7 Indicted in $21-Million Fraud Case : 6 Orange County Men Named; Loans Involved 21 Banks

Seven businessmen, including six from Orange County, have been indicted by a Los Angeles federal grand jury on wire fraud charges involving $21 million in real estate loans.

Six defendants were arrested Thursday by the FBI. The seventh is believed to be in Costa Rica.

The 35-count indictment, issued late Wednesday, alleges that the men set up an elaborate scheme to defraud 21 banks and savings and loans nationwide. The banks lent the men between $100,000 and $5.8 million between 1983 and 1984.

According to court documents, the defendants allegedly told the banks that the money they borrowed would be used to buy and develop two parcels of land in Chatsworth and Newhall. However, the borrowed money was allegedly diverted by the defendants for their own use, court records said.

Warrant Issued

Those arrested include: John F. Hayden, 66, of Santa Ana; Marvin H. Weiss, 59, of West Covina; John W. (Skip) Chodak, 43, of Laguna Hills; John R. Ward, 46, of Newport Beach; Bruce R. Furst, 33, of Laguna Hills, and Leo M. Peterson, 42, of Fountain Valley.

A warrant was issued Thursday for Gerald R. Ramos, 37, of Orange, who earlier this year spent four months in federal prison for refusing to cooperate with the grand jury investigating his real estate operations. Ramos is on vacation in Costa Rica, according to his attorney, Robert Kennedy.

The indictment grew out of an ongoing investigation by the FBI, the U.S. attorney’s Major Frauds Unit, the California attorney general’s Special Prosecution Unit and the Orange County district attorney’s Major Frauds Unit.

Link Between Deals

The common link between the Chatsworth and Newhall real estate deals was Glacier Assurance Co. of Missoula, Mont., officials say. Hayden served as president and chief executive officer of Glacier, which provided bonds guaranteeing that the loans would be repaid if borrowers defaulted.

Glacier underwrote about $200 million worth of mortgage guarantee bonds before the firm was declared insolvent last year by judges in Montana and Orange County. The company, which had an office in Tustin, was responsible for underwriting $89 million of the $95-million loan loss sustained by the Bank of America in the fourth quarter of 1984.

Hayden also is charged with falsely representing that the net worth of Glacier was $29 million in December, 1983. In March, 1985, the California Insurance Department seized Glacier’s assets and found the firm’s liabilities exceeded its assets by $37.2 million. The indictment detailed an elaborate operation by several companies that worked together to arrange the two multimillion-dollar real estate deals. The defendants allegedly borrowed $14 million for the Chatsworth project and $7 million for the Rivendale project in Newhall.

Between December, 1983, and February, 1984, for example, the defendants allegedly got 32 loans by submitting phony appraisals and financial statements and providing worthless loan guarantees, according to the indictment.

But, instead of using the money to develop the land, the defendants diverted the money “by laundering the proceeds through shell companies, alter-ego identities and sub-escrows . . . ,” according to the indictment.

$2 Million Transferred

Four defendants allegedly transferred more than $2 million from the loans to various bank accounts in the British West Indies, Atlantic City, New Jersey and Missoula.

The defendants allegedly told the banks they planned to build “expensive homes” on the Chatsworth property. They also proposed to build a hotel to serve visitors to the 1984 Summer Olympics on the Rivendale land, according to the indictment.

Ramos and a partner allegedly bought the Chatsworth property in 1984 for $1 million. They subsequently resold it to another partnership they controlled for about $14 million.

The defendants allegedly told the banks the land was worth between $18 million and $20 million. Peterson prepared appraisals to back up the loan applications, the indictment said.

Meanwhile, Weiss, Chodak and Ramos “falsely represented that the Rivendale (Newhall) property, with the hotel, was worth $35 million,” according to the indictment.

Real Estate Loans

Chodak allegedly obtained millions of dollars worth of real estate loans through shell companies he controlled with Ramos, the indictment said.

Defendant Ward was the owner and operator of Southport Development Co., which was insolvent and in default on $15.5 million worth of loans that Glacier had agreed to repay, the indictment said.

Furst was the owner of the Furst Holding Co., which allegedly arranged multimillion-dollar real estate loans insured by Glacier bonds, according to the indictment.

Finally, Weiss was co-owner of Energy Resources Financial Inc., which allegedly acted as an agent for Glacier in arranging guarantee bonds and related loans, according to the indictment.

“This (the indictments) culminates months of hard work,” said Guy N. Ormes, head of the Orange County fraud unit, who has been designated to serve as an assistant U.S. attorney for this investigation.