New real estate venture for suspect in restaurant arson, fraud

Red Steer Restaurant co-owner launches new real estate firm

mrowland@modbee.comAugust 15, 2013 

In the midst of his continued legal woes, the former owner of Turlock's Red Steer Restaurant has launched a new real estate development company and is looking for financial backers.

Turlock resident Tracy Smith, 31, was back in Stanislaus County Superior Court on Monday for pretrial hearings on felony arson, five felony counts of obtaining money by false pretenses and five felony charges of writing bad checks. The hearings were continued until Sept. 24 and his cases are awaiting trial.

Smith, who with his family owned Red Steer restaurants in Turlock and Modesto, was arrested in July 2009 and charged with arson in the May 2009 fire that destroyed the long-standing Turlock eatery on Golden State Boulevard. Smith was booked along with his cousin, 28-year-old Turlock resident Jeremy Britt, who was charged with aggravated arson in the blaze. The fire caused $1 million in damages. Prosecutors allege Smith and Britt burned down the restaurant in order to cash in on its insurance policy.

Later that July and then November, Smith was arrested and charged with five counts of issuing checks without sufficient funds, totaling almost $10,000.

Then in January 2012, Smith was arrested and charged — along with co-defendant Manuel Arroyo, 43 — with five counts of obtaining money, labor or property by false pretenses. The charges stem from a fraud investigation into claims that in 2007, Smith and Arroyo took $800,000 from a 69-year-old Turlock woman for real estate investments that never came through.

Smith founded Turlock-based Consolidated Reliance in 2012 and serves as its chief executive officer. In early August, he launched the company's website, www., and issued a news release about the enterprise and its investment opportunities.

Consolidated Reliance states on its site that its mission is to "find and acquire undervalued real estate properties and underperforming businesses." It states it has a five-year goal to develop 200 low-income housing units in Stanislaus County and the surrounding areas.

Staying busy

On its website, the company touts four projects in development, a mix of commercial and residential buildings across Stanislaus County. The two Modesto sites, at 708 H St. and 400-450 Burney St., are office spaces. The Turlock property at 146 N. Golden State Blvd. is a two-story building it says it plans to use for businesses downstairs and apartments upstairs. The Riverbank building at 6807 Third St. is to have eight housing units.

An additional property on Fremont Street in Stockton is shown on the company's Facebook page.

Smith declined comment on his pending cases or his new company after his court hearing this week. His attorney, Alexandria Carl of San Francisco, also declined comment.

In January, Smith began posting about his new venture on his Twitter account, which Consolidated Reliance's homepage links to.

"Running a company with the well being of people in mind seems like an abandoned practice. I have decided to make it my personal mission," was his first tweet from his account —

Calls to Consolidated Reliance's downtown Turlock office were not immediately returned to The Bee.

The news release for the Consolidated Reliance launch states that the company was established "with the sole purpose of identifying undervalued properties and businesses, acquiring them, and capitalizing on such opportunities to create an excellent rate of return for its principals, investors, and lenders and for the improvement of surrounding neighborhoods and cities."

It is unclear from the company site and statement how Consolidated Reliance has raised the funds for its current projects. Most of the sites are under renovation. The H Street location has been completed and leased to Modesto company Vision Graphix Design. The business is in the process of moving into the site. On its website, the graphic design firm names Consolidated Reliance as one of its clients.

Consolidated Reliance lists its other executives as Louis Gutierrez, chief operating officer; Gary Curtis, chief development officer; and Manuel Jacquez, vice president of real estate.

City of Turlock officials met with Smith and contractor William Ross to have a pre-development meeting about the Golden State Boulevard property in mid-July.

Maryn Pitt, the Turlock assistant to the city manager for housing and economic development, said the free-of-charge service was to discuss the scope of renovations, which would remodel the existing space, formerly the home of Jura's Pizza Parlor, to accommodate a new restaurant and second-floor apartments.

"City departments were all present to provide feedback on what would be required in terms of entitlements, permits and conditions for the project," Pitt said. "No other assistance was provided. To date, no plans or applications have been submitted to the city."

Promised lucrative returns

Smith's real estate investment project in 2007 suspected in fraudulent activity involved the promised development of a large property in Atwater that would include a racetrack, motels and other businesses. A Turlock Police Department arrest warrant affidavit said the 69-year-old Turlock woman, whose name is being withheld, was approached to be a financial backer in the development and promised nearly double the return on her investment in an eight-month period.

According to the affidavit, the woman took out five home equity loans on her properties in Jamestown, Livingston and Turlock for the sum of nearly $570,000. An additional $270,000 in loans were taken out on her daughter's properties for the same investment. The woman told police she received handwritten notarized notes on her investments.

According to court documents, she was promised a $912,000 return on her $570,000 investment and an additional $420,000 return on her $270,000 investment. The money from the loans was turned over to Smith and Arroyo, who are accused of depositing it into their bank accounts.

The affidavit states that investigators discovered the woman was not recorded in any property titles, deeds of trust or legal contracts within Stanislaus or Merced counties as an investor, co-owner or partner in any investments.

Court documents state that the woman had obtained numerous loans from Arroyo when he worked at Countrywide Mortgage Co., which led her to believe the new investment opportunity was legitimate. Investigators uncovered that she received only two cash payments, totaling $3,500, during an 18-month period.

The woman told police she had since lost two of her properties because she was unable to make the payments.

Smith, Arroyo and Britt are next scheduled to be in Stanislaus Superior Court for pretrial and preliminary exam hearings on their cases at 9:30 a.m. Sept. 24.

Bee staff writer Marijke Rowland can be reached at or (209) 578-2284. Follow her on

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