Businessmen Convicted of Fraud in Real Estate Deals

A federal court jury convicted two Orange County businessmen and a Covina associate on fraud charges stemming from a pair of real estate deals that caused dozens of small banks to lose about $21 million.

Based on promises to develop two parcels of land, the banks loaned millions of dollars to the defendants in 1983. However, government prosecutors alleged throughout the three-month trial that the defendants provided the banks with false and inflated appraisals, created shell companies and pocketed most of the money. Neither piece of property was ever developed.

Leo M. Peterson of Fullerton was convicted of 22 counts of wire fraud stemming from his involvement in borrowing money to develop an overvalued 442-acre parcel of land in the west San Fernando Valley community of Chatsworth.

Bruce H. Furst of Laguna Hills was found guilty of 22 counts of wire fraud related to the Chatsworth property, but he was acquitted of 10 other counts related to a second real estate deal in Newhall.

Marvin H. Weiss of Covina was found guilty of 10 counts of wire fraud related to the Newhall property but was acquitted of 11 counts related to the Chatsworth deal. Each count carries a maximum five-year federal prison sentence.

The jury returned the verdicts late Monday after two weeks of deliberation.

One defendant who asked to be tried separately is scheduled to go on trial in late March. Another defendant is a fugitive and three others who previously pleaded guilty are due to be sentenced on March 23. U.S. District Judge Harry L. Hupp set the same date to sentence Peterson, Furst and Weiss.

Attorneys for the three defendants convicted Monday said they plan to appeal. The defendants declined to comment after the verdicts were announced. Assistant U.S. Atty. Patty Collins said the Chatsworth property, which is worth between $1 million and $4 million, is still for sale. The Newhall property, appraised at about $5 million, is tied up in complex litigation, she said.