U.S. Indicts 8 in Alleged $10-Million Land Scheme

Eight men, including former Norwalk City Manager William H. Kraus, were indicted Friday by a federal grand jury for allegedly defrauding hundreds of investors out of more than $10 million.

The 23-count indictment on mail fraud and conspiracy alleges that, through two companies, the eight men lured hundreds of people--mostly from Utah--to invest in real estate with artificially inflated property values.

Much of the money was then funneled to Lanseair Corp., a San Diego-based holding firm that owned the properties, the indictment alleges.

No investor funds remain, according to San Diego County Deputy Dist. Atty. John R. Heisner, who was brought in as a special assistant U.S. attorney to lead the 23-month investigation of the alleged scheme.

Promised Returns

The funds originally were invested in American Factoring Corp., a Salt Lake City-based company that authorities claim persuaded clients to make investments supposedly secured by the properties owned by Lanseair.

American Factoring allegedly promised annual returns to investors of up to 48% through “factoring,” a common business practice of buying a firm’s accounts receivable at a discount. The outstanding accounts then are collected by the factoring company.

American Factoring did not engage in factoring, federal prosecutors allege, but instead simply lured funds from unsuspecting investors and transferred most of the money to Lanseair.

The defendants spent the funds on “personal consumption” items, including luxuries and illegal drugs, Heisner said.

Suspects Seized

Arrested in Los Angeles were Kraus, 46; Edward E. Wingender, 34, of Long Beach, and Rudy Decker Lang, 60, of Borrego Springs.

Among those arrested Friday morning in San Diego were Lynn Dale Bogart, 36, allegedly the chief organizer of the plan; Charles Carrasco, 50, a former member of the Del Mar Fair Board; Frank Consoli, 26, owner of Solar Equipment Sales, and Alan L. Williams, 40, an attorney.

Still at large is Michael R. Moore, 46, president of American Factoring, and a Salt Lake City resident.

Kraus resigned under pressure as Norwalk city manager on Aug. 20, 1983, after an independent investigation by a Los Angeles attorney uncovered questionable business deals involving Kraus. He currently teaches government at California State University, Long Beach, according to Mayor Cecil Green.

Financial Imbroglio

The 19-page report accused Kraus of falsifying his involvement in a financial imbroglio that included defaulted loans and soured business deals. Kraus said at the time that he might have committed a crime when he used a worthless property deed to finance a house in San Diego in 1978.

The investigation also centered on Kraus’ past business deals with convicted criminals. He resigned after the report was submitted.

Bogart and Wingender pleaded guilty in San Diego Feb. 20 to federal charges of distribution and conspiracy to distribute cocaine and will be sentenced April 22.

Bogart currently is in the Metropolitan Correctional Center in San Diego for violating terms of probation relating to a counterfeiting conviction in Los Angeles in 1980.

Times staff writer Ralph Cipri ano also contributed to this story.