Purported Ex-Mistress of Marcos Convicted in $18-Million Fraud

Dovie Beams de Villagran, a former B-movie starlet who was the purported mistress of deposed Philippines President Ferdinand Marcos, was convicted Wednesday on charges of defrauding 13 banks out of nearly $18 million by submitting wildly inflated loan applications.

Deliberating for nearly three days, a federal court jury convicted De Villagran of 39 counts of bank fraud, bankruptcy fraud and making false statements to lending institutions to support her multimillion-dollar residential and commercial properties throughout Southern California.

The jury deadlocked on two other counts.

Amid revelations that both De Villagran and her husband, Sergio, have been exposed to the AIDS virus, De Villagran’s lawyers attempted to argue during the two-week trial that the former actress suffered brain damage as a result of her medical problems and could not be held accountable for her actions.

While government prosecutors painted a portrait of a shrewd businesswoman ensconced in an opulent Pasadena mansion with gold-inlaid pools, De Villagran’s servants testified that she had been reduced to spending days at a time locked in a closet, clutching a pillow and weeping.

“She had a damaged head, you understand me? She had a damaged brain,” her lawyer, Richard Sherman, angrily told reporters after the verdict. “I wasn’t allowed to present my case, and now the lady doesn’t get a chance.”

U.S. District Judge Pamela Ann Rymer ordered De Villagran immediately taken into custody pending sentencing Dec. 14, despite De Villagran’s tearful pleas and her lawyer’s assertions that the order could prove fatal in view of her fragile health.

Sherman had sought to present evidence that De Villagran suffered brain damage from an earlier blockage of a carotid artery and from the “dementia” effects of her exposure to acquired immune deficiency syndrome. Her doctor testified outside the presence of the jury that De Villagran suffers from AIDS-related complex.

Rymer allowed the jury to hear evidence of De Villagran’s health problems, but precluded any testimony about how they may have affected her mental well-being or ability to know she was committing a crime.

Testimony from a variety of bank officials showed that De Villagran and her husband, who pleaded guilty to bank fraud just before the trial began, submitted inflated income statements as a basis for obtaining $18 million in loans from 13 banks.

In some cases, according to prosecutors Ronald J. Nessim and Julie Fox Blackshaw, the couple submitted falsified income tax statements showing millions of dollars of income for years in which a loss had been reported to the Internal Revenue Service. In other cases, the loan applications listed millions of dollars in income from a non-existent automobile brokerage the couple claimed to own.

Jury Foreman Frank Suraci said it was difficult to reconcile the image of an emotionally distraught woman presented by the servants and the capable businesswoman portrayed by the bankers who testified. In the end, he said, the loan applications spoke for themselves.

“There was nothing to indicate that the same woman that was clutching pillows in the closet was lunching with bank executives in Pasadena,” Suraci said. “It was two different people.”

Jurors also found De Villagran guilty of concealing substantial assets--totaling as much as $6 million worth of artwork, jewelry and furnishings, according to federal prosecutors--from bankruptcy examiners when the couple filed for bankruptcy last year and claimed $22 million in debts.

Sherman acknowledged after the verdict Tuesday that some assets do exist, but he put their value at less than $100,000 and said De Villagran plans to return them.

De Villagran’s purported two-year love affair with Marcos made headlines in the Philippines soon after it ended in 1970. What are purportedly transcripts of tapes she made of her lovemaking sessions with him are included in the book “Marcos’ Lovey Dovie,” by Philippine journalist Hermie Rotea.