Indictment Ties Orange County Developer to Kickback Deals

Orange County real estate developer James D. Stout was indicted Wednesday by a federal grand jury on charges of accepting $1.5 million in kickbacks in a series of real estate transactions with the troubled Beverly Hills Savings & Loan Assn.

Stout, whose relationship with a former Beverly Hills S&L; executive vice president was the subject of a congressional investigation in 1985, is charged with collecting secret commissions from a real estate brokerage to which he had channeled purchases financed by the S&L; from 1982 to 1984.

Stout, who founded the Daon Corp.’s U.S. division and earned a reported $6 million a year as owner of his own real estate investment and management firm in Irvine, J. D. Stout Co., was a partner with the now-insolvent Mission Viejo-based Beverly Hills S&L; in the purchase of 56 apartment projects worth more than $450 million, according to the indictment.

Assistant U.S. Atty. Anita Dymant said Stout’s companies were responsible for locating, evaluating and acquiring properties in exchange for a general partnership in the purchase, while Beverly Hills acted as limited partner and put up the financing.

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The indictment alleges that Stout obtained secret commissions from Haun, Raab, Webster & Co., an Orange County brokerage that handled the bulk of the acquisitions, that generally amounted to one-half or one-third of the brokerage’s sales commissions.

According to the indictment, Stout received about $3.8 million in commissions during the two years of Beverly Hills S&L;’s apartment purchases, of which $1.5 million was paid to Stout without the S&L;’s knowledge.

Dymant said the payments amounted to illegal kickbacks both because of Stout’s failure to disclose the commissions to the savings and loan and because of his own financial relationship with the thrift. Stout was not only a partner in the transactions, but was a director of one of the companies created to handle the purchases, BHS Realty Corp., a second-tier subsidiary of the savings and loan, Dymant said.

“The problem with all of that is that what Stout was getting essentially was Beverly Hills’ money, and it was a secret profit that he didn’t tell his partner about,” the prosecutor said.

Neither Stout nor his attorney could be reached for comment.

An oversight committee of the House Energy and Commerce Committee in 1985 examined Stout’s personal relationship with Robert E. Newberry, the S&L;’s former executive vice president, focusing on allegations that Newberry personally received $200,000 in bonuses from Stout in 1983.

Newberry has not been charged in the indictment, and Dymant said “it’s hard to say” whether Newberry knew about the commissions Stout allegedly received. She added: “This indictment does not necessarily conclude the investigation; the investigation is ongoing.”

Beverly Hills Savings & Loan was declared insolvent in 1985 and taken over by the Federal Home Loan Bank Board, under whose direction it is now operating.

If convicted on the 11 counts of fraudulent participation in savings and loan transactions, Stout faces a maximum sentence of 55 years in prison and a $110,000 fine.