Suspects in Real Estate Scam Caught, but Mystery Persists : Fraud: Two men who claimed to be brothers allegedly bilked investors of $4.8 million in the biggest swindle in Huntington Beach. Their identities remain elusive.

With his $1,000 suits, Mercedes-Benz convertible and flair for smooth talk, prosecutors said, Hector Marsach exuded the good life as he and an associate persuaded scores of Southern California investors to sink their life savings into the early 1980s real estate market.

But in April, 1982, Marsach and his associate, who called himself Pedro Marsach but who police believe is really Hector Manuel Mendez-Marsach, dropped out of sight as suddenly and as mysteriously as they had appeared in Huntington Beach, taking with them, prosecutors said, about $1 million from as many as 340 investors. In all, the men are believed to have defrauded investors out of $4.8 million in what police say still ranks as the city’s largest-ever fraud case.

Almost exactly eight years later, the two fugitives were arrested April 10 at the other end of the country, in St. Petersburg, Fla.

Huntington Beach Detective Ron Pomeroy, who had dogged the men since 1982, discovered their whereabouts and alerted Florida authorities after learning that Mendez-Marsach had applied for credit in the Sunshine State.

“Sometimes it pays to stick with it,” Huntington Beach Police Lt. Ed McErlain said of Pomeroy’s persistence.

Hector Marsach, who police said uses that alias but whose real name is unknown, remained this week in St. Petersburg’s Pinellas County Jail on California warrants for 20 counts of grand theft. Police describe him as the mastermind of the scam. He is being held under $2-million bail.

Mendez-Marsach, 59, was being held under $1 million bail on the same charges.

The men had been on the run since 1982 when the arrest warrants were first issued by Huntington Beach police. According to McErlain, Hector Marsach and Mendez-Marsach--they posed as brothers--opened a Century 21 office in Huntington Beach in 1979 and shortly after established a business called Marsach Investment Co. The business advertised in local newspapers for investors in limited real estate partnerships.

With Southern California’s real estate market in full throttle at the time, police and victims of the swindle said the advertisements drew standing-room-only crowds of potential investors. Hector Marsach, who ran the operation, had to employ about 40 salespeople to keep up with the business, police said.

In meetings with potential investors, Hector Marsach regaled listeners with a stunning American success story. Born dirt-poor in Puerto Rico, he had said, he arrived in New York City in 1952 at age 13 speaking little English. Against incredible odds, including nine cancer operations, Hector Marsach said he rose to become a real estate entrepreneur, living in an expensive house in San Clemente.

The story was a compelling one, but according to investigators, it was also false. Although Mendez-Marsach is from Puerto Rico, they said, Hector Marsach apparently was not. They described him as a con man whose past is so mysterious that to this day they know virtually nothing about him.

Through Marsach Investment Co., Hector Marsach and Mendez-Marsach set up 16 limited partnerships for such projects as apartments, condominiums and office buildings, investigators said. Police now believe the pair never had any intention of following through on the partnerships. Instead, they collected money while delivering promises to investors.

“I put down $62,000 and they were telling me I could make $3 million in six years,” said Lanny Snapp, now 53, a paraplegic from Cypress who was among the investors.

Snapp, an engineer who says he is skeptical by nature, said he was taken in by Hector Marsach’s trappings of success.

“He dressed the part, he looked the part and yeah, I thought he was honest or I wouldn’t have put my money down,” Snapp said.

The end for the Huntington Beach operation came in April, 1982 when some investors began to suspect Hector Marsach was pocketing their money, police said. When two of Hector Marsach’s employees sent a letter to investors seeking to oust him as general manager of the partnerships, police said Hector Marsach and Mendez-Marsach skipped town three days later, leaving behind only Hector Marsach’s toupee and a Mercedes-Benz. They are believed to have taken $1 million with them.

Huntington Beach police later discovered that most of the partnerships were in foreclosure. As a result, investors such as Snapp lost all the money they had put in, police said. Snapp said he had used equity from a house to invest. He wound up having to file for bankruptcy.

“Do I feel bitter? I stuck my foot out there and I got it lopped off,” Snapp said. “My only bitterness is that the guy stole it.”

Snapp added that he doubts, even with the men in custody, that he will ever see his money again.

“I hope they bring them to justice, but for investors 10 years ago, you know there won’t be any money there,” he said.

Hector Marsach and Mendez-Marsach were arrested in a moderate-income apartment complex where Mendez-Marsach was remembered as wearing casual attire and driving a budget car.

“He was a real low-key guy,” said Jane Link, executive director of the Coquina Key Arms Apartments in St. Petersburg. “He was real friendly with all the neighbors. We all liked him.”

Link said Mendez-Marsach moved into the apartments in September, 1988. She said she knew little of his background other than that he claimed to be a retired schoolteacher. Link said she never saw the man who called himself Hector, although police arrested both men in the same apartment.

Mendez-Marsach was found when police ran his name through a credit reporting bureau, McErlain said. Further checking revealed that both Mendez-Marsach and Hector Marsach were opening a florist’s shop in St. Petersburg, McErlain said.

At Pomeroy’s request, St. Petersburg police staked out the apartment complex on April 10 and waited for the two men. Wendell Creager, a St. Petersburg police information officer, said two officers and a canine unit arrested the men without incident when they returned home. This time, they left behind a pet goldfish, which is being taken care of by the apartment management.

Proceedings to extradite the men to California are pending. As of this weekend, neither had waived extradition, meaning it could take weeks to get the necessary paper work together to bring them back.

For Snapp, he won’t be entirely certain that the two men who allegedly took his money are in custody until he gets to look at their faces.

“If they were slick enough to do what they did in 1982,” Snapp said, “I have a feeling it’s not them.”