Fraud Defendant Has Long History of Legal Woes : Courts: Records show that Douglas P. Blankenship of San Clemente is named in a variety of state and federal lawsuits.

Douglas P. Blankenship, the San Clemente man arrested last week on charges that he helped defraud the nation’s financial institutions of $25 million by masquerading as a wealthy real estate developer, has a history of legal entanglements, according to court records.

Besides the criminal charges, Blankenship is named in more than 30 state lawsuits, four federal suits and three bankruptcy cases, including his personal bankruptcy filing three years ago, according to records in Orange County.

Blankenship, 45, was indicted last week by a federal grand jury in Seattle on charges of racketeering, bank, wire and mail fraud, and fraudulent transportation. If convicted, he could be sentenced to up to 60 years in prison.

Federal authorities have accused Blankenship of scheming to defraud financial institutions by using phony financial statements--some indicating a net worth of up to $99 million--to obtain loans or finance property purchases.

Blankenship was among 15 people around the country, including five Orange County residents, who were indicted last week in connection with the alleged scheme. Federal prosecutors claim the 15 used phony tax returns, false financial statements, corporate fronts and various aliases to further the scheme.

A bail hearing is set for today in U.S. District Court here. Blankenship is being held at Metropolitan Detention Center in Los Angeles.

American Savings & Loan, one of the alleged victims of the scheme, investigated Blankenship after he filed for personal bankruptcy. The company claimed in a 1988 filing in federal court here that Blankenship made false statements about his background.

For instance, Blankenship said in a 1981 financial statment that he owned coal mines in Kentucky worth $2.5 million.

“This is misrepresentation,” American Savings & Loan said in its filing. “The Kentucky Department of Mines and Minerals records do not reflect the debtor as an owner-operator of any coal mines located in Kentucky.”

Blankenship repeatedly told people he had received master’s degrees in transportation systems and quantitative methods, and in administration, from the University of Kentucky.

“The university has no academic records on the debtor whatsoever,” American Savings & Loan found.

And the Ph.D. that he claims to have received from Ohio State University in transportation systems and quantitative methods is bogus too, American Savings claimed in its suit.

“Ohio State University has never offered a Ph.D. program in transportation systems and quantitative methods,” according to the suit.

Court records show that Blankenship was employed as an associate planner with the Orange County Transit District from April, 1973, to October, 1976.

But Blankenship claimed in a sworn deposition taken in 1988 that during the same period he was working for the transit district he also was involved in hundreds of millions of dollars of real estate deals.

“From 1974 until 1982, I developed 82 luxury homes located in Capistrano Beach, San Clemente, Beverly Hills, West Los Angeles and other areas,” Blankenship said in the deposition. “I would estimate that during this period of time, I built homes with a value of approximately $68 million.”

He also claimed to have built $250 million worth of condominiums, 12 commercial strip centers, four commercial neighborhood centers, nine office buildings and a mall.

Darryl Paul, an attorney representing Dana Point contractor Alexander J. Muir Inc., claimed in a suit filed in Orange County Superior Court that it lost nearly $100,000 to Blankenship. The contractor agreed to purchase about an acre of vacant land from Blankenship in San Clemente, only to discover later that Blankenship didn’t even own the property.

“There was a lot of monkey business,” Paul said in an interview.

Court records also show that FHP Corp., the Fountain Valley health-care company, went to court to recover money from Blankenship for a real estate deal involving a proposed medical center in Downey.

FHP won a $200,000 civil judgment last April against one of Blankenship’s companies, Pacific Coast National Development Corp. in San Clemente, according to Michael A. Oswald, an FHP attorney. FHP has been unable to recover the money.

The Fountain Valley firm had arranged to lease a building in Downey that Blankenship said he owned.

FHP mistakenly sent lease payments to Pacific Coast National for several months until it discovered that Blankenship had not yet acquired the property. When Pacific Coast National refused to reimburse the money, FHP sued to recover the money.

Times staff writer Kristina Lindgren contributed to this article.