Daulet Bey, red scarf, leaves Oakland courtroom in 2005 where her son, Yusuf Bey IV, was charged with hate crimes and felony vandalism. (Bob Larson/Contra Costa Times)

By Josh Richman, Chauncey Bailey Project

The bankruptcy court trustee in charge of liquidating Your Black Muslim Bakery has suggested a settlement that would let the mother of the destitute and defunct community institution’s final two CEOs keep some of what once was bakery property.

U.S. Bankruptcy Judge Edward Jellen has not yet signed off on the possible compromise, which was spelled out in a court document filed May 30 by attorneys for Trustee Tevis Thompson.

“Once the 20-day notice period runs, we will submit an application for entry of an order approving the settlement, assuming that no objections are filed,” said Eric Nyberg, Thompson’s attorney. “If there are objections, we will then set the matter for a hearing.”

Under the compromise, Daulet Bey, 50 — mother of Yusuf Ali Bey IV, 22, now in jail facing criminal charges including kidnapping, torture and real-estate fraud — would hand over deeds to the properties at 5873 and 5877 San Pablo Ave. — now assessed at taxable values of $775,200 and $1,122,000, respectively — across the street from what used to be the bakery’s North Oakland headquarters.

Thompson will record the deed only for the latter, larger property, the proposed deal says; if he can put it on the market, get a deposit in escrow within 60 days and close the deal within 90 days for an amount that settles the bakery’s remaining debts, he’ll return the unrecorded deed for the smaller property to Daulet Bey.

If he can’t sell the larger property that quickly, he’ll sell both, but Daulet Bey will have an $85,000 lien on the proceeds, the proposed deal says. If there’s any money left after that lien and the bakery’s debts are paid off, she’ll get that extra amount, too. And the trustee is relinquishing his claim to a third property owned by Daulet Bey, at 541 Merrimac St. in Oakland, in which he believes there’s no equity anyway.

Thompson “believes that the settlement with Bey is a fair and reasonable settlement that is in the best interest of the estate and its creditors,” his lawyers wrote, because it regains the properties without further, costly litigation.

Daulet Bey said Tuesday that Thompson’s filing differed somewhat from what she believed to be the deal’s terms, so she won’t discuss details until those discrepancies are worked out.

“This whole matter … has taken a heavy toll on my family, particularly my three young sons. I’ve been financially and emotionally devastated through this, and I don’t have the funds to get the legal representation necessary,” she said, adding that while she wasn’t involved in any fraud, she wants to reach a settlement. “The bakery has debts that do have to be satisfied, and if we can come up with a compromise that’s structured fairly, I’m up for it,” she said.

Thompson had sued to recover these properties in October, claiming their transfers to Daulet Bey “were done with the actual intent to hinder, delay or defraud creditors” of the financially wrecked bakery.

In February 2006, eight months before seeking bankruptcy protection from about $1.1 million in debts, the bakery gave the two San Pablo Avenue properties — storefronts with apartment or office space upstairs — to Daulet Bey free of charge, as a “gift.” Bey IV was CEO at the time.

Property records show Your Black Muslim Bakery had bought 5873 San Pablo Ave. in 1978 for $42,000, while 5877 San Pablo Ave. was bought for $500,000 in August 2002 by Madeeah Bey, another mother of children to bakery patriarch Yusuf Ali Bey. Four months later, she gave the property to Richard Stovall, who has lent the Beys money on several occasions and now is a creditor in this bankruptcy; two months after that, he gave the property to the bakery.

Daulet Bey had argued in court filings that these properties were given to her to avoid foreclosure; she said she paid $70,000 in mortgage and insurance debts on them out of her own pocket, and renovated the buildings, as well.

The Merrimac Street residential duplex has been “gifted” at least five times between Daulet Bey, the bakery and Madeeah Bey, public records show; it was last given to Daulet Bey in May 2004 by then-bakery-CEO Antar Bey — another of her sons, later killed in a 2005 carjacking attempt. Daulet Bey argued this property originally was bought in her name, and she relinquished it upon quitting the bakery organization but accepted it back as a gift because she’d served the bakery for so long and mothered eight of the patriarch’s children.

Alameda County property records show Daulet Bey and Bey IV since 1999 have taken $1.5 million in loans against these properties — $900,000 against the Merrimac Street property, which also was used to secure Bey IV’s release from jail on bail in May 2006; and about $600,000 against 5877 San Pablo Ave. The last of those loans — a meager $650 taken against 5832, 5873 and 5877 San Pablo Avenue in December 2006 — seems to indicate how deeply drained of equity those properties were, and perhaps how desperate the family had grown as the bakery’s debts mounted.

Jellen converted the bakery’s voluntary bankruptcy to an involuntary liquidation in August, and in November approved sale of the bakery’s longtime headquarters at 5832 San Pablo Ave. for $1.052 million; it’s now being renovated for use by a nonprofit serving people with HIV/AIDS, and was not among properties at issue with Daulet Bey.

Reach Josh Richman at 510-208-6428 or jrichman@bayareanewsgroup.com.