State High Court Votes to Suspend S.F. Attorney for 5 Years for Role in Fraud

A divided state Supreme Court has ordered a five-year suspension of a San Francisco attorney who admitted falsifying documents to help a developer carry out a multimillion-dollar fraud scheme.

The court voted 5 to 2 last week to accept the State Bar’s recommendation of a five-year suspension, which began in November, 1983, after lawyer Ariel Basse pleaded guilty in federal court to two counts of mail fraud.

Chief Justice Rose Elizabeth Bird and Justice Malcolm Lucas dissented, voting to disbar Basse.

The developer, George Benny, whose $200-million real estate fortune collapsed in 1982, was sentenced last year to 30 years in federal prison for racketeering. He was convicted of cheating lenders out of $40 million that he borrowed for real estate developments in the San Francisco, Las Vegas and Reno areas.

According to court documents, Basse admitted to the State Bar that he had helped Benny persuade Wells Fargo Bank to lend the developer $13.5 million for a 396-unit condominium conversion project by preparing false documents saying Benny had invested $2 million of his own money in the project.

Basse also admitted preparing a fraudulent loan document that helped Benny settle a suit by Wells Fargo once the bank had discovered the fraud, court records said.

The charges to which Basse pleaded guilty involved a Benny scheme to get bank loans, estimated by prosecutors at $22.5 million, by fabricating “straw buyers” for the condominiums. Authorities said fraudulent loan applications were submitted in the names of the “buyers,” while Benny made the down payments, collected the loan proceeds and was deeded the property. Basse admitted submitting false applications for two such “buyers.”

Basse was sentenced to a year in prison and fined $1,000, but was released after three months.