Snyder Sues on $300,000 Election Funds Investment

A lawsuit filed by Los Angeles City Councilman Arthur K. Snyder charges that his campaign finance committees have been defrauded out of $300,000 through an investment scheme that involved an oceanfront Malibu property in 1981.

The Los Angeles Superior Court suit alleges that two investment firms solicited money from the Snyder committees to use for a loan secured by the Malibu property, which purportedly had a market value of $1.28 million.

According to the suit, the property was worth no more than $500,000. The suit says that Snyder’s committees have been unable to recover any of their $300,000 since the owners defaulted and the property went into foreclosure.

Alan Kenison, a former executive with one the investment firms named in the suit, called it “a frivolous suit.”

If anything, said Kenison, who is no longer associated with the defendant companies, the people who invested money for the loan probably will make a profit when the property is sold.

“Their security has not been jeopardized,” he said. “The total amount of the loan was about $800,000 (put up by investors, among which were Snyder’s groups). My guess is that although the real estate market has declined, the people (who hold paper on the property) will probably end up with a profit on it.”

Snyder’s committees say they were told the loan was for only $600,000. They charge that the property is not worth enough to repay investors the actual $856,000 loan amount.

Defendants also failed to disclose to investors that the property was located on “the toe of a landslide,” which further diminished its value, the suit contends.

Named defendants in the suit are American Consolidated Financial Corp., Consolidated American Mortgage Corp. and Kenison, Ralph Goodson, Paul Roth and Robert Munger, who were described in the suit as sole shareholders of the companies, and several other individuals.