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Bringing Up Baby Gavin 

How William Newsom's pipeline into the Getty fortune has put money -- lots of it -- in his politically ambitious son's pocket

Wednesday, Apr 2 2003

Page 3 of 4

The Gordon P. Getty Family Trust is governed by a board of trustees composed of Gordon and his four sons, Andrew, Peter, John, and Billy. For the past eight years, William Newsom has been the trust's administrator, deploying hundreds of millions of dollars in blue-chip stocks, bonds, real estate ventures, and the occasional start-up company.

Since 1989, Newsom also has served as a trustee of the Ronald Family Trust A, another piece of the original Sarah C. Getty Trust, which benefits offspring of Gordon's brother Ronald. And the judge is a partner with Gordon Getty in a real estate investment firm, Donwilong LLC, created to provide for Gordon's half sister, Donna Long.

The judge further serves as co-trustee of the Ann and Gordon Getty Foundation, which gives millions of Getty dollars to nonprofit organizations. Most of these tax-deductible donations support classical music and opera companies. In 2001, the foundation gave $750,000 to the San Francisco Symphony, $585,000 to the San Francisco Opera, and, in a more modest act of charity, $1,000 to Meals on Wheels.

But Newsom also is deeply involved in helping Gordon Getty invest his personal trust income.

Newsom acts as co-trustee of Gordon's San Francisco Revocable Trust, which buys and sells Bay Area real estate. Among its holdings is 704 Sansome, a small office building that Getty purchased for $2.1 million in 1997 from political consultant Clint Reilly. For a while, Getty's sons used it as headquarters for several businesses.

In 1989, Newsom incorporated a Nevada-based firm, Newsom Investments Ltd., to manage Getty's investments in real estate and other ventures. Newsom Investments is managing partner of Loma Rica Ranch LLC, a corporation that plans to build a large housing development in rural open space near the city of Grass Valley in the Sierra foothills of California. The developers are lobbying city officials to annex the Ranch property, which would greatly increase its value.

"Loma Rica will be smart growth," the judge says. "Eighty percent open space -- two bedrooms, one bathroom [homes] for $140,000 to $180,000."

Indeed, the judge has incorporated a dozen or more Getty-financed investment vehicles in low-income-tax Nevada, including one that earns royalties from oil wells and another that owns property in South Africa.

Newsom and Gordon Getty have other interests in the Third World as well.

The judge serves on the board of directors of the Getty-funded Conservation Corporation Africa, which owns 25 safari lodges in wild areas of South Africa, Zimbabwe, and Tanzania. The luxuriously appointed lodges cater to well-heeled eco-tourists who can afford to pay $350 a night.

"We lease the land and restore it to pristine condition," says Newsom. "There is light impact with 15 rooms [in each lodge] on 10,000 acres. We employ 3,500 people and provide medical clinics and schools. I am very proud of steering the [Getty] family to it."

An ardent environmentalist, Newsom sits on the boards of a number of green groups, including the Environmental Defense Fund, the Audubon Society, and the Sierra Club Foundation, financial parent of the Sierra Club. Last December, the Sierra Club began selling shares in a Gordon Getty-owned mutual fund to its 700,000 members and to the public. The Forward Fund eschews investments in oil, timber, or automotive firms. According to Newsom, Getty believes inflation can be ended by replacing national currencies with interest-bearing mutual funds. His theory, called "fertile money," has yet to find much acceptance with economists, but being a billionaire means, among other things, that you get to experiment with the monetary system by setting up your own mutual fund.

Like father, like son. William Newsom's closeness to the Gettys opened the door for Gavin to piggyback on what quickly turned into a highly profitable real estate investment in Maui.

In January 2001, the Ronald Family Trust A, of which the judge is a trustee, purchased 4,500 acres of beachfront property, called Hana Ranch, on the island for $24 million.

A few months later, the judge secured a conservation easement from the Maui Coastal Land Trust to permanently protect 2.5 miles of beachfront from development. Newsom says a Getty-financed group, Hana Ranch Partners LLC, plans to run cattle on the property and allow up to 10 buyers to build nice homes overlooking the permanently conserved beaches. As point man for the project, Newsom says he will set aside 100 acres for affordable housing for locals. "The residents of the area are poor and mostly on welfare," he remarks.

Newsom says he and his son each invested $125,000 in Hana Ranch in July 2001. Gavin reported on his economic disclosure statement that by December of that year, his share had zoomed in worth to more than $1 million.

The land value rose "a lot more" when Oprah Winfrey later purchased a piece of the ranch, Judge Newsom says. Winfrey read about the conservation easement and called the judge on his cell phone. Last April, she and her personal trainer, Bob Greene, bought several hundred acres of the beautiful spread.

The Newsoms also each have owned stock in Getty Images, a $1.6 billion conglomerate that owns an archive of 70 million photographs and illustrations. The Seattle-based firm rents these images to advertising agencies and media of all sorts. William and Gavin have served on the board of Getty Investments LLC, which sank $32 million into Getty Images in 1999. The supervisor was later allowed to buy $10,000 worth of Getty Images stock when the company was restructured. A few months after that, his stake was worth more than $60,000, according to the Chronicle.

(In a small but wonderful irony, an information-industry trade magazine called CIO recently ran a glowing article on Supervisor Newsom's "Care Not Cash" initiative to kill cash benefits for the homeless in San Francisco. The mag ran a picture of a shivering homeless man that it bought from ... Getty Images.)

Gavin Newsom also has a partnership stake in his father's firm, Newsom Associates, located in an office across the street from the upscale Marina Safeway store in the supervisor's district. On his financial disclosure statement, the younger Newsom valued his share in Newsom Associates at "over $1 million." Judge Newsom says that reflects his son's interest in the Hana Ranch property.

About The Author

Peter Byrne


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