Judge Frees Assets of 4 of 5 Fraud Suspects

A federal judge has found there is insufficient evidence to continue freezing the assets of four Glendale business people accused in a lawsuit of bilking 70 investors out of $10 million in a complex real estate scheme.

But after a hearing in Los Angeles federal court last week, Judge Robert M. Takasugi did grant a preliminary injunction that restrains the holdings of a fifth defendant in the suit, Glendale real estate agent Rodney B. Swanson.

The ruling was a setback for the investors, who allege that Swanson was merely a “shill,” who lured them into money-losing deals that benefited the other principal defendants.

Takasugi said that, although he had questions about some of the transactions, the investors had not justified an injunction against Francis J. Lanfear and Edward D. Groves, owners of Central Trust Deed Co.; accountant John T. Minnick, and Lois McCauley, president of Verdugo Escrow Co.

“I hoped the judge would rule according to the facts,” attorney John Gaims, who represents McCauley and the escrow company, said after the hearing. “My clients were not involved in any conspiracy to defraud the plaintiffs in any manner.”

Finley Taylor, attorney for Lanfear and Groves, said the investors had not demonstrated that his clients acted improperly.

“You can have suspicions, but that’s not good enough in a court of law,” he said.

In September, the investors’ attorney, Larry C. Russ, filed suit and obtained a temporary restraining order, briefly freezing the assets of the five defendants. Russ said he feared they would move their holdings so the investors could not claim the assets.

Last week’s ruling, which kept a freeze only on Swanson’s assets, was something of a hollow victory, Russ said in an interview Monday.

“He has very little in the way of assets at the present time,” Russ said.

“The judge is being very careful,” the attorney added. “It’s a dramatic remedy we’ve asked for. He just wants to put us to the task of giving him a little more evidence.”

Swanson persuaded Glendale-area residents to invest in real estate projects, the lawsuit alleges. After the investments were made, Swanson and his associates would secretly transfer ownership of the land, or borrow against it, draining the property of its value, the suit alleged.

The allegations are under investigation by the district attorney’s office, but no criminal charges have been filed.

Russ said Swanson appeared at a deposition in connection with the lawsuit shortly before the Oct. 17 hearing. He said Swanson refused to answer questions, citing his Fifth Amendment right against self-incrimination.

Swanson did not appear at last week’s hearing, or send an attorney to represent him. He could not be reached for comment early this week.

Russ said he next will seek a court ruling to compel the defendants to provide documents that may help substantiate the case. The attorney said he hopes to gather more evidence, then return to court to seek a new freeze on the principal defendants’ assets.