The Press-Enterprise

http://www.pe.com/business/local/stories/PE_Biz_D_palmwood15.16e487a.html

The developer of the failed project that promised to bring a luxury hotel, a Phil Mickelson-designed golf course and expensive homes to a 1,766-acre area just outside Desert Hot Springs has been indicted by a federal grand jury in Minnesota, accused of fraud and money laundering.

Michael Crosby, an alias for Michael Joseph Krzyzaniak, was the managing partner of Palmwood Golf Club LLC and numerous other entities. The indictment accuses Krzyzaniak of bilking investors of more than $20 million.

According to a report from 2008, one Minnesota-based businessman and his family had invested at least $17 million into Palmwood.

The Minneapolis Star-Tribune newspaper first reported the 23-count indictment, which was unsealed Thursday.

In addition to seeking investors to build Palmwood, Krzyzaniak also had deals to install Internet terminals in airports and golf courses, develop alternative energy projects in Colorado and construct a NASCAR-type racetrack in Minnesota, according to the indictment posted online by the Minnesota newspaper.

Desert Hot Springs approved Palmwood in December 2006 and unsuccessfully sought to annex a majority of the land into the city's boundaries. But the project was plagued by legal and environmental challenges.

The Coachella Valley Association of Governments claimed a large portion of the property fell at that time into its proposed multispecies habitat conservation plan, in development since 1996.

Palmwood, which would have included 1 million square feet of retail space near Highway 62 and Indian Avenue, was never built.

In March 2008, the developer's Minnesota-based investors successfully petitioned a Nevada court to oust him from the development, claiming fraud and that their funds were used to support the developer's lavish lifestyle.