Luke Brugnara Makes His Point

All the city's most bombastic commercial landlord wants is a San Francisco-themed casino in Las Vegas ... or absolute misery for anyone who gets in his way

"This is such bullshit."

Luke Brugnara, San Francisco's most bombastic and, perhaps, pugnacious commercial landlord, looks around the Department of Public Health's shoddily painted, poorly lit hearing room, which is lightly peppered with government workers in wrinkle-free pants and cheap shirts, and doesn't bother masking his disgust. He is sitting on a generic wooden meeting-hall bench, waiting to confront bureaucrats who have filed a complaint against him, claiming he has too much ivy growing on and around his home in tony St. Francis Wood. He's not exactly waiting patiently; Brugnara is asked to quiet down when he utters the phrase "What a fucking disgrace" a little too loudly while watching a representative of a Chevy's restaurant deal with complaints about a leaky pipe.

Once Brugnara's name is called, he stalks to the podium like a boxer leaving his corner. He's wearing his standard outfit for conducting business: a pair of navy blue sweat pants, a red long-sleeved polo shirt, and a Ralph Lauren barn jacket zipped tight around his barrel-chested torso. After a brief attempt to explain that most of the properties in his neighborhood have dense shrubbery, followed by a few harsh exchanges with the Health Department bureaucrat hearing the complaint, Brugnara decides to explain exactly where he stands.

"Quite frankly, my time is more valuable than yours, and I see this as being harassed," he says. "I own many office buildings in downtown San Francisco, and for me to be brought down here to talk about plants is ridiculous."

"You can argue all you want, Mr. Brugnara," says the bureaucrat, "but all we want you to do is maintain it in a reasonable manner. And looking at these pictures of your property, this constitutes overgrowth vegetation."

Brugnara is shown a picture of his home, which has thick ivy balled up on its roof and extending out to -- but not obstructing -- the sidewalk. The photo probably wasn't clipped from Better Homes & Gardens, but the house isn't exactly untended either.

"What constitutes overgrowth vegetation?" he asks testily.

"[The ivy] is climbing up your neighbor's wall."

"Sir, I own that building, too. It's my private property."

The bureaucrat seems a little unnerved by this revelation but sticks to his guns, telling Brugnara the ivy constitutes a potential "rodent harbor."

It is a poor choice of words.

Luke Brugnara has blown up in public arenas far more hallowed than this. He has seriously berated Nevada's all-powerful Gaming Control Board while asking it for a casino license. He has earned not one but two restraining orders based on his allegedly abusive behavior inside courthouses. So suggesting to Brugnara that he lives in a multimillion-dollar rattrap probably isn't wise, if one intends to run a civil hearing in a public place.

"So I can be cited for potential rodents?" Brugnara asks, the volume of his voice rising markedly. "I live there. I can assure you there aren't any rodents. You can't tell me what part of the code that violates? What it [the code] says is that it's [harboring] rodents, and it's not."

"We can argue all you want this morning, Mr. Brugnara. If you want to talk to an attorney that's fine with me."

"What are you suggesting I do?"

"I can't make recommendations. We'll have an investigator work with your gardener."

"My time is very valuable, and I want to know what I have to do to keep you people from harassing me. The purpose of this hearing is to satisfy you," Brugnara says, red-faced now and uncomfortably loud, leaning toward the squirming bureaucrat. "And I want to know what I have to do to satisfy you. ... I don't back down to any bureaucracy unless it's backed up by law and backed up by truth, and right now, you're just harassing me as a taxpayer. I pay your salary! Do you know that? I pay over a million dollars of taxes a year on my property. Are you aware of that?"

"You are going to be escorted out of here right now," the bureaucrat says.

"I don't need to be escorted," says Brugnara, turning his back to the bureaucrat and to an approaching police officer. "I'll walk."

A few minutes later, driving his blue Mercedes sedan toward one of his two downtown San Francisco office buildings, Luke Brugnara explains the performance at the Health Department: "I shouldn't have been down there at all today. So I was just going to go down there and make that guy's life miserable today.

"And that's what I succeeded in doing."

These days, Brugnara -- a self-made commercial real estate mogul who, by his mid-30s, had acquired a fortune he estimates at $200 million -- often seems at least as interested in making his point as he is in making money in commercial property. He had the foresight to sell off much of his downtown portfolio before the post-dot-com collapse of the office space market began, investing the proceeds in better-regarded Financial District properties, a 200-acre parcel of South Bay wilderness, and, most significant to him, a Las Vegas casino.

The casino, which he plans to turn into a grand, San Francisco-themed resort, is at the center of Brugnara's development plans. It also embodies one of the biggest points he wants to make.

In March, Nevada's Gaming Control Board rejected Brugnara's request for a gaming license, raising concerns about his license application, accounting practices, and character. Among other things, it was noted that he had allegedly threatened violence against a former mistress, a deputy city attorney, and a court-appointed receiver -- and then did not list those incidents on his gaming license application. Brugnara responded with nearly pyrotechnic anger, accusing the commissioners of being controlled by a cartel of insiders and threatening to sue.

Now, Brugnara is reapplying for his gaming license, apparently in the same spirit that took him to the Health Department. He's consulting with an attorney he considers one of the masters of misery-for-point-making's sake, renowned San Francisco barrister Joe Alioto, who is weighing the merits of filing an antitrust lawsuit against Las Vegas' gaming interests.

Or, in Brugnara's parlance, the merits of making a "bloody mess."

Luke Brugnara, 38, is the son of a juvenile hall manager. He grew up in the Sunset District, where he attended St. Ignatius College Preparatory and spent his time heavily involved in sports, particularly track. He was fast enough in the 400 meters to run for San Diego State.

He spent six years "relaxing" in college, where he met his eventual wife, Kay. (Today they have three children, ages 6, 3, and 1.) After school, he got a job with the Buchanan Group, a San Francisco-based mortgage firm. Not long after, he met one of the biggest players of 1980s commercial real estate in San Francisco.

Richard Deringer tapped Brugnara to work on a deal for a near-vacant building at 939 Market St. that he was trying to buy as cheaply as possible. By the recollection of both men, the building -- owned by a limited partnership that included Deringer -- had fallen into bankruptcy court when some government agencies decided it was seismically substandard after the Loma Prieta earthquake and moved out.

Deringer, though, knew the building was structurally sound. He set out to negotiate with creditors and drive the price of the mortgage on the building low enough for him to purchase, which would give him control of the property. And he was succeeding: He'd managed to crunch the note on the $10 million building down to about $1.5 million. Brugnara was doing legwork for the promise of a 2 percent payoff, which would have come out to about $30,000, a lot of money for a 28-year-old.

But then something not-so-remarkable happened: Deringer, who was at the time under indictment on 13 counts of bank fraud, couldn't convince any lenders to give him the $1.2 million that he needed to buy the note. (Deringer later was convicted and sent to prison.)

With Deringer out of the picture, the only person left with knowledge of the bargain price that had been negotiated was Brugnara, who had accumulated some contacts with real estate investors. He let them know about the bargain and came up with enough cash to buy the note, cutting Deringer out. Suddenly, Luke Brugnara was the sole owner of a commercial building in downtown San Francisco. "I was 28 and I had like a hundred grand pouring in every month," he recalls. "It was pretty cool."

While Brugnara was always outspoken, success seemed to embolden him. He bought three more buildings by the end of 1993, and was looking for more. His method was simple: He worked without partners, and pounced quickly on attractive properties. His lenders appreciated the decisiveness. "It's easier dealing with someone like Luke because you don't have layers of decision-making to deal with," says Nick Barbato of New York's Cooper-Horowitz Inc., a Wall Street firm specializing in finding and negotiating loans. "He seems focused on his game plan, and he doesn't linger."

Playing the commercial real estate game at high speed requires good instincts, which Barbato says are evident in Brugnara. He bought 814 Mission St. for $2.1 million in 1994, and sold it in 1995 for more than $12 million, according to published reports. Last year, Brugnara says, he sold 490 Post St., for which he paid $22 million in 1998, for $46.5 million, a transaction that timed the city's real estate boom perfectly. "That's why institutions will lend money to somebody like me," he says. "I've hit 12 home runs."

By the time he bought his best-regarded property, the Pacific Bank Building at 351 California St., for more than $20 million, his portfolio was bulging with eight other properties. Not bad for a 36-year-old who started with no family money.

As gifted as Brugnara proved to be at buying properties, however, he seems to have had problems managing them. And as his gift for acquisition, and ineptitude at management, became apparent, Brugnara also displayed a near-genius in the realm of pissing people off with sheer pugnacity.

In 1998, the San Francisco City Attorney's Office filed a lawsuit against Brugnara seeking $17 million in fines for alleged fire and health code violations at his buildings. In the complaint, the city alleged that he was illegally mixing ordinary garbage and medical waste in the trash hauled from 490 Post, a medical office building. Among a laundry list of other violations, the city also alleged that Brugnara refused to have the Pacific Bank Building's fire safety system tested properly and its elevators maintained.

Brugnara says he was singled out for investigation because his uncle, former Police Chief Tony Ribera, is a political adversary of Mayor Willie Brown. (He also speculates that his tendencies to tell reporters exactly what he thinks of city power figures doesn't help him, either.) Brugnara, who wound up being assessed a $1 million fine, is unrepentant: "The last thing I told the judge was that I would do nothing differently."

In any event, Brugnara's management problems weren't limited to those alleged by the City Attorney's Office. The local janitors' union awarded him its "Top Trash" award in 1997, recognizing him as being the worst employer to work for in the city. (Brugnara earned this honor by firing all the unionized janitors at the Pacific Bank Building after he purchased it.)

Last year, he was slapped with a restraining order after allegedly threatening a court-appointed receiver. According to court documents, Gregory Sterling was appointed as a receiver after Brugnara allegedly defaulted on a loan against one of his buildings; among Sterling's duties was the collection of rent at two of Brugnara's buildings. He was to send what he collected on to Merrill Lynch Mortgage Capital Inc., which had loaned Brugnara money.

While the two men were leaving the courtroom after the receiver's appointment, Sterling introduced himself to Brugnara, who responded with a direct question: "Do you know what it's like to get your ass kicked?" According to court testimony, a Brugnara employee also told many tenants in the building that if they paid the receiver rather than Brugnara, there would be consequences. Brugnara even posted signs in his buildings, demanding that tenants not pay Sterling, who was labeled a "self-described receiver" -- even though Brugnara had been in the courtroom when Sterling was appointed.

"I have been a professional, court-appointed receiver for twelve years," Sterling stated in court papers. "I have had a book about receiverships published entitled The Receivership Handbook. In the entire scope of my practice, I have never experienced such an overt and deleterious violation of an order."

This isn't even close to the most outrageous action Brugnara has allegedly taken in a courtroom. That distinction is awarded to a death threat he supposedly made to a deputy city attorney during a trial -- that is, a throat-slashing gesture he reputedly made while mouthing the words, "You're dead." Brugnara vigorously denies this, saying: "Do you know how stupid I would have to be to do that?"

He says he was loosening his tie while telling his own attorney their case was dead. He explains that the deputy city attorney in question, Thomas Lakritz, has a speech impediment that, Brugnara says, has embittered him toward people like Brugnara.

Lakritz declined to comment on the incident.

In another vein, Brugnara has also been accused of making a death threat against a former mistress. The threat allegedly occurred after the woman said she planned to show up at his house with a son she said was Brugnara's. Brugnara denies making the threat, calling the incident "a shakedown."

"She stalked me," he says. "It was like that movie Fatal Attraction."

Court documents paint a different picture of the affair, which lasted more than 18 months and culminated with Brugnara's brother obtaining a restraining order against him.

According to Eric Brugnara's declaration, he befriended his brother's mistress and tried to mediate a child-support settlement with Luke. (The child-support claim was subsequently dismissed.) In August of 2001, Luke spotted Eric with the woman, and allegedly threatened Eric with a metal bar. Eric subsequently obtained a restraining order. The brotherly relationship has not improved, if one is to believe a declaration Eric recently filed in court documents. "I would like to be able to listen to the phone message machine where I live without having to hear, "You better be sleeping with one eye open. I'm looking for you. I have already been by twice, and I will find you,'" the declaration says.

Luke shrugs the episode off as "sibling jealousy."

"Basically, it comes down to me having a 40-year-old brother who still lives at home and is jealous of what I've accomplished," he says. "Do I get mad? Yes, and I still feel very strongly about that. But I've never laid a hand on my brother."

Now Brugnara is at something of a crossroads. He recently sold six of his San Francisco buildings to allow him to buy a 200-acre nature reserve in the South Bay, as well as the $31 million piece of Las Vegas' Strip that he hopes to remake as a San Francisco-themed casino. And he uses a major management firm to run his office properties, insulating himself to a degree from any more "harassment" by the San Francisco powers that be.

The way Brugnara describes his current situation is not designed to curry any favor with those powers: "I'm like a lion. They should have killed me when I was a cub, because now I'm too fucking big. I'm too fucking powerful. ... It's like that movie 48 Hours, where Eddie Murphy walks into the redneck bar. And all the rednecks, they look at him like they're gonna kick his ass, right? But then Eddie Murphy pulls out a badge and says, "I'm your worst fucking nightmare: A nigger with a badge.'

"That's like me right now."

Luke Brugnara's office is on the top floor of his building at 351 California. There is no mistaking that it's his building: His name is in giant letters on all three exposed sides of the property.

A quick glance around his surprisingly snug office reveals some interesting things. Perhaps the most intrusive is the head of an 800-pound wild boar, which Brugnara stares at as he sits behind his dark wooden desk in his customary business uniform (red Eddie Bauer long-sleeved polo shirt, blue Nautica sweat pants, white New Balance tennis shoes). The desk is clear except for two simple red phones that, one half expects, will ring asking for nuclear launch codes.

Next to the boar's head are a few newspaper clippings, relics from Brugnara's mid-'90s property-buying spree. The visual centerpiece of the room -- after the boar's head, anyway -- is a large aerial map of Las Vegas. Brugnara's slice of the Vegas Strip is outlined in thick red. It is prime real estate these days, one of only 14 corner properties on the legendary drive, and thanks to projects sprouting up around it -- including the latest from casino magnate Steve Wynn -- the $31 million Brugnara paid for the shuttered Silver City casino and adjacent property seems cheap.

Looking at the map, Brugnara's eyes take on a dreamer's glaze as his mind drifts to the San Francisco- themed casino and resort he'd like his 18-acre plot to become.

"You'd enter over the Golden Gate Bridge with water running under you," he says. "You'd have a cable car going up through a mock skyline, past Victorian homes and everything. I mean, it would be like one of those things you'd see in a snow globe, a condensed version of the entire city, with Coit Tower and the [Transamerica] Pyramid if we could get rights on the Pyramid. ... You could have a Chinatown full of slot machines. You could have the Castro District ...."

As a business plan, the idea has promise: The latest craze in Las Vegas casino building is city themes, and resorts based on New York, Paris, and Venice have been wildly successful. But after the catastrophe that accompanied Brugnara's first stab at gaining a gaming license, the vision seems almost -- well -- hallucinatory. "The best thing to do if you really, really want a license," he says, "is conform. And maybe I will. You know, "Yes, ma'am,' "No, ma'am.' "Sure I'll grab my ankles, sir.' "Let me go get my kneepads.' But they could still say, "Get the fuck out of here,' and that's what I don't want to go through."

Say what you want about Brugnara; he doesn't grab his ankles for anyone, and certainly not Nevada's Gaming Control Board.

His gaming license hearing last March exposed him to a string of indignities. The day before the hearing was to begin, he read in the Las Vegas Review-Journal that he was unlikely to be granted a gaming license because he hadn't filled his application out properly. When the hearing started, he was questioned about all the alleged threats and legal run-ins that dot his past -- and that he had failed to note in his application. This is not to mention his accounting practices, which board investigators questioned.

According to the Review-Journal, Brugnara spent much of the meeting screaming at the board.

"I find it ludicrous that (the Control Board) can judge me," Brugnara yelled at one point.

"I've done more in one year than anyone in this room can dream of doing. ... It's so predictable what you'll do. The people on the Strip wind you up," he shouted, adding a winding flick of his wrists for effect.

"This was a kangaroo court from day one. These bureaucrats are jealous and envious of me," he boomed to reporters as his lawyers walked out on him, shaking their heads.

The gaming board's rejection of Brugnara's application was not ambiguous.

One board member declared: "I don't think you even come close to having suitability to have a license. In fact, I don't think I could even support you for a work permit."

Brugnara calls his experience last year before the Gaming Control Board "horrific." So of course he's reapplying this year, not so much because he thinks he'll win -- even Brugnara, who takes a decidedly optimistic view of the potential of his endeavors, acknowledges his chances are just "50-50"-- but because he has a point to make. At the moment, he's talking to a lawyer who is very good at making points, antitrust attorney Joe Alioto.

Alioto, of course, is one of the best-known antitrust lawyers in the country. During the course of his distinguished career, he has represented plaintiffs who have sued the National Football League, Texaco Corp., TicketMaster, A&P grocery stores, and Las Vegas casino magnate Howard Hughes on antitrust grounds. Alioto made his biggest impression on Brugnara, though, during an antitrust lawsuit that real estate magnate and political player Clint Reilly filed against the Hearst Corp. over its acquisition of the San Francisco Chronicle. The suit, handled for Reilly by Alioto, was viewed by some (including Brugnara) as having been influenced by the former campaign consultant's contentious history with the Hearst-owned San Francisco Examiner. (Reilly once got into a newsroom brawl with former Examinerand current Chronicle Editor Phil Bronstein; Reilly reportedly received a broken ankle and, later, a significant monetary settlement.)

Although Reilly eventually lost the case over the Chronicle purchase, the testimony elicited during trial subjected Hearst to extreme humiliation, revealing, among other things, that then-Examiner Publisher Timothy White offered to "horse-trade" favorable editorial coverage of Mayor Willie Brown, if Brown would support, or at least not oppose, Hearst's purchase of the much larger Chronicle.

Brugnara cannot help giggling about the result of Reilly's lawsuit -- especially a twist in which Hearst agreed to pay Reilly's multimillion-dollar legal fees if he agreed not to appeal the decision in the case. "Clint Reilly put up millions just to teach the papers a lesson," he says with evident glee. "He ruined that guy White's career, and he even got paid all the money he fronted."

Which brings us back to Las Vegas' gaming industry, where recent mergers between gaming industry superpowers, as well as what some see as obstacles to new competitors, might just make the industry vulnerable to an antitrust lawsuit. That's why Brugnara is "consulting" with Alioto at the moment.

"Las Vegas as a market has substantially changed," says Alioto, referring to the city's recent shift toward attracting families, as well as to massive mergers like the one between the MGM and Mirage corporations, both of which own Strip casinos. "We have to make sure the competitive spirit is not artificially impinged in any way."

Brugnara is less diplomatic: "You've got to pay, like, 2 to 3 million bucks up front," he says, giggling. "And then he [Alioto] just goes and literally crucifies the opposition. He literally pulls out the rusty nails and the big, heavy hammer and just puts them up on the cross.

"And, you know, whether Joe Alioto wins or he doesn't win, you've got a bloody mess as a result. Will that happen? Knowing me -- probably."

Alioto describes his approach much differently.

"I do not do anything other than follow the law," he says. "I don't use the law for any purpose other than what it was meant [for], and I very much believe in the spirit of competition. ... I don't go in to bloody anybody or to hurt anybody. I have no other motives, and I condone no other motives."

"When I'm in the ring," he adds, "I fight like crazy. But there's a big difference between playing fair, playing tough, and getting personal. I have no personal animosity toward anybody."

"That's my mountain, that's my mountain, that's my mountain, and that's my mountain," says Luke Brugnara, pointing at each peak from behind the wheel of his Mercedes S500 as he rolls down a dirt road into his 200-acre wilderness escape. "This is the best piece of land in the Bay Area."

The "parcel," as Brugnara calls it, is indeed a marvel, a huge swath of untouched wilderness near Gilroy loaded with crystal-clear creeks and bass-filled ponds and stunning valley vistas and ancient oak trees. Brugnara roams this idyllic paradise with childlike exuberance. The sweat pours off his brow as he stalks around the property with the urgency of a spoiled 9-year-old showing off a prized toy. He especially relishes giving lectures about the things he finds, such as grindstones used by the Ohlone tribe, or an 8-inch feces sample, which, he suggests while probing it with a twig, was left by a mountain lion. "It's fresh," he says, noting that there have been 71 fatal mountain lion attacks in California. "But they've never attacked two men together."

The very splendor of the property creates an interesting juxtaposition: a man who lashes out against everything he cannot control, and raw nature, which is utterly uncontrollable, even by Luke Brugnara. Exhibit No. 1: The Case of the Missing Antlers.

There is little question that, although Brugnara has never seen it, a mountain lion lives on or around this 200-acre tract, and that the lion is Brugnara's favorite aspect of the property. In fact, the first stop on a recent tour of the land is in a creek bed, near what Brugnara says is a 500-year-old oak, where sits the reeking, rotting carcass of what once was a very large buck. Based on the size of the deer and its broken neck, Brugnara figures it must have been killed by his mountain lion.

Brugnara first spotted the kill during his last visit here, three weeks ago; he's apparently been anticipating showing it off to others ever since. But the carcass -- which has only hair left on its ribs, and just a trace of rancid flesh around its ankles -- has a problem.

"Who took my fucking head?"

Brugnara is suddenly intensely distraught. He lopes frantically around the creek bed, looking for footprints or tire tracks, anything that would tell him who or what took his deer head. He finds nothing. Marching up to a meadow that oversees a glass-still pond that looks like a mirror against the cloudless blue sky, Brugnara continues his rampage. From a cell phone, he calls his brother-in-law, whom he pays to watch over the 200-acre property -- and to watch over it in such detail, apparently, that no deer carcass could go unnoticed.

"It's Luke," he says urgently into the phone. "Tell him it's Luke. Just tell him it's Luke. Tell him it's Luke!" There's a brief pause as the call gets transferred. When the conversation resumes, it's one-sided.

"What happened to that rack? Yeah. The head and the rack. ... The body's where it was, even the jawbone, but the rack and the head are missing. Has anyone been out here? What about Al? He hasn't been out here?"

After a few more minutes of grilling his brother-in-law, Brugnara is even more distraught. "He says it was probably an animal that did it, and I didn't see any footprints from trespassers," says Brugnara. "That really pisses me off."

He isn't kidding. Even after a strenuous 90-minute hike through other portions of the property, Brugnara insists on returning to the creek bed to see whether the deer's neck was sawed or gnawed.

"Hopefully a hungry animal just ran off with it," he says with a shrug, noting that he would have "no problem with that" and somehow emphasizing the restraint he is exercising in not suing or otherwise punishing the offending coyote. He marches back to the carcass and crawls around the reeking animal, determining that the head was, in fact, removed by a scavenger attracted by the stench of putrefaction. Brugnara is standing inches from the carcass. "If you come down here you can smell the decomposing flesh," he says. "So I would venture to say perhaps, you know, a coyote. Because I don't see any footprints."

About a moment later, Brugnara turns and ... and spots an enormous rack of deer antlers sitting in a field, behind the creek bed, about 30 feet away. Like a giddy schoolgirl, he hops to the head, absolutely giggling with pleasure.

"Damn it, I'm good," he says, merrily swinging the deer head as he all but skips back toward his car. "You know what? I'm good.

"Damn it, I'm fucking good."

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