Michael R. Mastro’s reputation as a prolific money-making real estate magnate drew investors to him for 40 years. He amassed an army of investors he called Friends & Family who referred him to their friends and family members. They would visit him at his humble office on Ranier Avenue South, write big checks and Mastro would issue them promissory notes. The notes pledged that they would earn 8, 10, or even 12 percent interest and that they could withdraw their investments at any time.

Mastro’s long stream of success abruptly dried up last month, however, when forced into bankruptcy by three different banks. Creditors most at risk are his 200 Friends and Family investors who owed over $100 million, many of whom have invested with Mastro for decades.

When liquidated, Mastro’s assets could possibly leave nothing for his investors. In the financial statement filed with the court by Mastro earlier this month, he reported total assets of $249 million and liabilities of $587 million, most of which is owed to banks with primary claim to his real estate.

Sad to say, many of his investors, like him, were in their 70s and referred to their loans to Mastro as the golden goose that kept laying. That is, until the real estate bubble burst and the stock market took a nosedive last year.

Although some are very angry with Mastro, many others who declined comment continue to speak highly of him. They still consider him an upstanding businessman who became a victim of unprecedented economic circumstances. Others are upset with Mastro’s lenders who pursued bankruptcy instead of allowing him more time to manage his way through the crisis.

It wasn’t until last fall that some investors began to sense signs of stress in Mastro’s dealings. A year ago September 30, Mastro sent a letter to his investors acknowledging the tough times, but assuring them that his organization was strong and would endure. He listed seven pending property sales that would net nearly $67 million when King County property records noted that there were only two closed sales out of the seven that sold for less than $22 million.

Earlier this year, investors noted a first in their experience with Mastro. He stopped allowing them to withdraw their investments. Some even offered to take less, but Mastro couldn’t comply. He continued to insist that he would recover.

Several dozen banks he owed money to eventually filed lawsuits for default on real estate loans. Some judgments were won or some appointed third-party receivers to run the real estate secured by unpaid debts.

In July of this year, however, an involuntary Chapter 7 bankruptcy petition was filed by three banks. Unfortunate for Mastro, this type of petition leads to liquidation, instead of restructuring.

Mastro initially resisted hard, but gave up the ghost three weeks later. Mastro just recently transferred his luxury car, jewelry and Medina waterfront Home into offshore trusts, of course, to protect them from seizure.

Businesses, retirees, churches, friends and family of friends all lose in Mastro’s demise. In addition, the securities division of the Washington Department of Financial Institutions is investigating whether Mastro’s Friends & Family contracts violated state law that prohibits the sale of unregistered securities.

A questionnaire was sent to investors and the agency interviewed Mastro. The investigation is expected to come to a close soon.

As one attorney told one of Mastro’s investors, the worst case scenario will be that the investor will lose all his money, and that he probably will.