Drug-Related Seizure Hurts Innocent Couple : Fillmore: Pat and Bud Untiedt had no idea that the buyer of their feed store and apartment was a suspected cocaine dealer. But they stand to lose their loan of $70,000.

Pat and Bud Untiedt didn’t particularly want to sell their Fillmore feed store and adjacent apartment three years ago. The 5,000-square-foot property had provided both a home and an income for the middle-aged couple for five years.

But Bud Untiedt, 63, had developed a brain tumor, and the treatment left him unable to work, his wife said. Desperate to sell, the couple made a deal with an employee’s son, who agreed to pay $250,000 for the property.

What the Untiedts didn’t know was that the buyer was a suspected drug dealer. What they couldn’t have foreseen was the federal government’s seizure of the building under a program to discourage drug sales.

What the Untiedts had been counting on was the $70,000 that Dennis Alamillo borrowed from them in a second mortgage to help finance the purchase.

Now it appears that they will never see that money, government officials say. When the property sells--and in the depressed Fillmore market, nobody is willing to predict when that might be--it’s unlikely to bring enough to pay off the primary mortgage holder, let alone the Untiedts, officials say.

“This is crazy,” said Pat Untiedt, 56. “We’re the only people who’ve been hurt by this whole thing. I love my country, but this government scares the hell out of me.”

Federal officials say they are not to blame for the Untiedts’ troubles, although Assistant U.S. Atty. Alejandro Mayorkas acknowledged that “it’s an unfortunate situation.”

The problems began about 10 months after the Untiedts sold the property to Alamillo. He was arrested on suspicion of selling cocaine. Ironically, criminal charges were never filed against Alamillo because prosecution would require the exposure of confidential informants, police officials said, but federal law still allowed the government to seize assets linked to Alamillo’s alleged drug sales.

Police said there was evidence that Alamillo used the phone at the feed store to arrange drug sales and that he completed the deals at a house he owned on C Street in Fillmore. Alamillo could not be reached and his attorney declined to comment.

A federal magistrate gave preliminary approval to the government’s claims to both properties. But under the law, Alamillo had a right to contest the action, and for about a year he fought the government’s claims in court.

During that time, the U.S. marshal’s service, which managed the property, allowed Alamillo to continue occupying the commercial building. Gary Auer, head of the FBI’s Ventura office, said it is not unusual to allow the target of a seizure action to remain on the property while it is pending in court.

“They get to stay in exchange for keeping it up and making the mortgage payments,” he said.

But the Untiedts’ attorney, Donald L. Leach, said Alamillo didn’t keep up the property or make payments on it. On the contrary, Leach said, the building was stripped of everything that could be moved.

“The building in no way resembles the property the Untiedts sold in 1988,” Leach said. The marshal’s service declined to comment on why Alamillo was not evicted for eight months after he stopped making mortgage payments.

The property’s first mortgage, held by Topa Thrift & Loan Assn., has risen from about $180,000 to $263,000, counting unpaid interest and Topa’s legal bills, according to Mayorkas.

With interest and legal fees, the money owed to the Untiedts has grown to about $75,000.

Meanwhile, real estate prices have plunged throughout Ventura County and especially in Fillmore, where the decline in value of commercial properties has been estimated at more than 20% from recent highs, Auer said.

Mayorkas said the government--which like the Untiedts stands to get nothing from a sale of the property--would have no objection to sitting on it until the real estate market improves. But Topa has initiated foreclosure proceedings aimed at selling the property, he said. “They’re not being paid,” Mayorkas said. “They’re an innocent party too.”

Topa attorney Russel Davies said the company feels sorry for the Untiedts but must protect its own interests. Noting the nationwide savings-and-loan crisis, he said: “We would be criticized by federal regulators if we were lax about that.”

Davies said the situation points up the risks involved when a property seller takes back a second mortgage. He said many people are in a similar situation to the Untiedts because of the drop in real estate prices in Southern California.

Mayorkas said the Untiedts apparently took back the second mortgage without knowing much about the buyer or his source of income. “It’s tough when you lend a lot of money to somebody you don’t know,” he said.

Pat Untiedt said she and her husband assumed that if Alamillo’s credit was good enough for a first mortgage, it was probably all right for a second. At the time, she said, the couple was too preoccupied with Bud Untiedt’s illness. “We were very anxious to sell,” she said. “We were going to the doctor five days a week.” Alamillo’s mother, now deceased, had been a faithful employee of the feed store, and they assumed that her son was trustworthy.

After taking back the second mortgage, the Untiedts netted about $88,000 in cash from their sale of the property. But most of that went to pay for the mobile home in which they now live. Although her husband’s tumor was not malignant, it caused some brain damage, and she is worried about future medical bills.

She faulted the federal agencies involved for allowing such situations to occur. “The government is confiscating this real estate and they don’t know what to do with it,” she said.

“I realize there has to be a war on drugs, but . . . when they start hurting people who haven’t had anything to do with the drugs, that’s wrong.”

Correspondent Janet Bergamo contributed to this story.