Defiant Ex-Orange Broker Gets 9 Years in $21-Million Scam

Defiant to the end, former Orange real estate broker Gerald Ramos was sentenced to nine years in prison Monday for his central role in a land swindle that netted $21 million from financial institutions across the country.

U.S. District Judge Harry L. Hupp concluded that the case was “an egregious fraud” and gave Ramos a sentence three times longer than any of the other seven defendants convicted to date in the case.

The scheme involved use of inflated land values, false financial statements and worthless mortgage-guarantee bonds to purchase two large tracts of land in Chatsworth and Newhall.

With his own lawyer suggesting that it was “theater of the absurd,” Ramos told Hupp that he was a bona fide businessman who was the victim of the swindle, not the victimizer. Yet he also claimed that the deal could have succeeded.

“Had the state of California, the federal government and the Orange County district attorney’s office kept their nose out of my business, this deal would have been perfect,” Ramos insisted.

Ramos, 38, a flamboyant deal-maker who told a probation officer recently that he spent what prosecutors have alleged was his $2.7-million share of the swindle on “women, cars, booze and real estate.”

Ramos spent a year as a fugitive before federal wiretaps on telephones of relatives led to his arrest in northern Spain last year. Prosecutor Guy N. Ormes, a special assistant U.S. attorney, told Hupp that he believes that Ramos has hidden what remains of his share of the loot.

Of the 10 mostly Orange County businessmen who originally were charged in the scheme, eight have been convicted, one acquitted by a judge, and one still awaits trial.

On Monday, a combative Ramos insisted that he had done nothing wrong and verbally sparred with the judge, who was preparing to sentence him.

Hupp questioned Ramos about his purchase of tax stamps, which he affixed to the Chatsworth deed and which appeared to inflate the value of the land. Hupp suggested that the only reason for doing so was “to misrepresent” the land value.

Ramos shot back, “That is your opinion, sir.”

When the judge pressed Ramos to state what he did with the $2.7 million--very little of which prosecutors have traced--he said he could not answer without access to his business records.

At the center of the criminal case is a 440-acre tract of land near Chatsworth that Ramos and his partner, John Chodak of Laguna Hills, had arranged to purchase for $1,050,000 in early 1984. They paid an appraiser from Huntington Beach $10,000 to prepare an appraisal to fix the value of the property at $18 million.

It was what Ormes described to jurors as a “cranked deal,” designed to justify a maximum loan with no intent to repay.

Critical to getting a loan on the property was a financial-guarantee bond from Glacier General Assurance Co., a now-bankrupt Montana insurer run by Santa Ana businessman John Hayden. The status of charges against Hayden on the Chatsworth deal is now on appeal.

The bond appeared to eliminate all risk to lenders in the transaction. But because Glacier was near insolvency at the time, the bond was worthless. It was issued by Glacier’s Southern California representative, John Wain, who has since died.

Ultimately, two loans were issued by 21 Midwestern and Eastern banks totaling $21 million on both properties. However, the Chatsworth tract was rugged and inaccessible and unsuitable for a housing project there, according to Ormes. Investors were tantalized by promises of construction of a 300-room hotel in Newhall in time for the 1984 Olympics, but the land was in a flood plain and the project was not possible, Ormes said.

The developers defaulted on both loans without making a single payment, the government has charged.

The chief witness in Ramos’ trial, and an earlier trial last year, was Chodak. Like Ramos, Chodak received almost $3 million from the loan proceeds. He was the first defendant to cooperate with prosecutors and pleaded guilty to the swindle. He received a two-year sentence on the charges.

Also testifying for the government was Marvin Weiss, a Los Angeles businessman who was sentenced to three years in prison for his part in the Chatsworth-Newhall swindle.

Bruce Furst, an Orange loan broker who helped arrange the financing, also testified against Ramos. Furst’s previous three-year prison sentence was reduced last week to two years, based on his cooperation. Ormes said that Furst, who has already served some time in prison, should shortly enter a halfway house before his release.

Others convicted in the scheme were loan broker Michael Fairbanks, 29, of Anaheim; appraiser Leo Peterson, 65, of Huntington Beach; David Techak, 37, of Anaheim, who was Chodak’s assistant, and Los Angeles appraiser Charles Mobley.

Hayden, who is still awaiting trial, allegedly received $3 million from the scheme, according to Ormes.

The only defendant acquitted in the first trial last year was developer John Ward, whom Ramos made a partner as a condition of receiving the financial-guarantee bonds.

After the verdict was returned, jurors were particularly interested in what happened to Wain, Weiss’ partner, and the man who made the key decision to issue the Glacier bond. The guarantee bonds, one developer testified, turned financing “from a headache to a snap.”

Wain died an apparently natural death, Ormes said. Because of his short illness and the quick cremation of his remains, federal investigators were at first skeptical. But an extensive investigation turned up no evidence that Wain faked his death, Ormes added.