Donald and Nina Lewis spent $30,000 fixing up their retirement haven, an abandoned house they purchased in 2009 near Edwards Air Force Base.
All seemed normal until a year ago, when a sheriff's deputy came knocking. He told them the home sale had been fraudulent and showed photos of a female suspect. The couple had never seen the woman, but they've spent each day since in fear of losing their house.
"We have no idea what's going to happen," Lewis said.
The couple is awaiting the outcome of a housing fraud investigation alleging the theft of at least 18 homes across California. The defendants, according to state Atty. Gen. Kamala D. Harris, targeted homes vacated because of an owner's death or disability and seized them by exploiting an arcane abandoned-property law.
They sold at least 13 of those, leaving new owners such as the Lewises vulnerable to the claims of heirs or relatives.
The 144-page complaint, filed last week in Fresno County Superior Court, lays out how a Fresno family and two attorneys laid claim to the homes under the state's adverse-possession law. The statute affords certain rights to squatters, provided they improve abandoned properties and pay taxes on them.
The defendants, the state alleges, lied to the courts and filed false documents to convince judges they had met those conditions. A Harris spokesman said that the scam is believed to have involved many additional homes and that the investigation continues.
Property law experts said unwitting buyers who purchased homes from the suspected scammers would probably lose in court, unless judges decide the true owners failed to assert their rights in a timely fashion.
"This is a heartbreaking situation, because it will wind up with a lot of fights between people who were victimized," said attorney Kathleen Smalley, who specializes in complex real estate transactions at Boies, Schiller & Flexner in Santa Monica.
The victims may also include mortgage lenders and title insurers, said Dan Schechter, a professor at Loyola Law School in Los Angeles. Buyers may quit paying mortgages on homes they stand to lose. Title insurers may be on the hook to cover the losses of lenders or buyers.
The insurers and lenders could wind up competing with the innocent buyers in trying to seize any ill-gotten gains from the defendants, if they are convicted.
The attorney general's office is seeking restitution of at least $3.5 million from the defendants — the estimated value of the homes when the sales occurred. That money could go to victims of the alleged scam, according to the office.
Attorneys for the two lawyers accused of participating in the scam — Craig M. Mortensen, 60, of Fresno and Sheldon W. Feigel, 50, of nearby Sanger — denied that their clients knowingly took part in any crime.
Also charged were three siblings: Sandra E. Barton, 31; Christopher S. Barton, 31; and Cambria L. Barton, 21. The sixth defendant is Daniel P. Vedenoff, 29, identified as Sandra Barton's boyfriend.
All the defendants except Cambria Barton have pleaded not guilty to charges including perjury and falsifying evidence. Cambria Barton turned herself into authorities Thursday morning. Feigel, Christopher Barton and Vedenoff had posted bail as of midday Thursday, but Mortensen, Sandra Barton and Cambria Barton were still in Fresno County Jail. They face a combined 288 felony counts.
Christopher Barton's attorney, Sabrina Ashjian, did not respond to a request for comment. Sandra Barton's attorney, Douglas Foster, declined to comment. Vedenoff and Cambria Barton had not yet secured legal counsel.
Adverse-possession laws are only rarely used to take title to abandoned or blighted homes. More often they are used to settle disputes over property lines, as when one neighbor mistakenly fences in another's property.
Rooted in ancient English law, such statutes allow people to take over mistakenly claimed or abandoned real estate if a court finds certain conditions have been met, including making an "open and notorious" claim to the property.
Under California law, those laying claim are required to prove they have improved the homes, paid property taxes, and lived in them or rented them out for at least five years.
Harris' office said the Barton family, aided by the lawyers, did live in, fix up and pay delinquent taxes on some of the homes — but never occupied them for the required five years, as they stated in falsified court records. The defendants apparently scoured public records to identify abandoned homes, authorities said.
Often taxes had gone unpaid and the owner had died or moved out because of a disability. The next step would be to verify that heirs or others with rights to the property were out of the picture.
A neighbor at one of the homes, in Monterey Park, said the house's elderly owner, Charles J. Hutchison, disappeared in 2012, causing nearby residents to speculate that he had died. (The Times could find no record of his death.)
Sandra Barton and other members of her family soon appeared and canvassed the neighborhood. They called themselves Hutchison's friends and said that a nephew on the East Coast wanted to find him, according to the neighbor, who requested anonymity for fear of retaliation from the defendants. They hired a gardener to tend to the home, then returned months later to clean it up, apparently in advance of a sale, the neighbor said.
Property records show that Sandra and Cambria Barton acquired the house in April and sold it in June to a Monterey Park house-flipping enterprise, Zoey Design, for $488,000. Zoey, in turn, sold it in August to a new owner who paid $620,000 and took out a $300,000 mortgage, according to public records.
In 2010, property records show, the Bartons sold another home, on a quiet stretch of Young Avenue in Rosemead, for $420,000, also without arousing suspicions at the time.
Neighbors said they seldom saw the elderly lady in the home, who had locked herself inside with her dogs and cats and let the property deteriorate.
Then one day the woman was gone.
"We never heard from her again," said Steve Hasegawa, a neighbor since 1977.
A contractor appeared and quickly fixed the old place up in what Frances Moss, who has lived on the street for 37 years, called a "complete turnaround."
In April 2010, a young couple bought the home and moved in.
At times, the Barton clan's efforts were challenged. The state started investigating in 2010, after the inheritor of a home in Guadalupe, in Santa Barbara County, consulted a title firm while seeking an equity loan — and was told that Sandra Barton had been listed as the owner.
In a Los Angeles County Superior Court case, records show that Mortensen sued on behalf of Sandra Barton in July 2009 to seize a home in Van Nuys, where the owner had died in November 2008. When a lawyer for the rightful heir, Deborah Winkler of Marina del Rey, disputed the claim in early 2010, Mortensen asked that the case be dismissed, a request granted by the judge.
"This must be some mistake," Winkler recalled thinking after discovering Barton was trying to gain possession of the home. "What are you talking about? It's my house. It was my sister's."
Donald Lewis, the man who lives near Edwards Air Force Base, said he retired on disability in 1989 and bought the Colonial-style home for $90,000 because it is next to where his wife's brother lives. Having survived kidney cancer, he fears the disease may return. He wants his wife to be near someone who could care for her if he dies.
"We don't really have the money to hire a lawyer," he said.
Times staff writer Andrew Khouri and researcher Scott Wilson contributed to this report.Copyright © 2014, Los Angeles Times