Judge Drops 21 of 31 Counts in Mortgage Fraud Case

A federal judge Monday dismissed 21 counts from a 31-count indictment against Santa Ana businessman John F. Hayden, ruling that a one-year delay in prosecution prejudiced Hayden’s defense.

U.S. District Judge Harry L. Hupp made the unusual ruling in Los Angeles. While Assistant U.S. Atty. Terree A. Bowers told Hupp that an appeal was possible, he declined to comment after the court session.

Hayden, 67, remains charged with a real estate fraud scheme in which he allegedly issued worthless mortgage guarantees on $5 million in real estate for a condominium project in Oregon.

Hayden’s firm, Glacier General Assurance Co. of Montana, wrote 1,300 such financial guarantee bonds in the early 1980s, including many involved in transactions that led to a $95-million swindle of the Bank of America in 1984.

$700 Million Owed

Glacier is in receivership. Montana regulators claim that the business has more than $780 million in liabilities and only $10 million in assets.

Hupp threw out all charges relating to two real estate deals in 1983 in Chatsworth and Riverdale. Several alleged confederates have been tried and convicted of mail fraud in connection with those transactions, most recently Gerald R. Ramos.

Hayden was facing trial in March, 1987, in the Chatsworth and Riverdale deals when prosecutors said they had discovered additional evidence showing Hayden’s involvement was more extensive.

A new indictment was filed last March. In Monday’s ruling, Hupp dismissed those counts of the new indictment that reflected the Chatsworth and Riverdale transactions.

“I’ve been through 3 1/2 years of living hell and I’m tired of it,” was Hayden’s only comment.

His lawyer, James C. Chalfant, called it “a significant victory. But we’re not going to pop the champagne corks until Mr. Hayden is acquitted.”

Bowers said Hupp’s partial dismissals “will have no effect on the overall case.” Hupp set the trial for July 19.