From high life to bankruptcy.

The 29,000-square-foot mansion built by Ralph W. Smith in the high desert town of Indian Wells has everything one might expect in a city with the state's second-highest per capita income.

It sits on more than two acres and has 18 bedrooms, 27 bathrooms, a large pool, two jacuzzis, outdoor kitchens, a 12-car garage, two gyms, a chauffeur's quarters and three guest houses.

Built by some estimates for $20 million, it's now on the market for $7.5 million. But the true cost of the compound may be harder to tally.

Smith, the 73-year-old founder of South Central L.A.'s Smith & Sons Enterprises Inc., an owner of ambulance and transportation businesses, is alleged to have used as much as $10 million in company funds to finance the home's construction.

While not illegal, such spending led in large part to his 23-year-old company's Chapter 11 bankruptcy filing, according to Howard Ehrenberg, a lawyer appointed as the bankruptcy trustee.

"He used to be so proud of that house," said Juan J. Mendez. chief operating officer of APT Ambulance Co. Inc., one of the businesses. "He'd say it was our house, the company's house, where we would retreat and we would do our brainstorming. We had 100 percent trust in him."

Today, the mansion represents the largest asset of Smith & Sons, which operated APT Ambulance and APT Medical Transportation Inc. Smith & Sons filed for bankruptcy protection in 1999, and Smith was removed from its management. Since the filing, Ehrenberg has been running the company.

Now, he and 75 employees are putting pieces of the company back together, expecting to return to profitability later this year.

"This was a very successful company that, through some poor business decisions, lost control of everything to a bankruptcy trustee," said Ehrenberg. "Now, it's likely to spend the next eight to 10 years paying off creditors."

Smith's attorney, David Brand, said Smith would not comment.

City contracts

Smith & Sons, half owned by Smith and half by a trust for his grandchildren, was formed in 1979. In its early years, APT Medical Transportation moved more than 100 people daily in 50 vans, said Mendez, who joined the company 18 years ago and now runs it with Ehrenberg.

He said the success of Smith, who is African-American, was welcomed in the black and South Central L.A. communities.

"He was a very kind man and very intelligent," Mendez said. "He got a lot of people on his side. For one person to be that successful was helpful to downtown, the county and the city."

APT Medical Transportation was one of a handful of contractors for the city's transportation department, handling the L.A.'s CityRide program, a service for the disabled and senior citizens, and the L.A.'s DASH program, a scheduled bus service.

One of its largest contracts was with the South Central Los Angeles Regional Center for Developmentally Disabled Persons, which serves the mentally and physically handicapped in South Central L.A.

APT Ambulance, which accounted for 80 percent of revenues, provides ambulance services for hospitals in South Central, as well as for the elderly or chronically ill who need to make regular hospital visits.

At its peak, Smith & Sons generated $10 million in annual revenues, Ehrenberg said.

Paying the price

Smith's success did not come without ruffling feathers.

Mendez said that Smith would scream at city and county inspectors, kicking them out of the building.

And while Mendez said Smith affectionately referred to him as his "son from across the border," his behavior became worse toward his own sons, three of whom helped Smith run the company. Smith, said Mendez, fired his sons in 1997.

"He was treating everybody the wrong way, even his family," Mendez said.

"He's a tough guy," said City Councilman Nate Holden, who often found himself playing mediator between city officials and Smith. "He doesn't like to be pushed around. The city picked on him because he had a short fuse. They knew how to push his buttons."

The conflicts came to a head in 1998, when the city dropped APT Medical Transportation's city contract and replaced it with a national contractor over the objections of the community; which rallied behind Smith in an effort to save local jobs.

Among those who voiced support for Smith was State Assemblyman Herb Wesson Jr. Wesson did not return calls seeking comment.

James Lefton, chief of transit programs at the city's department of transportation, said APT had several maintenance problems and had failed California Highway Patrol inspections three times before the city put the company on probation.

Because APT was a local minority-owned company, the city continued to suggest several changes APT could make to improve its business, he said. But, in the end, the city dropped both programs' contracts with APT.

"We made our best efforts to assist them in terms of suggestions or indications of where the problems were and how they could do things differently and better," Lefton said. "We didn't feel Mr. Smith was as responsive as we would have liked in terms of our changes."

Mendez said the city's decision to drop the contract came as little surprise to APT's employees, who were aware of Smith's conflicts with the city. What's more, Mendez said, the company was not prepared to handle the contract.

In October 1998, APT defaulted on a $2.8 million loan from Union Bank of California, and in March 1999 it suffered another setback when it was ordered to pay its workers' compensation carrier, Golden Eagle Insurance Co., $580,000 by a San Diego Superior Court judge.

After Golden Eagle began collecting its judgment, Union Bank asked that a receiver be put in place at APT to pay back its loan.

In July 1999, Smith & Sons filed for Chapter 11 bankruptcy protection and Smith was removed from management.

Ehrenberg was appointed trustee three months later, and persuaded the court to consolidate the assets of the various APT entities into Smith & Sons.

Shifting assets

In the midst of the consolidation, which was completed in the summer of 2001, Ehrenberg said he discovered that a contract with the South Central Los Angeles Regional Center for Developmentally Disabled Persons had been transferred to a shell company called SMS Transportation Services Inc.

That company, he said, was owned by Smith.

He filed suit in U.S. Bankruptcy Court against SMS and John W. Harris, Smith's attorney and the registered agent for SMS.

Ehrenberg said he believed Smith created SMS and transferred the Regional Center contract "in an effort to salvage something for himself."

Calls to Harris' office were not returned. Phyllis McClean, the chief of the community services division at the Regional Center, declined to comment about its contracts, stating only that the center no longer works with APT.

The suit is pending.

The other thing Ehrenberg discovered as he plowed through the company's records was the mansion.

Running through the creditor's list, Ehrenberg saw marble companies, architects, plumbers and other companies inconsistent with the needs of an ambulance service.

What's more, in a separate divorce proceeding, Smith's ex-wife claimed she was entitled to a voice in the disposition of the Indian Wells mansion because she owned part of the company, which helped pay for the mansion.

Appraised by Union Bank at $5.25 million, the mansion represents the largest of Smith & Sons' $6.8 million in assets, according to bankruptcy filings. Ehrenberg, who estimated more than $10 million in company funds were used to build the house, put it on the market two years ago. He has reduced the asking price from Smith's suggested $15 million.

Reviving the firm

By the summer of 2001, APT had five ambulances, three of which were in running condition, a dilapidated fleet of buses and 40 employees.

"The company had been at the bottom of every hospital list because its service record was so poor," Ehrenberg said.

In an effort to streamline and restructure, in July 2001 Ehrenberg sold its building on Crenshaw Avenue for $1.3 million and moved the company to a lower cost building in Inglewood.

A month later, Ehrenberg began operating ambulances again through APT Ambulance, now the sole operating entity of Smith & Sons.

Older ambulances have been repaired, new ambulances have been added to the fleet and the old buses and vans have been replaced by six new vans. Ehrenberg said the ambulance workers have started to show up on time to hospitals and that he has managed to get back much of the business the company lost during the past few years.

APT has 15 ambulances, six vans and 75 employees. It works with 50 vendors and has contracts with White Memorial Medical Center and Temple Hospital downtown. It also just won a contract with L.A. County, he said.

Revenues are expected to hit $6 million this year, twice what they were a year ago, and Ehrenberg said Smith & Sons would become profitable by the end of 2002.

His reorganization plan was approved by the bankruptcy court last month. The focus now is on paying back all creditors over the next eight to 10 years.

After which the business goes back to Smith and his family--though control will be diluted because of the consolidation of the APT entities, some of which had other partners.

"It was his own choice to do what he wanted to with his company's profits," Ehrenberg said of Smith. "By paying back creditors 100 percent with interest, every creditor will be fully compensated. In terms of punishment, Smith has lost control of his company for a decade."

But the saga may not end there.

"Ralph Smith and his sons are not seeing eye to eye," Ehrenberg said. "So it's not necessarily the case that at the end of the day Ralph Smith himself would be in control. It will more likely be the case that the family will have to work together at some point in the future."