YELLOWKNIFE - A significant section of Yellowknife's waterfront, which has been embroiled in the fallout from a major drug bust, had a narrow escape from the taxman this month.

Just three weeks before RCMP swooped down on her office in Johnson's Building Supplies with a warrant to search for illegal drugs in October 2005, Sandra Gellenbeck had mortgaged the company's land in Old Town for $1.475 million.

The Johnson's lands, and several other properties Gellenbeck inherited from her father Karl Lust, were to be auctioned to recover $1,146,631 in taxes owed to the City of Yellowknife. The taxes were paid before the final deadline.

The Johnson's lands are among the most desirable in Yellowknife's historic Old Town - nine lots at three addresses on Franklin Avenue, including more than 100 metres that look onto Yellowknife Bay, between Pier 1 Marine and the GNWT Natural Resources offices.

According to public records in NWT land titles and corporate registries, the money-man who came to Gellenbeck's rescue was Wallace Finlayson, owner of Sutherland's Drugs and a former director of Johnson's Building Supplies.

The mortgage was registered against Gellenbeck's Old Town properties Sept. 23, 2005. Sutherland's and Finlayson also hold a $300,000 mortgage on a Gellenbeck property at 5223 Finlayson Drive. It was registered Dec. 4, 2006.

Finlayson declined to comment on the mortgages. Gellenbeck also declined comment through her lawyer in Edmonton on the future of Johnson's Building Supplies or the company lands in Old Town.

The public records offer mute testimony to the long association between Finlayson and his late father Doug and a succession of owners of Johnson's Building Supplies, beginning with Oscar Ivar Johnson, the company founder, and its rapid decline under Gellenbeck's management.

Finlayson dropped from Johnson's board in February 2006 when Gellenbeck became the sole director of the company she inherited from her father in 2002.

The Registrar gave Gellenbeck written warning on Oct. 18, 2006 that Johnson's was about to be struck from the companies register for failing to file annual returns. Creditors, including Revenue Canada, registered liens against company lands in 2005.

Gellenbeck was one of 11 people arrested last Oct. 14, 2005 in what RCMP call "Operation gunship." She will be in court in early September to face charges of possession of cocaine and possession for the purpose of trafficking.