Retiree Pursues Businessman After Soured Real Estate Deal

Instead of enjoying his retirement days behind a golf club or fishing pole, James Harrison Smith, a dapper, retired Air Force lieutenant colonel, spends most of his time collecting information about a San Fernando Valley businessman named Donald Frederick Altenbernd.

Smith, 64, is not writing a biography.

He’s trying to prove that Altenbernd is responsible for the $60,000 Smith lost in two limited real estate partnership investments six years ago. Smith, who lives in Alta Loma in San Bernardino County, says he hasn’t seen his money or the deeds to the Humboldt County recreational land his partnership bought in 1979.

Dozens of Civil Lawsuits

Smith, who has filed a $1 million civil suit against Altenbernd, is not the only one pursuing the 59-year-old Northridge businessman. Altenbernd is named as defendant in dozens of civil lawsuits filed in Los Angeles and Orange County Superior Courts.

Public records show that he has failed to pay about a dozen court-ordered judgments against him.

The government has questioned his real estate transactions before. On Jan. 22, 1980, the state Department of Real Estate revoked Altenbernd’s real estate broker’s license. Earlier, a Superior Court judge issued a judgment in a civil case against Altenbernd and his D/A Development Co. Inc. for “obtaining secret profits, fraud and conspiracy to commit fraud” in connection with a real estate transaction.

Ten years earlier, Altenbernd’s broker’s license was suspended for 60 days by the state after clients filed complaints with state real estate officials.

Frequently Acts as Own Attorney

Former employees say Altenbernd’s business dealings have angered dozens of people through the years. Still, those who know him describe Altenbernd as a handsome, charming and talented man who frequently acts as his own attorney.

In a 1979 biography contained in a real estate investment prospectus, Altenbernd described himself as “an independent developer of California, Arizona and Colorado properties.” Today, Altenbernd says he serves as a consultant for Trans Gulf Inc., a Dallas-based oil company. No such company is listed in Dallas telephone directories, but it is a registered Texas corporation.

“I’m not liable for Smith’s money,” Altenbernd said in a recent interview. “I don’t have his property.”

Altenbernd said his deceased business partner, John S. Alexander, was responsible for Smith’s money. Alexander was struck by a car and killed in December, 1979, shortly after he and Altenbernd collected $100,000 from Smith and four limited partners.

Unable to recover their money or deeds to their land in a place called Shelter Cove, Smith and his partners, including three Orange County couples, filed the $1 million lawsuit against Altenbernd in 1982. The suit is pending in Los Angeles Superior Court.

Altenbernd insists that he offered to turn over the disputed deeds to Smith’s former attorney, Jette Anderson of Ontario.

However, Anderson said Altenbernd has never offered to turn over the Shelter Cove deeds or provide any information about the property.

After researching all Altenbernd’s unresolved court cases and unpaid judgments, Anderson said she advised Smith that he might spend thousands of dollars in legal fees but probably would never see his money or land.

‘I Have No Animosity’

Although he has been uncooperative with Smith, Altenbernd said he is now willing to help Smith in any way he can. “I have no animosity towards Smith,” Altenbernd said. “I think he is a victim of bad advice and stupidity.”

Bob Stephens, a former detective with the Newport Beach Police Department who recently returned to patrol duty, has been guiding Smith’s efforts to untangle his ill-fated real estate investment. “Altenbernd is making a mockery of the legal system by hiding behind corporate veils,” Stephens said, explaining that Altenbernd’s business dealings were all handled through his several corporations.

For example, Altenbernd’s I. R. Financial Corp. was co-general partner in Smith’s real estate investments.

Stephens said he is frustrated because attorneys with Orange County’s fraud unit rejected Smith’s case, saying there were jurisdictional problems. Although Smith’s money was collected in Newport Beach, it was allegedly diverted and spent in Los Angeles County and elsewhere. And, the untimely death of Alexander further clouded the liability in Smith’s case, Stephens said.

“We took it as far as we could here,” said Stephens, a stocky, blond man who has become close friends with Smith over the years they have worked together.

Sheriff’s Investigation

Stephens recently arranged for Smith to meet with Los Angeles County sheriff’s investigators, who agreed to listen to Smith’s story and review his documents.

But Stephens and other fraud investigators say Smith’s biggest problem is that overburdened local and state fraud units generally accept only the biggest, multimillion-dollar cases--not ones for $60,000.

Despite recent eye surgery and years of frustration, Smith refuses to give up his pursuit of Altenbernd.

“At this point, it’s a challenge,” said Smith, a tall, silver-haired man. He said he never expects to regain his money or the property, but he is continuing the quest “for the principle of it.”

Smith admits that he made a mistake by investing more than half of his retirement money in the two real estate deals. “It looked like a good thing. I was going to make some money,” said Smith, who lives off his government pension and the proceeds from some small investments.

Collected $500,000

According to an Altenbernd business associate, Altenbernd and Alexander collected about $500,000 from real estate limited partners in 1978 and 1979. The associate, who spoke on condition that he not be identified, said Alexander used the investors’ money to buy recreational property at public auctions.

According to a July 9, 1980, letter from Altenbernd to Smith: “I. R. Financial holds 67 lots in trust, deeded free and clear of all encumbrances, pursuant to your investment program. As a result of these negotiations, the average purchase price is $740 per lot, and for a California coast subdivision these prices are ridiculously cheap. Should you have any questions, kindly advise. Very truly yours, Donald F. Altenbernd, president.”

Altenbernd confirmed that I. R. Financial bought the lots for Smith’s partnership. He said some lots--48, according to public records--were later sold to International Time Sales, another of his companies, “to protect them.” He said the rest of the lots were deeded back to the state for failure to pay taxes.

However, according to deeds filed in the Humboldt County recorder’s office, in April, 1984, International Time Sales sold several lots with identifying numbers matching those of lots belonging to Smith.

Altenbernd denied that the lots sold last year belonged to Smith’s partnership, and insisted that he is not responsible for Smith’s money because, “I never had anything to do with the formulation of that partnership.”

Attorney Supports Smith

According to partnership documents filed with the court, Alexander and Altenbernd’s I. R. Financial Corp. served as co-general partners, with Smith and the others serving as limited partners.

According to public records, the secretary of state revoked I. R. Financial’s corporate status on July 2, 1984, for failure to pay state income taxes.

William Belding, Altenbernd’s former attorney, supports Smith’s contention that Altenbernd is at least partially responsible for the money or the Shelter Cove land.

“Altenbernd was intimately involved in both the money-raising and the administration of the partnerships,” Belding said in a recent interview.

Belding, who drafted the partnership documents, said he did not know what happened to the money after Alexander’s death. He noted that he, too, is suing Altenbernd, seeking $8,000 in unpaid legal fees.

Interviews with former employees and business associates paint a picture of Altenbernd as a man who changes his phone number, office address and occupation every few months.

‘Complaints Every Day’

“There were complaints every day. I heard the people on the phone yelling at him,” said a former employee, who worked for one of Altenbernd’s defunct companies for several years. The employee asked not to be identified.

In the late 1970s, Altenbernd operated an infrared security system company called International Security Systems. Altenbernd said he sold that company in 1979 to a West Los Angeles company, Arts and Sciences Technology Inc. Arts and Sciences later sued Altenbernd over the sale. That suit is pending.

“I’m just besmirched by Arts and Sciences’ problems,” Altenbernd said, when asked about the dozens of lawsuits pending against him.

A former Arts and Sciences director, who asked not to be identified, said Altenbernd rescinded the sales agreement in 1981 and later sued the company for back salary.

Minnesota-based Hawaii E&R; Co. is suing Altenbernd’s Vacation International Properties Inc. in Los Angeles Superior Court. The suit alleges that Altenbernd has refused to return about $25,000 in deposits he collected from Hawaii E&R;’s time-share condominium customers.

False Representation Alleged

Hawaii E&R; alleges that in February, 1983, Altenbernd falsely represented himself as a licensed real estate broker.

Altenbernd denied that he represented himself to Hawaii E&R; as a licensed broker and said that the case involved a “commission problem to be resolved shortly.”

According to the lawsuit, Altenbernd was supposed to act as a marketing agent for time-share condominiums in Hawaii, but was fired by Hawaii E&R; after several months.

Altenbernd has given a deposition and the case is in the discovery stage, but Altenbernd has failed to produce adequate business records, according to Jan Harris, Hawaii E&R;’s Los Angeles attorney.