Margie Handley’s Neighborhood

by Bruce Anderson, September 9, 2010

Marge Handley, the prominent Willits heiress and Republican philanthropist, owns a modest new home in a struggling subdivision off East Hill Road in South Willits called Haehl Creek.

Mrs. Handley, 70, can retreat to her Hearst Road ranch out east of town when her Haehl Creek neighborhood seems unpleasant.

Which it is lately for Mrs. Handley.

According to court documents filed by Mrs. Handley, her Haehl Creek neighbor, retired anesthesiologist Gary Bodensteiner, also 70, has not only been harassing her, the doctor informed mutual acquaintances that he had purchased a gun.

Margie Handley

Mrs. Handley, fearing that the doctor intended to anesthetize her with his recently acquired weapon tried, but failed, to get a court order preventing Dr. Bodensteiner from getting close enough to shoot, or at least have his gun taken from him.

The two senior citizens, children of the 1950s, live across the street from each other at Haehl Creek, a modestly upscale, sparsely occupied subdivision south of central Willits, if Willits, six miles of unplanned sprawl, can be said to have a center.

Five hundred yards of suspiciously expensive road leading to Mrs. Handley's and Dr. Bodensteiner's Haehl Creek neighborhood has upset Dr. Bodensteiner. The new road runs south off East Hill into the Haehl Creek Subdivision. It will also serve Howard Memorial Hospital when the hospital is built.

Marge Handley donated the land for the new hospital. As you turn south off East Hill Road, you drive down a grand five hundred yards of commodious new road to the Haehl Creek Subdivision. If you kept south through the subdivision you would drive into rolling hills still owned by the Harrah-Handley clan.

One, two, three, four – spiffy new access road, bare hospital land, Mitchell's subdivision, Handley's ancestral acres.

Two years ago, Doctor Bodensteiner began to suspect that some large portion of the $742,908 paid by the Howard Hospital Foundation for its share of the new access road disappeared into either Marge Handley's copious purse or into a certain contractor's bank account.

That contractor is James Mitchell, also of Willits.

Mitchell's share of the cost of building what became a public road to his private subdivision is not known. What is known, however, is that Mitchell billed the Howard Hospital Foundation for $742,908 for its share of the road, and the Foundation paid Mitchell $742,908, that amount apparently based on a City of Willits-commissioned traffic study which was used to apportion the road's cost.

The traffic study said the new hospital would bring a lot more traffic to the overall road than would 58 homes in Mitchell's Haehl Creek Subdivision. The Foundation, therefore, should pay the lion's share of the cost of the road's construction.

But did the Foundation also fund another several hundred yards of road and sidewalk winding through Mitchell's private development?

That the 500 yards of pavement benefited Mitchell by serving his subdivision is assumed to have been merely fortuitous. Mitchell would pay his share of the cost of the road's construction and, presumably, pay for the roads and related infrastructure where the road ends and his 58-lot project begins.

Mrs. Handley had sold Mitchell the land on which Mitchell's subdivision rests, and she lives in a house she bought in that subdivision. And Mrs. Handley also served for years as president of the Howard Hospital Foundation and continues to serve on its board of directors. Those directors tend, in the way of charities, to be personal friends and, in the way of small town charities, they are often associated in business transactions unrelated to the hospital.

Boards of directors of charitable foundations are organized to raise money. They don't consist of paupers, and Willits is a small town long on the working poor, short on wealthy people. It is inevitable that the sliver of wealthy people residing in Willits, among them several doctors and successful realtors, would make up the Howard Hospital Foundation's board. The trustees have money of their own and they are adept at raising more.

But small towns being small towns, rumors quickly went round that Mitchell had given Mrs. Handley a home in his new Haehl Creek Subdivision and that the Foundation had somehow paid for it.

Mitchell hadn't given Mrs. Handley a house in his subdivision.

Mrs. Handley bought the home from Mitchell to be near her aged mother who lives nearby on the old Harrah ranch, which Mitchell's subdivision abuts.

Mitchell does his development business as Bemcore Enterprises, Inc. and Spring Valley Homes, Inc. He is registered with the state as a contractor under Spring Valley Homes, Inc.

Mitchell's Bemcore built the Haehl Creek subdivision, which immediately fell victim to the great collapse of 2008 soon after Mrs. Handley and Dr. Bodensteiner bought in. Of the 58 parcels of the subdivision, only a few have houses on them. The rest exist as vacant lots.

But Mitchell, before the national housing market collapse, got the proposed hospital's road built, all 500 yards of it. Its purpose was to serve the new Howard Hospital. But as it worked out, until the new hospital appears, the access road serves only Mitchell's mostly unsold subdivision. Marked off for 58 homes, it appears that only 19 have been sold, 39 exist in the form of unsold vacant lots.

While the new road makes access to Mrs. Handley's family property to the south of Mitchell's tract more accessible, it's only to people who prefer pavement to gravel. The Handleys have always had a road to their place, crude as it may have been. Many Handley-Harrah descendants, including the matriarch, Bob Harrah's wife and Mrs. Handley's mother, live on the family homestead bordering Mitchell's Haehl Creek Subdivision to the south. Mrs. Handley only benefits from the accommodating, Foundation-funded access road when it blossoms into the developer's curving side streets in the subdivision itself and curves past her and Dr. Bodensteiner's homes.

Beneath the finest 500 yards of road in all of Northern Mendocino County, the City of Willits paid Mitchell to install $100,000 in accompanying amenities necessary to both the new hospital and his little suburb, including water and power lines.

These improvements, and the $742,908 stretch of 500 yards of access road, represent a handsome gift of public and non-profit Howard Hospital Foundation funds to Mr. Mitchell's private development even if he paid some amount beyond that figure as his share of the road and its accompany infrastructure.

If something untoward, if not swindle-like occurred, it would have been Mitchell billing the Foundation for much more than the actual cost of the road and its water and power lines so he could cover all or a portion of his share of access to his Haehl Creek Subdivision.

Did that happen?

It's impossible to know. All these people, except Dr. Bodensteiner, are pals. And even the doctor himself was once a pal as he worked assiduously to raise money for the Foundation before he began asking questions about the road deal and focusing his ire on Marge Handley. When he did that, Dr. Bodensteiner immediately became an ex-pal.

If the hospital is never built, and the economy magically bounces back, and Mitchell builds out the rest of his $500,000-$600,000 homes, the apparent gift to him of water and access road will look like a very grand gift of Foundation money to a very lucky guy.

But if the hospital is built, and the Adventist Church has announced it will provide the funding to do it, Mitchell is more likely to sell all 58 cheek-by-jowl lots and homes to the new hospital's better paid staff.

Either way, Mitchell can come out ahead, way ahead.

For now, though, he's taking a bath in economic water colder and dirtier by the day.

When I encountered Willits' lead citizen at a candidate's night more than a decade ago, she was a plump, gracious, matronly woman rather overmatched by the glib liberal she was running against. Her seventh decade becomes her. Mrs. Handley, judging from her photographs, is now stylishly slim; she wouldn't look out of place in The Big Donor's Circle at the San Francisco Opera.

During her grandmotherly incarnation Mrs. Handley twice dared run for public office as a Republican on the relentlessly liberal Northcoast; she lost to now-Congressman Mike Thompson in contests for the State Senate in 1990 and 1993, and was defeated by the blandly inevitable career officeholder Wes Chesbro for the State Assembly in 1996.

Born and raised in Willits, Marge Handley is a native daughter of “The Gateway to the Redwoods.” A formidable businesswoman in her own right, Mrs. Handley has operated a successful paving business and has been active as a realtor. These days she spends much of her time taking care of her elderly mother and steering the ongoing efforts to get a new hospital built for Willits, the town where her father, Robert “Bob” Harrah, parlayed a modest sawmill he'd started with his three brothers in 1942 into Harrah Industries, beneficiary of lucrative defense contracts and best known locally as the Willits-based Remco Hydraulics, closed some years ago, and Microphor Inc., still thriving in Willits only five hundred gloriously paved yards from Mrs. Handley's town home in the Haehl Creek Subdivision.

Harrah's thriving concerns were bought up by outside conglomerates as Mr. Harrah, from all accounts a kindly, charitable man, grew rich, very rich. Harrah and Mrs. Handley's second husband, Bud Handley, died in 1993, within days of each other, leaving Marge Handley a story book rich widow.

For many years, Mrs. Handley served as chairman of the Howard Hospital Foundation. She recently stepped down as board chair but is still active in fundraising for the hospital “with the objective of retaining high quality hospital services in Northern Mendocino County.”

The Howard Hospital Foundation owns the present 75-year-old hospital premises about midway in the six-miles of fast food restaurants, motels, and miscellaneous ramshackle structures housing the nebulous enterprises that comprise contemporary Willits. The hospital dates from the days Willits, like Ukiah, was a coherent little town, and it, like the new hospital will partially be, began as an act of charity, having arisen out the tragic death of 15-year-old Frank Howard, son of Charles Howard owner of the famous race horse, Seabiscuit. The boy may have survived an automobile accident on the Howard Ranch if emergency medical services had been available in nearby Willits. The boy's grieving father, Charles Howard, gave $30,000 in seed money to build what became Howard Hospital. The hospital's supporting Foundation was established in 1966. The hospital plant is old and undersized for the demands now placed on it.

The Seventh Day Adventist Church operates the for-profit Howard Hospital. The Adventists also own the for-profit hospital in Ukiah. And they will build the new Howard Hospital, Willits, on land donated by Handley and her family. (Coast Hospital in Fort Bragg is community-owned.)

As of last week, the new hospital consists of a construction trailer and vacant land bisected by 500 yards of spiffy new road complete with a bicycle lane and light standards. Red and yellow flags celebrate the pristine pavement and its spotless sidewalks which, taken as one visual, look as if a very small foreign nation had begun an imperial outpost but suddenly abandoned it after some very expensive site-prep.

As I turned south from East Hill Road onto the expensive pavement leading to the Haehl Creek Subdivision, a tweeker in full spasm-gibber mode hurtled past in a battered pick-up truck.

The new road may someday serve a new Howard Hospital. For now it serves nothing but the new houses developed by Marge Handley's friend, Mr. Mitchell. If Mitchell's little suburb is ever built out, fifty-eight happy homes will form an instant neighborhood for the proposed hospital. As is, there are about 30 homes huddled neatly on a few short streets, only 20 of which are occupied. One model home is used as a sales office by Mitchell whose own home is on Sherwood Road, northwest of Willits.

But one home is occupied by Marge Handley. She bought it for about $600,000 choosing, as is her legal option, not to disclose the transfer tax. The Assessor keeps these unpublicly-disclosed figures separately and taxes proportionately. A conspiratorially-minded person inevitably suspects deceit when the transfer tax is not public, but there really isn't any in this case, although for appearances sake Mrs. Handley and Mr. Mitchell might have chosen the public option.

Mrs. Handley's aged mother lives nearby on Harrah land above the subdivision. At an electronic gate decorated with a set of steer horns, Harrah acres, overlooking Mitchell's development project, climb into the hills. As I paused to admire the horns atop the punch-in code box, a honky-tonk-looking babe of middle years, spotting my decrepit Honda, drove down out of the Harrah hills to follow me on my tour. Driving back through the subdivision bisecting the blank area where the new Howard Hospital will someday appear, I paused a second time at a double-locked gate on the west side of the 500 yards of grand access promenade where a nicely-rendered sign informed me I was looking at “Commonwealth. A Howard Foundation Hospital Community Garden at the site of the new Frank R. Howard Healthcare Campus.”

Double-locks for a community garden?

Honky-Tonk Gal again drove slowly past, a malevolent sneer on her late-night face.

I wondered how Mitchell was going to sell his upscale homes with careening tweekers at its entrance, double-locked community gardens inside, and down market Tammy Wynettes throwing menacing eyeballs at prospective customers.

For three years now, Dr. Bodensteiner has considered all this expensive access road and accompanying infrastructure as highly suspicious, criminal even. His eyebrows went up and stayed up at not only the money spent on the presently non-existent new hospital's infrastructure even if it did lead comfortably to his house in Mitchell's subdivision.

To the doctor, trained in the scientific method, it all seemed suspiciously vague, all cozily in-house, and awfully clubby.

Which it was and is, and made even more suspicious by the stonewall the Foundation threw up around the $742,908. Why not just show the doctor how the money was spent?

Nope. The Foundation left it to their lawyers to explain.

And Marge Handley, who Doctor Bodensteiner quickly came to view as a kind of rural Mata Hari, went for her lawyers.

The Foundation's Santa Rosa-based attorney, Simon Inman, wrote the doctor: “The Foundation believes that it entered into an appropriate contract with Bemcore Enterprises (Mitchell), that its contribution to the costs of the improvements was appropriate given the benefits it expects to receive and that the overall price for the improvements was appropriate. Whatever information you may have regarding alternative pricing may well not be based on the full specifications required to construct the improvements in the manner required by the City.... The Foundation Board is satisfied that in all respects it has discharged its legal and fiduciary obligations in connection with this matter and I have no reason to doubt that conclusion.”

Of course you don't, Mr. Inman. You're the Foundation's mouthpiece. But you might want to inquire on behalf of your clients, “Did the Foundation pay more than their fair share of the access road and its water line?”

Dr. Bodensteiner had previously engaged in a separate dispute with Mitchell over the construction of the doctor's own house. Mitchell eventually did the upgrades Bodensteiner had insisted were part of the sales price. The doctor, one might suspect, has a private beef with Mitchell that does seem to drive the doctor's pursuit of Mitchell and Handley.

Mitchell was also sued by his sub-contractor, Frontier Contracting. Frontier's president, Art Vollert, slapped a $252,527.56 mechanic's lien on Mitchell's Haehl Creek subdivision “for labor, services, equipment, material furnished” for the undergrounding of utility and water lines and other work.

Did Vollert's get his money?

No, not yet.

Marge Handley, in a statement supporting her failed effort to get a court order restraining Dr. Bodensteiner from approaching her and otherwise disturbing her, assesses her distress:

“This entire problem stated in the spring of 2008 when both the Bodensteiners and I built a home in Ed Mitchell’s new Haehl Creek Subdivision. Gary got into a lawsuit and argument with Ed Mitchell over upgrades in his home and eventually Ed just dropped the suit, gave him his upgrades, assuming he would go away. What he didn’t understand is that Gary is mentally ill and won’t take his medication.”

Dr. Bodensteiner says his only medication is aspirin.

“In Gary’s pursuit of Ed he did some research at the Courthouse and found that my house showed zero transfer tax, so he immediately assumed that Ed had given me my home and that the Frank R. Howard Foundation had paid for it fraudulently due to a check that we wrote for our portion of the road where the new hospital will be built. He decided that the road was worth $70,000, and because the Foundation paid $700,000, that we must have added another zero to the bill and then Ed gave me my home.

“The truth is that I covered the transfer tax stamps at time of purchase, which is allowed. I paid $600,000 for my house and did a 1031 exchange. The Foundation paid for its share of the road based on a traffic study that the City of Willits had done. I am President of the Frank R. Howard Foundation and we own the hospital and are attempting to build a new one.”

The Foundation owns the present hospital facilities, the Adventists run the medical show.

“Gary started a letter writing campaign to everyone who is in a position of power against me and against the Foundation and it has gone on for over a year. I have tried to ignore it and thought eventually he would get tired of running into brick walls, but it just seems to spur him on to talk to more and more people and write more letters. To date he has contacted all the City Council members, the Mayor, the Police Chief, the Grand Jury, the District Attorney, Assemblyman Chesbro, Congressman Mike Thompson, the Willits News (whom he visits weekly demanding that they print this “fraudulent” behavior by me and by the Foundation) and many others, including calls to the Hospital Board members, and the letters to the Foundation demanding that I be dismissed from the Board. (Letters that I have obtained are enclosed). I try to follow up every contact I know he has made with a phone call and everyone says, Don’t worry. He’s a nut case.”

Mrs. Handley must know that the apparatus she cites here, including the Willits newspaper, would not dare say a critical word about her even if she became a public “nut case.” These entities, especially the Willits News, know their places and functions in the Willits power pyramid as certainly as a footman knew his in the court of the Sun King.

“I am very disturbed about this because I value my integrity and he [Dr. Bodensteiner] is trashing it daily, not only with letters but apparently with everyone he comes into contact with, verbally. The Foundation is trying to raise money for a new hospital and trashing the Foundation doesn’t help us with our fundraising, even though many people know he is deranged, some don’t and the gossip is all over town that the Foundation paid for my home. I can’t sleep some nights because I feel helpless as to how to stop him from maligning my reputation. We have contacted an attorney and the attorney has written him letters and spent much time on the phone with him letting him know that he is totally wrong about all of his allegations, but it seem to be to no avail. Our attorney has advised us to lock the door if we see him coming and not let him into the office and refer any phone calls to us to him (the attorney). I have not wanted to sue him for slander because two medical doctors have told me that when one is a paranoid schizophrenic it will only cause him to become more obsessed and cause his behavior to become more bizarre.

“Several weeks ago Gary [Bodensteiner] called Kevin Erich’s secretary [Erich is the hospital CEO] at the hospital and let her know that he had purchased a gun. Up until this point Gary’s wife assured me that he did not own a gun because sometimes I wake up in the night and expect to see him standing at my window pointing a gun at me. Now he has a gun and I have just learned second hand that he is taking shooting lessons in Ukiah.

“The man should not own a gun. The purpose of asking for this restraining order is so that his gun can be confiscated.

“He also goes into the Bank of Willits occasionally and tells things to Richard Willoughby – the President of the Bank. He told Richard that he is taking pictures of everyone who comes and goes from my home and he is getting 'the goods on me' and that Ed Mitchell and the Contractor who built the home come by to see me – whatever that is supposed to mean. (They have stopped by to fix things in the home that are under warranty.) Richard is willing to testify in court to this and the Secretary at the hospital is willing to testify that she was told he owned a gun. I consider this to be 'stalking' – the fact that he is watching me this carefully.

“The day I learned he had a gun I was leaving for Alaska and just returned home or I would have asked for this restraining order then.

“I feel stalked and harassed and know that my reputation is being maligned in a community where I have lived my entire life. I just want the court to get his gun. Please.”

The court didn't take the doctor's gun, and the court didn't give Mrs. Handley her restraining order.

Dr. Bodensteiner chuckles at the tumult he's caused.

“They're all just a bunch of small town crooks,” he says.

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