Businessman Cleared in Real Estate Case : 6 Others Accused in $14-Million Chatsworth Development Deal

A businessman facing 22 fraud counts in connection with Chatsworth real estate project was acquitted of all charges Tuesday by a federal court judge.

U. S. District Judge Harry L. Hupp ruled that John R. Ward of Newport Beach did not intend to commit fraud and had no knowledge of any fraudulent activity when Ward’s Southport Development Corp. became involved in a $14-million real estate deal.

Ward and six other men were indicted by a federal grand jury last May on charges stemming from the 1984 transaction to develop a 442-acre parcel in Chatsworth. A federal prosecutor said Tuesday that Ward’s acquittal would not affect the other cases.

The money for the project, backed by mortgage guarantee bonds, was provided by 21 small financial institutions. The bonds, however, turned out to be worthless and the project was never built, according to testimony in Ward’s trial.

Ward chose to have his case heard by the judge at the same time as the jury trial for four other defendants. The jury began its deliberation Tuesday morning. One of the other two defendants indicted has pleaded guilty and awaits sentencing. The other is a fugitive.

“My client is ecstatic,” said Ward’s attorney, Donald C. Randolph.

Randolph said Ward is working as a real estate consultant in Orange County. Throughout the trial, Randolph said, Ward had insisted that he thought the real estate deal was legitimate.

The banks who lent the money for the development were unable to collect on the loans or the mortgage insurance, and the government alleged that the development project was a fraud from the beginning. Federal authorities charged the defendants with pocketing the borrowed money.

“We thought long and hard about charging Mr. Ward, and we think we did the right thing,” said Gary W. Schons, a deputy state attorney general serving as a special federal prosecutor for the trial. “His acquittal does not affect the rest of the case.”

Schons said the government intends to call Ward as a witness in the trial of another defendant, whose separate trial is scheduled to begin in March.