Suspect Accused of Bank Fraud Is Denied Bail : Crime: The judge points to a ‘lot of suspicious activities’ surrounding San Clemente businessman Douglas Blankenship, including the disappearance of his Rolls.

Douglas P. Blankenship--accused of masterminding a $25-million fraud against financial institutions in several states--was denied bail Thursday by a federal magistrate who said “there are a lot of suspicious activities going on,” including the disappearance of the San Clemente businessman’s gold-colored Rolls-Royce.

In rejecting a defense attorney’s claims that Blankenship is “honest and trustworthy,” U.S. Magistrate Ronald W. Rose said he believes that the defendant is “a substantial flight risk.”

Blankenship, 45, is accused in a 300-page federal indictment of using corporate fronts, phony tax returns, inflated financial statements and various aliases to obtain loans and property from banks and thrifts around the country.

A co-defendant, Michael E. Hilander of Houston, surrendered voluntarily Thursday in U.S. District Court here. Rose ordered him held without bail.

Rose said much about Blankenship is a mystery, including “who he really works for . . . who pays his rent, what his real name is . . . (and) where his assets are.”

Blankenship, Hilander and 13 other defendants--four of them from Orange County--were indicted last week by a federal grand jury in Seattle on charges including racketeering and bank and wire fraud.

Blankenship is being held at the Metropolitan Detention Center in Los Angeles. If convicted, he faces up to 65 years in prison; Hilander, held at the same facility, faces more than 30 years in prison.

Some victims of the alleged fraud--including Beverly Hills-based Great Western Bank--relied on financial statements and tax returns that said Blankenship had a net worth of up to $99 million, even though records from his 1987 personal bankruptcy filing listed his worth at only $7,600.

Regina Gardner, a federal courts investigator, said at the hearing that she received reports that a moving company was emptying out Blankenship’s Capistrano Beach home last week. Garner said she was talking to one of Blankenship’s neighbors by telephone when he told her that “North American Van Lines was clearing out the house,” she said.

What’s more, her office could not find the Rolls-Royce that Blankenship was driving at the time of his arrest.

“That vehicle has now disappeared,” Garner said. “They (the U.S. attorney’s office) cannot account for it.”

Kenneth D. Miller, Blankenship’s defense attorney, argued that his client has been a resident of California since the 1960s and wouldn’t flee the area. In his 1987 personal bankruptcy case, however, Blankenship claimed that he was a Kentucky resident and fought to keep the case in that state, despite creditors’ efforts to move it to California.

Rose also denied bail for Hilander, 48, primarily because of evidence introduced by Garner indicating that he possessed driver’s licenses from three states under three different names. Some of the addresses, she claimed, were “phony.” including one in Huntington Beach.

“It’s just another irregularity at this point, which gives us cause for concern,” Garner said.

On Nov. 19, Rose is scheduled to decide whether Blankenship and Hilander should be turned over to authorities in Washington. Puget Sound National Bank, which authorities say was one of the largest victims of the alleged scheme, is based in that state.