Developer Indicted in Land Sale to Park Service

A federal grand jury Thursday indicted Encino real estate developer Jerry Oren on charges that he and two associates fraudulently inflated the value of a scenic tract in the Santa Monica Mountains that was sold to the National Park Service for $8 million, making it the most expensive parcel ever bought for the Santa Monica Mountains National Recreation Area.

Oren, 51, a real estate developer with dozens of holdings around Los Angeles, was charged with wire fraud and making a false statement in a matter within the jurisdiction of the National Park Service. If convicted, he faces a maximum penalty of 10 years in jail and $11,000 in fines.

Charges of aiding in the wire fraud were filed against Radoslav L. Sutnar, 56, a consultant to Oren at the time of the land sale, and Moshe Ziv, 36, a partner in a New York real estate firm who allegedly fabricated a letter offering to buy the land for $9.3 million.

The letter, which was supposed to have come from a client of Ziv’s, was later given by Oren and Sutnar to an appraiser, who used it as the basis for calculating the value of the property, according to the indictment. The resulting appraisal was $2.6 million higher than one conducted a short time before.

Sutnar and Ziv face up to five years in jail and a $1,000 fine if convicted.

No Effect on Sale, Price

The three defendants are scheduled to be arraigned March 23 in federal court in Los Angeles.

The indictment does not affect the purchase or the price, officials said. Assistant U.S. Atty. Charles J. Stevens, who is prosecuting the case, would not say whether the government will seek a refund from Oren.

The 336-acre tract of oak-dotted hills and meadows north of the Ventura Freeway near Agoura Hills has been the subject of controversy since it was purchased from Oren’s firm in 1985 by the Trust for Public Land, a nonprofit conservation group that acquires land for later resale to local or federal parks agencies.

The San Francisco-based group resold the land, which is in Cheeseboro Canyon, to the National Park Service. The Park Service had sought the parcel for years, but lacked the necessary funds to buy it.

Individuals within the Park Service and other landowners in the Santa Monica Mountains insisted that the price was far above market value. Even so, opposition was muted by the fact that virtually everyone involved saw the parcel as a “plum” acquisition because the land is close to the Ventura Freeway and could serve as a convenient public-access point for the recreation area, said Daniel Kuehn, supervisor of the Santa Monica Mountains park.

‘Unfortunate’ Situation

“It’s unfortunate that it turns out we paid too much money for the property,” Kuehn said. But, he said, “land values is the area are just escalating like crazy.”

Years from now, the acquisition will look like a bargain, he said.

Santa Monica Mountains National Recreation Area is a string of parks and trails on private and public land between Griffith Park and Point Mugu State Park in Ventura County. Created by Congress in 1978, the recreation area is a third complete, with the Park Service holding title to about 12,000 of the 36,000 acres it eventually plans to own, Kuehn said.

In 1983, Oren began negotiating with the Trust for Public Land to sell part of an 811-acre tract in the lower end of Cheeseboro Canyon owned by his firm, Oren Realty and Development Co. That September, Oren granted the trust an option to buy 336 acres for $7.5 million.

As a term of the deal, the National Park Service, which planned to acquire the land when it had enough money, required that the trust commission an appraisal of the land to determine its fair-market value.

An appraisal conducted for the trust in 1984 determined that the land was worth $5.8 million, according to the indictment. After the trust gave Oren a copy of the appraisal, Oren allegedly said that he had received other, higher offers for the property.

Higher Offer

About that time, according to the indictment, Oren called Ziv, who was a personal friend and former consultant to Oren’s firm, asking him to write a letter indicating that a client of Ziv’s firm wanted to buy the Cheeseboro Canyon property.

According to the indictment, Ziv then had a secretary type a letter indicating that Union Pacific, a client, offered to purchase all 811 acres of Oren’s property, with the value of the 336-acre parcel sought by the Park Service set at $9.3 million.

A subsequent appraisal of the land--taking into account the purported offer--raised the value of the land to $8.4 million. This was the appraisal presented to the Park Service by the trust.

When a price of $8 million was ultimately settled on by Oren and the trust, trust and Park Service officials hailed it as a bargain.

The indictment was the result of a Department of Interior investigation that began in 1985, prompted by publicity about the allegations that the sale price was inflated, according to park officials.

The Times reported soon after the sale was completed that Tom Hickman, a staff appraiser for the Park Service, had questioned the accuracy of the trust’s appraisal as far back as September, 1984, but had been ignored.

In a series of memoranda, Hickman told his superiors that the letter offering $9.3 million for the land “has a certain odor to it” and could be a “setup deal” to raise the sale price.

Acquisition a ‘Fiasco’

But Hickman’s memorandums failed to influence the Park Service’s decision, which was to go ahead with the deal.

After the investigation of the deal was completed, Tom Sheehan, an assistant inspector general for the Interior Department, described the Cheeseboro acquisition as a “fiasco.”

One Park Service official said that the lack of thorough scrutiny of the appraisal was probably in part because of a desire to complete the transaction before parkland funds, which had just been made available by Congress, could be frozen by the Reagan Administration.

Since 1981, the Reagan Administration in most years has recommended no funding for the purchase of land for the Santa Monicas recreation area. Congress usually has authorized some money, but the Administration in some years then asked Congress for rescission of the funds--in effect, freezing the money for several months while the request was being considered.

The Cheeseboro purchase resulted in changes in the way the Park Service handles the purchase of property by third-party agencies such as the Trust for Public Land, according to Howard Chapman, regional director of the National Park Service.

‘Couldn’t Turn This Down’

In the past, there had been more than one instance in which the trust “was going in, getting an offer, making it appear to the public and everyone else that the National Park Service couldn’t turn this down because it was too good an acquisition,” Chapman said.

In the wake of the Cheeseboro controversy, the Park Service created a nationwide policy that any time a third party becomes involved in an acquisition of parkland, “we have to have an agreement with them before the transaction,” Chapman said. “They don’t go into it on their own. We want it clear that they move in at our request and concurrence.”

All appraisals now must be approved in Washington, he said. As for anonymous competing bids for land, he said: “If somebody comes in with an offer, we want to know who it is and what they’re up to.”

“It’s unfortunate that there is a taint produced by this,” Ralph Benson, vice president and general counsel for the trust, said after the grand jury action Thursday. “The Santa Monica Mountains project needs all the help it can get. Cheeseboro was a wonderful acquisition.”

Times Staff Writer Myron Levin also contributed to this story.