Marlin Assets Are Seized; Hearing on Fraud Charges Set
A Superior Court judge has permitted a receiver to seize the assets of a Los Angeles investment group after a state agency accused it of lying about the operation of its tax shelters, which raised $50 million from 1,000 investors ostensibly to buy and rehabilitate “historic landmark” buildings.
State Department of Corporations attorney Doreen B. Wolf had informed Judge Warren H. Deering on Monday that “little or no” rehabilitation work has been done on buildings purchased by Marlin Properties and Marlin Industries, that investor funds in various limited partnerships were commingled and that the Marlin books and records “are either deficient or non-existent.” Deering then issued a restraining order against the Los Angeles-based Marlin group and set a hearing for Dec. 16 on allegations that it violated state securities laws.
Also named as defendants in the state’s civil action are companies that functioned as contractor on the rehabilitation jobs: Federated Construction Co., Federated Capital Corp. and Michael Thomas, principal shareholder of the two Los Angeles firms. The suit alleged that they abetted the Marlin group in selling securities when they “knew or should have discovered the misrepresentations and omissions of material facts contained in the offering materials.”
Marlin owner Mark Anderson could not be reached for comment. Thomas said he has been cooperating with the Department of Corporations, adding: “They will find that I am innocent of anything that went on. I hope they find it out quickly. . . . We did the work and didn’t get paid for it.”
Among the limited partnerships that Anderson set up are several in Los Angeles, including Hollywood Bank of America Building Ltd., Pasadena Green Building Ltd., Santa Monica Crocker Building Ltd. and Los Angeles Union Building Ltd.
Other buildings are in the San Francisco-Oakland area, and, according to Thomas, still others are in New York. Those include the New York City Chamber of Commerce building and the Carnegie-Miller house.
The state alleges that the defendants falsely said in a prospectus that the Fox building in Oakland had been purchased, whereas $602,000 was paid for optioning and then leasing it “because Anderson claimed the general partners did not have funds to make the $1-million down payment.” The building’s owners have sued to recover possession of that building, the suit said.
The state’s lawsuit also alleged that the conduct of the defendants “has so misled the investors and depleted the assets of Marlin entities that the Pacific Gas & Electric Building was foreclosed upon.” This, the suit said, caused a loss of about $1.9 million in equity in the building, which is in the Bay Area.
