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1 December 2004 – LAWFUEL – First for law, legal, attorney, criminal…

1 December 2004 – LAWFUEL – First for law, legal, attorney, criminal law news – A federal grand jury in Santa Ana today indicted eight defendants in a complex scheme in which they fraudulently converted Huntington Beach apartments to condominiums, which allowed them to sell the properties at substantial profits. In addition to the real estate scheme, the indictment charges four of the defendants, including former Huntington Beach Mayor Pamela Houchen, with corruption for fraudulently concealing Houchen’s ownership of an apartment building in a redevelopment district where she was prohibited from owning property.

The 74-count indictment charges:
* Philip Benson, 72, the alleged architect of the scheme and a real estate broker at Pier Realty in Huntington Beach;
* Harvey Du Bose, 63, the supervising title officer at Stewart Title of California in Irvine;
* Pamela Houchen, 47, who was a member of the Huntington Beach City Council until September and who worked with Benson at Pier Realty;
* Michael McDonnell, 38, an investor who acted as a “straw buyer” for Houchen properties and converted several other properties;
* Thomas Bagshaw Jr., 55, a real estate agent and notary public who also worked with Benson at Pier Realty;
* Howard C. Richey, 78, an investor and client of Benson;
* Jeffrey Crandall, 44, an investor and client of Benson; and
* Michael Cherney, 57, a real estate agent and client of Benson.
* All of the defendants are Huntington Beach residents with the exception of Benson, who formerly lived in the city but now lives in Hayden, Idaho; Richey, another former resident of Huntington Beach, who now resides in Hemet; and DuBose, a resident of Santa Ana.
* The 41-page indictment alleges three distinct fraudulent schemes: a scheme to defraud the people of Huntington Beach out of the honest services of Houchen; a scheme to obtain money from the purchasers of condominiums through false statements; and a scheme to defraud Stewart Title out of its right to the honest services of Du Bose.
* In the first scheme, four defendants were charged with mail fraud and wire fraud for depriving the citizens of Huntington Beach of Houchen’s honest services as an elected official. The indictment alleges that Houchen used McDonnell as a straw buyer to purchase property that was within a redevelopment zone in Huntington Beach. Pursuant to a written agreement between the two, McDonnell purchased the property on behalf of Houchen, who then renovated the property and sold apartment units as condominiums. Bagshaw later stepped in for McDonnell, signed McDonnell’s name on documents and notarized his own forgeries so the condominiums could be sold. Houchen realized profits of approximately $229,000 from the sale of four condominiums. During the time Houchen owned the properties, she failed to disclose her ownership to the people of Huntington Beach through the California Fair Political Practices Commission, and she continued to participate in the activities of the redevelopment agency that affected her secretly held property.
* In the second scheme, the grand jury charged all eight defendants with obtaining money from condominium purchasers by making false statements to real estate buyers. Huntington Beach, like most cities, has an ordinance that prohibits the conversion of apartments to condominiums without first obtaining a permit from the city. In Huntington Beach there was an exception to this rule that allowed a building held as a stock-cooperative prior to 1980 to be converted to condominiums without a permit. As part of the scheme, defendant apartment owners Houchen, Cherney, Crandall, Richey and McDonnell fabricated backdated documents to take advantage of the exception for stock-cooperatives. Working with Benson and Du Bose, they filed backdated documents with the Orange County Recorder that claimed their apartment buildings were held as condominiums from the 1980s. They paid Benson and Du Bose “conversion fees” of up to $25,000 to effect the fraudulent conversions from apartments to condominiums, and, once the fraudulent conversions were completed, the apartment owners sold the condominiums. Du Bose wrote title insurance on behalf of Stewart Title that falsely assured the buyer and lender that the transactions involved condominiums. Bagshaw assisted Benson in selling the fraudulently converted condominiums.
* In the third scheme, all of the defendants except Cherney are charged with scheming to defraud Stewart Title out its right to the honest services of Du Bose. Part of the conversion fee was directed to Du Bose to get him to write title insurance policies that Stewart Title would never have approved if it had known about the fraudulent nature of the apartment-to-condominium conversions.
* In total, Benson and Du Bose are charged with converting at least 15 apartment buildings into condominiums. In these buildings, at least 45 apartment units were sold as condominiums, generating more than $11 million in sales. Benson is charged with 50 counts of mail fraud and 24 counts of wire fraud. Du Bose is charged with 47 counts of mail fraud and 23 counts of wire fraud.
* Houchen is charged with selling at least eight condominiums she knew were fraudulently converted. The sales grossed more than $1.7 million. Houchen is charged with 11 counts of mail fraud and seven counts of wire fraud.
* Bagshaw is charged with assisting in the sale of at least nine condominiums he knew were fraudulently converted. Those nine condominiums sold for more than $2.3 million. Bagshaw is charged with 11 counts of mail fraud and one count of wire fraud
* McDonnell is charged with selling at least 19 condominiums he knew were fraudulently converted. The condo sales grossed more than $3.9 million. McDonnell is charged with 22 counts of mail fraud and eight counts of wire fraud.
* Richey is charged with selling eight condominiums he knew were fraudulently converted, generating more than $2.4 million in sales. Richey is charged with eight counts of mail fraud and six counts of wire fraud.
* Crandall is charged with selling seven condominiums he knew were fraudulently converted. Those properties were sold for more than $1.9 million. Crandall has been charged with seven counts of mail fraud and four counts of wire fraud.
* Cherney is charged with selling two condominiums he knew were fraudulently converted, grossing $874,000. Cherney has been charged with two counts of mail fraud
* All eight defendants will be summoned to appear for arraignment in United States District Court in Santa Ana later this month.
* An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
* Each count in the indictment carries a maximum possible penalty of five years in federal prison.
* This case is the product of an ongoing investigation being jointly conducted by the Federal Bureau of Investigation and the Huntington Beach Police Department.
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* CONTACT: Assistant United States Attorney Andrew Stolper
* (714) 338-3536

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.