites in downtown San Jose. When the Los Gatos man pitched investors, success seemed inevitable. The mantra of the era was "get in or lose."
In fact, Erickson's two condo projects -- one on Delmas Avenue, just west of Highway 87, the other on Fifth Street, across from San Jose City Hall -- were, in the words of prosecutors, "an unmitigated disaster." No ground was ever broken.
You might dismiss it as another failure but for this: Gil Erickson had done a year in prison after a grand theft conviction a decade before in a Monterey County property scheme, a fact he didn't share with investors. And he lacked the massive wealth he claimed.
Erickson, 72, who grew up in San Jose as the son of a mortician, was sentenced last week to eight years in prison by Superior Court Judge Hector Ramon. In a plea deal, he was convicted earlier this year on a series of charges including securities fraud and grand theft. Prosecutors say he took in $2.8 million from 40-odd investors before things fell apart.
A beefy, bald man with a background as a leader in Youth for Christ, Gil Erickson knew how to persuade investors. "People thought of him as a competent man," said prosecutor Georg Behrens. (A side note: In the 1970s, Erickson's vice-president in Youth for Christ was David Runyon, who went on to drunken disgrace as a San Jose councilman).
On the Delmas property, once the site of the historic Bethel Lutheran Church, Erickson's Grandpoint Community Builders planned to build a 152-unit condo complex. On the Fifth Street site, it was working with the Methodist Church to build 320 units.
Grandpoint, which sometimes went by Northpoint or Next Group, said it hired Strangis Properties to work with the city. And the company promised investors that the project would be secured by the fabulously wealthy Erickson Family Trust, which wasn't so fabulously wealthy.
There was one tipoff that should have alerted investors: Stymied in its attempt to get traditional financing, Grandpoint was promising investors a 50 percent return on their money after a year.
The story of one investor, whom I'll call by his first name, Jack, shows how it worked. Jack had heard about Grandpoint through a real estate investment club. After watching a webinar featuring Erickson's son, Alexander, he met with Erickson at the company's downtown offices.
Jack was cautious: He sent in a set of email questions that Grandpoint deftly answered. (Example: "What percentage completion is the Fifth Street property as of today?" Answer: "If the question refers to the commencement of construction, it is 75 to 80 percent ready.") He invested $100,000, money he never saw again.
Before Erickson was sentenced, a cadre of his friends wrote letters describing him as a devoted family man, a guy who started a course in writing business plans for his fellow inmates at Elmwood. Cynthia Van Biene of Austin described Erickson as a selfless man "who would give the shirt off his back to someone in need."
To his investors, Erickson was also the guy who took the shirts off their backs. You can argue that they were greedy. But in a court of law, that's no defense to fraud, particularly if you've sinned before.