My orchard page three

Cell phone 

As stated earlier, unknown to DiLoreto, in 1997, Ostenson started serious conversations with Holzman. Ostenson was using a partnership cell phone to make an inordinate number of calls to the west coast, home of Holzman. In the early days of the cell phone, rates were sometimes over one dollar per minute. DiLoreto was paying all the phone bills that Ostenson and his wife created. This was about the time Ostenson and Holzman, as learned later, began their courtship. I paid Ostenson’s huge phone bill along with all the other bills. It was more than $600 a month in 1997. This was not DiLoreto partnership business this was Ostenson/Holzman partnership business. I had to control spending so I terminated the cell phones and Ostenson’s paycheck. Much to his chagrin. 

One attorney for all? 

One of the stipulations of the Partnership Agreement was the requirement for either partner to inform the other of any expense or financial transaction more than $500.00. Ostenson delivered partnership cherries to a company to use for juice. DiLoreto was not informed of this transaction as was required in the new Partnership Agreement. The partnership was never paid and the Fruit Juice company went bankrupt. Ostenson was using Mr. Bohr from a law firm in Wenatchee for the partnership dissolution negotiations. DiLoreto was using Jeff Dean. Both attorneys are now deceased. Ostenson then decided to file a lawsuit against the juice company for non-payment. He used his attorney, Bohr to represent the partnership which, of course, consisted of Ostenson and DiLoreto. Try to understand the implications of this. The same attorney that was opposing DiLoreto was now representing DiLoreto. Ostenson never informed DiLoreto of this lawsuit. DiLoreto learned of the lawsuit from his banker. The banker had read about the lawsuit in the Wenatchee newspaper and queried DiLoreto. DiLoreto had the last laugh. Ostenson never paid Bohr for his services and Bohr tried to collect from DiLoreto. In a letter responding to a request from Bohr for payment, Jeff told Bohr that DiLoreto was not and had never been his client and that he should go after his client, Ostenson. 

Lack of communications 

Throughout all this Ostenson refused to communicate with DiLoreto, except via attorneys. DiLoreto suggested that Ostenson go to his attorney’s office and DiLoreto would go to his attorney’s office. DiLoreto could then talk to Jeff, his attorney, Jeff could talk to Bohr, Ostenson’s attorney, Bohr could talk to Ostenson and the antagonists could resolve their issues in one day rather than weeks or months. In response, DiLoreto received a letter from Ostenson’s wife, attached, refusing to communicate with DiLoreto and blaming DiLoreto for Ostenson’s recent heart attack. 

Maintenance, Ostenson style. 

Ostenson, as part of his duties for which he was paid, was required to maintain the farm equipment in safe operating condition. Ostenson owned an old Ford truck that was a piece of shit. DiLoreto had given Ostenson his almost new Ford truck earlier in the partnership. But when the shit began to hit the fan, DiLoreto recalled the almost new truck and gave Ostenson back his piece of shit truck. This had been repaired somewhat when DiLoreto used it but it was not perfect. Ostenson was using this truck for the cherry harvest. The generator had failed and therefore the battery would not stay charged. If the engine were shut off, then the truck would have to be pushed to get it started again. In addition, the parking brake did not work. So, if the engine were kept running there was the possibility that the truck would roll causing damage. A Latino was operating the truck. He stopped the truck because he needed to get out of the truck for some reason. He could not secure the engine because then he would not be able to start the truck. The parking brake did not work. He did pull the handle, to no avail. When the Latino tried to get out of the truck, it rolled forward almost killing the Latino. Ostenson felt no remorse. He did not visit the Latino in the hospital nor did he repair the truck other than to replace the generator. There was physical damage to the truck which Ostenson wanted the partnership to repair. DiLoreto told him to go fuck himself.

Free at last 

In March of 1999 DiLoreto was finally free from Ostenson and now owned a forty acre, newly planted, orchard. DiLoreto was the last person one would expect that would wind up owning an orchard. DiLoreto felt the other alternative, continuing the partnership was untenable. Together with a Latino, Francisco, DiLoreto persevered. The new orchard had a small crop because the trees were in their fourth year. DiLoreto installed an irrigation system making it easier to irrigate the forty acres. He used a major packing house to pack and to sell his fruit. Considering that he was a stock broker sitting at a desk in Bellevue and the orchard was 150 miles away, he survived the first year as a solo owner. 

Can Ostenson manage a one-man parade? Some think not. 

One aspect of Ostenson was that he was not capable of managing. A previous business associate remarked that Ostenson could not manage a one-man parade. When DiLoreto and Ostenson were going through their divorce, it was decided that each party would submit any outstanding bills to the attorneys. The attorneys would then decide which bills, if not all, should be paid. Along with some other bills, DiLoreto submitted the electrical bill for the home that was now in the new orchard. The electrical bill for the home was then paid. About a month later, Ostenson discovered that the electrical bill for the irrigation pump on his, the old orchard had not been paid. Of course, it had not been paid because it had not been submitted for payment by Ostenson a month earlier. When the bills were submitted, Ostenson probably confused the electrical bill for the home with the electrical bill for the irrigation pump on his orchard, the old orchard. What Ostenson did next was unconscionable. He went to the Grant County Public Utility District office in Ephrata and demanded that the payment of the electrical bill for the home on the new orchard be reversed and the money be used to pay his irrigation pump electrical bill. The staff at the PUD told him that reversing the bill was not possible because it would put the electrical bill of the home in arrears and necessitate shutting off the home’s electricity. The weather was below freezing and the home had electrical heat. The staff at the PUD called me and explained to me what he had requested and why they refused his request. It is always a depressing when one sees the true selfish behavior of some individuals. 

Another scheme to lose money? 

Before DiLoreto became disillusioned with Ostenson, Ostenson approached DiLoreto with another scheme. Ostenson’s plan was to lease the adjacent 160 acres of bare land and plant an orchard. I prepared a spreadsheet to determine if this scheme had merit. Using conservative market estimates, I determined that there was no way that this scheme would ever become profitable. The main deterrent to profitability was the leasing feature. The orchard would revert to the owner after several years and all of the improvements would be lost. Nevertheless, Ostenson convinced another friend from his Navy days to take the plunge. This friend ran out of money before he completed the planting of all the trees. The land then reverted to the owner. The trees that had been planted were destroyed. Ostenson’s friend lost about $500,000. What was the reasoning behind Ostenson’s recommendation to his friend? Assuming the newly planted orchard of his friend began to produce fruit, Ostenson would initially be the packer for that fruit. 


After our divorce Ostenson marginally managed the packing shed and sold his fruit and other grower’s fruit through Holzman. Holzman was a 51% owner of the LLC Ostenson and Holzman had formed in 1998. The LLC leased the packing shed from Ostenson. It may have said before but Ostenson was a horrible manager. Coupled with his lack of basic management skills was the fact that he was a slob. The field adjacent to the packing shed looked like a garbage land fill. DiLoreto has attached a picture of the field adjacent to the packing shed Ostenson was managing. This picture was taken around the time Ostenson was fired. His orchard also reflected his lack of management skills and his sloppy nature. On one occasion Ostenson’s neighbors brought a formal complaint to the county and state concerning Ostenson’s lack of basic pest control procedures. The orchard directly downwind of Ostenson’s orchard estimated that it cost him an additional $25,000 per year in spray costs to protect his orchard from the pests that Ostenson had created by his sloppy pest control procedure. DiLoreto’ orchard was adjacent to Ostenson’s orchard but not directly downwind. The rodents from Ostenson’s orchard were a constant threat to DiLoreto’ orchard. 

DiLoreto the new orchardist 

In 1999, as sole owner of 40 acres of new orchard, DiLoreto carried on. It was hectic. There was a phone call from the orchard every day with some emergency or another. I had a good Latino manager and he lived on the orchard in a double wide we reconditioned. He lived with his wife and one then two children. We sold what little fruit we harvested to a large packing house, Dovex. In the year 2000, Dovex offered to purchase 25 percent of the orchard, then form a partnership and manage the orchard for $25.00 per acre per month. This was cheaper than Ostenson and a lot more professional. The cash from the sale of 25% went a long way towards helping DiLoreto with the negative cash flow of the new orchard. The management team was infinitely more professional than Ostenson. When my Latino manager learned that Dovex was now managing the orchard and bringing with them their own orchard manager, he left. Apparently, he relished being the boss and he could not bear to work for another supervisor. At the time is was a disappointment to me but in the long run, it was one of the best things that could have happened to me. In the year 2000, we trellised the apple trees that were not trellised and made many other improvements. Dovex also packed and sold my fruit. I maintained the check book during this period although Dovex handled the payroll. The partnership with Dovex lasted 11 years. 

Back to Ostenson. Ostenson files Chapter 11 to no one’s surprise 

In 2007, Ostenson filed for protection under Chapter 11 of the United States Bankruptcy Code. He filed with the Eastern Washington Bankruptcy Court in Spokane, Washington. The Court’s records are all published on the internet and are accessible to anyone via the Public Access to Court Electronic Records (PACER) system. I was informed early by friends that he had filed for Chapter 11 Bankruptcy protection. I immediately began reading all Ostenson’s bankruptcy filings. In a bankruptcy proceeding, the person filing the bankruptcy, the debtor, must list all his or her assets and liabilities. Chapter 11 is defined as, “protection from creditors given to a company (or person in this case) in financial difficulties for a limited period to allow it to reorganize.” To make a Chapter 11 filing work, the assets must exceed the liabilities by a significant amount. As assets are sold, the debtor slowly works his way out of debt and bankruptcy. Ostenson had inflated the value of most of his assets to make it appear that there was more there than there actually was. This would allow him the protection of Chapter 11 rather than the more stringent Chapter 7. Ostenson listed his orchard, the old orchard, for $530,000. He failed to mention that he only owned one-half of the orchard. But no one really cares. 

Don’t cry for Ostenson, he has done a lot of damage

By now, I imagine, you are feeling sorry for Ostenson. Don’t. In early May of 2007, Ostenson announced via a PACER listing that he intended to sell his orchard, the old orchard, to a friend of his for only $330,000. With taxes and bank debt Ostenson owed just about $330,000 on the orchard. So, nothing would go to his bankruptcy estate. The sale amount was low, only two-thirds of the declared value on Ostenson’s listing of assets a few months earlier. Where did all the value go? This, of course, was fraud. But no one really cares. To sell the orchard, Ostenson had his brother’s widow sign a quit claim deed. So, her investment in the old orchard vanished. KeyBank also made some concessions to facilitate the sale to Ostenson’s friends and not the highest bidder. If you are feeling sorry for Ostenson, remember that by selling for a low dollar amount, Ostenson was cheating some of the creditors out of their funds. Because Ostenson and his attorney knew that people were watching, they proposed that the sale close in seven days rather than the customary 30 days. Jeff Dean, DiLoreto’ attorney, and DiLoreto jumped in and demanded that the orchard is sold to the highest bidder via a closed bidding process. None of this process was easy. Ostenson and his lawyer did not want to sell the orchard to the highest bidder, they wanted to sell it to friends of Ostenson for just a fraction of its value, not the true value. 

The obsession of DiLoreto

By now DiLoreto was obsessed. He had suffered enough years of having a sloppy neighbor, Ostenson. If Ostenson’s friends purchased the old orchard, it would just be more of the same. DiLoreto wanted that orchard. He really wanted that orchard. Dovex had given DiLoreto carte blanche to go after the old orchard and attempt to make the purchase in the bankruptcy court. Jeff Dean and DiLoreto fought and fought for the orchard. Ostenson’s attorney revealed late in the negotiations that Ostenson had leased the orchard for three years to the two individuals who were trying to buy the orchard. What would DiLoreto do about the lease? DiLoreto answered that if he purchased the orchard that he would honor the lease. The lease would have two more years to run following the sale. This was clearly fraud. There was no mention of the lease when Ostenson listed his assets at the beginning of his bankruptcy. If the lease document were authentic, it would be about two years old. DiLoreto asked for but was never given the original lease document. He planned on using routine dating techniques to date the ink used for the signatures. Ostenson, naturally, could not find the original. Ostenson’s attorney questioned DiLoreto’ financial ability to make the purchase. He asked for and was given DiLoreto’ tax return. When he questioned the tax return, DiLoreto deposited over $400,000 into Jeff Dean’s Lawyer’s Trust Account. Thus, making the numbers on the tax return moot. 

Highest bidder 

The bankruptcy judge ultimately ruled that the orchard would go to the highest bidder who possessed the requisite funds, following the submission of sealed bids to the court. The opening of the sealed bids was to be on a Friday. During the week, Ostenson’s attorney asked, but was denied, to be allowed to see our bid. Unbelievable. After all the negotiations, Ostenson’s sweetheart buyer ultimately did not bid. You will love this. On Thursday, with less than 24 hours to go, Ostenson found another mysterious buyer. Mysterious buyer number two. The buyer did not have the funds to make a bid but Ostenson’s attorney asked that the opening of the bids and the sale be delayed beyond Friday to allow the mysterious buyer without funds time to come forth. Jeff Dean had a field day with his letter to the judge. Jeff commented on the non-appearance of a mysterious buyer in the past. Jeff said that we must all comply with the requirements set forth for the bidding. A deposit of money and a sealed bid prior to midnight on Thursday before the bids were to be opened on Friday. The judge refused the delay. He opened DiLoreto’s bid on Friday and he allowed DiLoreto to go ahead with the purchase. Ostenson did not go quietly. He refused to sign the sale documents until he was threatened with contempt of court. On a Friday, moments before his last moment before being in contempt of court, Ostenson and his spouse signed the documents in the title office. DiLoreto followed them into the title office and had the orchard turned over to him. He watched Ostenson and his wife enter and leave the title office. He was driving a relatively new vehicle that was not listed with his assets. DiLoreto was not surprised. 

Buy or sell again. Low ball price. 

Prior to the eleventh year Dovex utilized the buy or sell provision of the partnership agreement. The buy or sell agreement stipulated that if one partner wished to dissolve the partnership, that partner would offer to buy the other partner out at a value the partner initiating the buyout determined. For some reason, Dovex must have been convinced that DiLoreto would sell out at any price. When he offered to buy out DiLoreto, he offered $920,000. This $920,000 included 80 acres of mature trees, most of the cash from the year’s harvest, about $300,000 and the cash in the checking account, over $100,000. Basically, Dovex was offering about $500,000 for eighty acres of orchard when the cash in the checking account and the accounts receivable are removed from the $920,000 offer. Another thought that Dovex failed to consider was the recent purchase of Ostenson’s forty acres for $400,000. This value should have placed a floor on his bid in that the two orchards combined should have been worth at least $800,00. This would have made $1,200,000 a reasonable offer. He also failed to consider the planting of 18 acres of Honeycrisp apples for over $300,000. These new trees were just beginning to produce. It is difficult to understand why Dovex would make such a low bid for the orchard. During one discussion, the Dovex representative was questioned about the low offer. Dovex cited the apricot trees and their inability to be profitable. The apricot trees have recently been removed at a cost of $6,000. Thus, Dovex gave up hundreds of thousands of dollars in orchard value because of the non-profitable apricot trees. Trees that were removed for $6,000. As soon as Dean and DiLoreto received the $920,000 offer from Dovex, Jeff Dean responded with a letter informing Dovex that DiLoreto would purchase rather than sell. A few days later we closed the deal and DiLoreto now owned 80 acres of beautiful orchard. This was in November of 2010. 

DiLoreto owns 100% 

DiLoreto was now on his own again. He selected and entered into a management agreement with an organic grower and manager in November 2010 and he has never looked back. The orchard has been extremely profitable and its beauty when the crop is hanging on the trees is unsurpassed. DiLoreto claims he will not sell at any price. The orchard now consists of 26 acres of Honeycrisp apples, 8.5 acres of Jonagold apples, 18.8 acres of cherries and 17.0 acres of Gala. Another 8.3 acres of formally apricots has been planted with Buckeye Gala apples. An irrigation pond and a 1600 square foot shop has been installed on the orchard.

Recommendations, Avoid a partnership 

Recommendations. Never, never, never go into a fifty-fifty partnership with anyone. Never. If you cannot do it yourself, do not do it. If you must enter into a partnership, do it 60-40 or 70-30 where you keep the higher percentage. Maintain the check book yourself. Giving up control of the check book is a disaster waiting to happen. Partnerships do not work.

Stay away from the bank. If you borrow money to farm, sooner or later the bank will own you.

Timeline, Timeline of events 

After reading the court’s decisions on the appeal and the appeal to the State Supreme Court DiLoreto has a better idea of what happened. What happened was that Ostenson was consumed by his inability to manage. DiLoreto has developed a timeline of the events surrounding the DiLoreto/Holzman/Ostenson/Dovex relationship. 

March 1996. Ostenson proposes a 50-50 partnership, he and DiLoreto, to plant one orchard, manage another mature orchard. DiLoreto accepted Ostenson’s proposal. 

March 1997. Ostenson proposes that the partnership purchase and develop a facility to store and pack partnership fruit. DiLoreto accepted his proposal.

May 1997. Ostenson proposes that the partnership go into fruit juice business. DiLoreto declined to enter the juice business with Ostenson and his family. 

July 1997. Ostenson establishes juice business in the partnership packing shed despite DiLoreto’ objections. He uses partnership apples, partnership water and the partnership facility but fails to reimburse the partnership for its share of the assets used. 

August 1997. Ostenson proposes that the partnership further expand the packing shed. This expansion ultimately cost over 1.2 million dollars of borrowed money when completed in 1998. DiLoreto declined. 

August 1997. DiLoreto notified Ostenson that he should find a new partner because DiLoreto wanted to dissolve the partnership. 

August 1997. Ostenson began to ship partnership fruit to Holzman for sale. 

August 1997. Ostenson and Holzman begin their business relationship. DiLoreto was aware that the partnership was shipping to Holzman but he did not know that Ostenson and Holzman had become partners. 

August 1998. Ostenson receives SBA loan and is able to purchase DiLoreto’ half of packing shed. 

1998, Ostenson and Holzman formed LLC, unknown to DiLoreto. 

September 1998. Ostenson given buy or sell letter with 30 days to respond per partnership agreement. 

January 1999, Ostenson did not respond to buy or sell agreement, therefore, DiLoreto removed loan guarantees. 

January 1999. Union Bank declared the partnership in default and starts to repossess the new orchard.  

 January 1999. To delay the buy or sell from culminating, Ostenson declared a mystery buyer who never appeared 

March 1999. DiLoreto now owns the new orchard. 

January 2000. DiLoreto gains a new 25 percent partner, Dovex, and life gets better. 

March 2005. Ostenson was fired by Holzman. 

January 2007. Ostenson declared bankruptcy. 

January 2007 or a little later. Northwest Wholesale filed a lawsuit against Ostenson and Holzman for over $300,000.

January 2007 or a little later. Ostenson sued Holzman. 

June 2007. DiLoreto purchased Ostenson’s orchard. 

November 2011. Dovex forwarded a buy or sell agreement and DiLoreto purchased their 25 percent. 

2012-2017. Life is good. 

September 2015. Ostenson loses his lawsuit against Holzman in the Washington State Supreme Court. 


Not too proud of what he had to do 

The author realizes that each of us has their fans and their detractors. Ostenson’s fans have never done business with him. Therefore, they remain naïve. Ostenson’s detractors are those who have done business with him. To a man, they all despise him. What DiLoreto did during the dispute with Ostenson was not always something he was proud of. In defense of DiLoreto, the author notes that he did what he had to do to survive. DiLoreto sensed that Ostenson was headed for disaster. There is no doubt that Ostenson would easily have taken DiLoreto down with him. DiLoreto did not have the deep pockets of Holzman. If DiLoreto had been forced to pay the bills that Holzman paid, he would also have been bankrupt. This reasoning may not excuse everything, but it excuses a lot.