Ex-Queen of Real Estate Sentenced to 10 Years
Joan Betts Diplarakos, who built a single real estate office in La Puente into a chain of offices and a real estate investment empire before it all collapsed six years ago, was sentenced last week to 10 years in state prison for stealing more than $1 million from her investors.
Diplarakos looked weary but showed little emotion Thursday as she heard Los Angeles Superior Court Judge Ernest M. Hiroshige give her the toughest sentence permitted by state law. Then, after the judge rejected her attorney’s plea for bail while her conviction is being appealed, the white-haired defendant was led off to prison just two days short of her 66th birthday.
About a dozen people who had lost money in her investment schemes were in court and broke into broad smiles as the sentence was pronounced. Some could barely contain their glee, but one man said he would not gloat over the defendant’s plight. Just say, he said, that “the victims are sadly pleased.”
Attorney Gary Pohlson, who represents Diplarakos, said the case was a tragedy not only for the investors but also for his client, whose business went into bankruptcy and who “lost everything she had.”
A county Probation Department sentencing report to the judge said Diplarakos, who had been earning $30,000 a month from her real estate businesses, lost her home and has been living on Social Security benefits in a small house provided by a friend at Twin Peaks, near Lake Arrowhead.
At one time, Diplarakos had seven real estate offices stretching from the San Gabriel Valley to Carlsbad in San Diego County. Pohlson said Diplarakos tried hard to make her investment projects work. “She never intended to cost anyone money,” he said.
But Deputy Dist. Atty. Brent Collier said her motive was not the issue in the case. The trial showed, he said, that Diplarakos took money from investors for specific development projects and, instead of carrying out those projects, used the money for other investments and expenses. He said she used some of the money to buy and resell dozens of homes with a partner.
Collier said Diplarakos would persuade homeowners to take second mortgages and put the money into real estate investments she organized. The projects, mostly in the eastern San Gabriel Valley and western San Bernardino County, involved proposals for everything from small housing tracts to shopping centers and industrial parks, he said.
The plan was billed as a way for homeowners to channel the equity in their homes into investments that would yield 40% or more a year, Collier said.
Began in ‘70s
Diplarakos, through her company, First Home Investments, began organizing real estate projects in the late 1970s, when property values were soaring. Some early investors made money, Collier said, but then the real estate boom cooled.
In early 1982, homeowners discovered that the monthly payments on their second mortgages were not being made by the investment partnerships, as Diplarakos had promised. Instead, homeowners were being threatened with foreclosure by the holders of the trust deed notes.
Investors complained to the Sheriff’s Department, which conducted a fraud investigation. Detective Charles Gibbons said he found that 256 people had invested $8.5 million in various real estate projects but that hardly any of the projects had been carried out.
Case Kept Simple
Collier said more than 100 counts of theft could have been filed against Diplarakos. But to keep the case manageable, he said, the prosecution focused on money that was lost on three proposed projects: remodeling an office building in Covina, constructing a shopping center near Mt. San Antonio College in Walnut and developing an industrial park in Rancho Cucamonga.
Diplarakos was convicted in November, 1987, of theft of more than $1 million from 18 couples and individuals who invested in the three projects. Most of the investors raised money by borrowing on their homes. When the real estate projects failed, they had to refinance their homes to cover the loss or accept foreclosure.
James A. McAfee, a deputy probation officer who recommended that Diplarakos be sent to state prison after he interviewed her and some of the victims, noted in his sentencing report to Judge Hiroshige that many investors lost everything they had saved for retirement.
McAfee reported that one school principal said he will have to work an extra five or 10 years to make up for the $70,000 he lost. A teacher who lost his $22,000 investment said financial worries broke up his marriage and forced him to sell his house at a loss. One woman attributed her husband’s death to worry over their financial loss. Another said she suffered a mental breakdown.
Debt Increased
One couple who had to refinance their home to cover their loss said they increased their debt from $52,000 to $300,000 and their monthly payment from $595 to $3,000.
Linda Ramos, who, with her husband, a Los Angeles dentist, invested and lost $232,000 in the proposed Walnut shopping center project, said all of the investors have suffered “a tremendous amount of tension and stress” over their loss. She said she knows of at least two people who lost their homes through foreclosure. “Our pain runs very deep,” she said.
McAfee reported that when he interviewed Diplarakos for his sentencing report, she “broke down and cried. The tears, however, appeared to be for herself and not for the hopes and dreams of the people that she maliciously and calculatedly defrauded.”
McAfee added: “One could say that the investors went into these fraudulent schemes with their eyes wide open. Such is not the case, however, because of the representations made by the defendant to the victims.”
He said Diplarakos “has a very commanding presence, and it is easy to believe that she would be able to convince people to invest their hard-earned savings.”
Age No Factor
McAfee continued: “The defendant is now an elderly woman, but her age should not receive prime consideration in her sentencing. The facts of the offense indicate extreme premeditation and calculation over a period of years. She showed no regard for the savings of the people who were investing in her fraudulent schemes, and yet today she does not seem to realize the carnage that she has committed.”
The district attorney’s office asked for the maximum sentence permitted by law, but her attorney said she should receive probation or, at most, a two-year term.
Pohlson said his client is “very sorry that people have suffered. She also has suffered. She would pay the money back in a minute if she could.”
Not All Investors Angry
Judge Hiroshige said some investors wrote letters to him defending Diplarakos and attesting to her honesty even though they said they lost money. But the judge said he agreed with the jury verdict convicting Diplarakos and added that she should receive the maximum sentence.
Pohlson said he will appeal the conviction based on the removal of one of the jurors during deliberations. Pohlson said the jury deliberated 11 days and was split 11 to 1 for conviction before the judge removed the dissenter on grounds that she was not following instructions.
Collier said there was nothing improper in the juror’s removal. He said that other jurors had complained about her behavior and that the judge removed her after questioning her and the other jurors.
