Boris Kralevich, an engineer and inventor, thought he left his daughters set for life.
For almost 100 years, the building at 2049 Fillmore St. in San Francisco’s Lower Pacific Heights neighborhood had been in the Kralevich family. His father, Milan, purchased it with a friend and together they ran the Lincoln Bar & Grill out of it. In 1981, Boris rented the 2,000-square-foot space to Elite Cafe, a New Orleans-inspired eatery known for its classic interior and marble-topped bar.
When he was in his late 50s, Kralevich put the building in trust for his daughters, Elaine Fiorina and Sylvia Johnson, as they were both getting married.
“His thought was that if these marriages don’t work out, no matter what happens, I have provided monthly income for them and I know my daughters are taken care of,” Fiorina says. For years, the checks arrived like clockwork, with about $120,000 being distributed to the sisters annually.
Things changed in 2011, Fiorina says, when Monterey attorney John Arthur Hudson took over as court-appointed trustee. That year, according to court records, Hudson took out a $250,000 loan on the property, then modified it to $539,000 in 2016 and modified again in 2017 to $637,000. In 2018, Johnson, a Carmel resident, contacted her sister and said something didn’t look right with the way they were being paid—payments were coming in cash, by money order and cashier’s checks bearing Hudson’s name, but not from the trust account. An account at Wells Fargo Bank that should have had at least $12,000 in it—Hudson, a former Monterey County prosecutor, had reported that amount to the sisters just a week earlier—contained far less.
A Wells Fargo employee wouldn’t tell Fiorina how much was there, but told her she needed to get professional help and fast.
In June 2018, Fiorina and Johnson petitioned the court to remove Hudson as trustee. In September 2018, Monterey County Superior Court Judge Susan Matcham ordered Hudson to repay the trust the full amount of all loans he took out, clear the property of liens that resulted from the loans and refund $20,000 in trustee fees by January 2019.
It’s 18 months later, and last week, Hudson was charged in federal court with wire fraud in a complaint that alleges he pledged the Fillmore Street Property as security and falsely represented that the loans would be used to improve the property. Instead, federal investigators traced the loan proceeds to Hudson’s unrelated legal settlement payments, personal mortgage and credit card payments and other personal expenses. He is currently out on $500,000 unsecured bond and reportedly living in Sacramento.
Monterey attorney Larry Biegel, who represented Hudson during the process to remove him as trustee, says he’s known Hudson for 40 years and tried cases against him when Hudson was a prosecutor.
“There’s no question he went wrong, but to go into specifics of what happened would be violating attorney-client privilege,” Biegel says. “I will tell you he feels enormously bad about it.”
Fiorina says she couldn’t get anyone in local law enforcement interested in the case. The Monterey County Sheriff’s Office, she says, considered it a civil matter and told Johnson, a Carmel resident, to talk to the Carmel Police. Carmel Police told the sisters to talk to San Francisco police, and they told them it was Monterey County’s problem. Her attorney, Palm Desert-based Nikki Allen, worked her connections to get the FBI interested.
Fiorina also says the California State Bar has taken no action against Hudson’s license and he’s still allowed to practice law. The Fillmore Street building was sold to satisfy the loans Hudson took out, with the proceeds after paying the debt going to taxes and the sisters.
“I was relentless. I wouldn’t stop,” Fiorina says. “If I die doing this, he is going to pay for what he did. Ultimately, the system worked, but in the Monterey County legal community, there’s a real good old boys’ network.”
Hudson’s attorney, federal public defender Gabriela Bischof, did not return a call requesting comment.
This is a longer version of a story that appeared in print in the June 25-July 1 issue.