Pair Accused of Running a Scam on Homebuyers

In bold newspaper ads and printed flyers, a Glendale company boasted that with its help, you could buy a house with no money down.

But police say this so-called creative financing plan was nothing but a scam that cost 19 customers and investors about $70,000 over a three-month period that ended last February.

Each prospective homebuyer who contacted Michael James Dunn and Paulette Ruel, co-owners of PM Enterprises, was asked to hand over $2,000 or more in advance fees. But the pair pocketed the cash, then abruptly abandoned the business, police allege.

Many of the victims could ill-afford to lose the money.

“These people were looking for their dream house,” Glendale Police Detective David O’Connor said. “What little money they had saved for that dream is wiped out.”

After a hearing Tuesday, Glendale Municipal Court Judge Joseph DeVanon ordered Ruel, 29, to stand trial on 19 counts of grand theft.

The judge dismissed two other theft counts--one because the theft occurred in Orange County and the other because the customer lost no money. He set a Dec. 4 arraignment for Ruel in Pasadena Superior Court.

Investigators said Ruel banked thousands of dollars as a result of the scam and drove a 1990 Jaguar convertible. But after Tuesday’s hearing, Ruel told the judge she could no longer afford a private attorney and would need a public defender.

Dunn, 41, who called himself Michael Stanford in Glendale, was arrested in June by Las Vegas authorities in connection with stealing money in an earlier real estate scheme there.

While fighting extradition, Dunn persuaded a Las Vegas justice of the peace to lower his bail. He posted bond by putting up property, which authorities said they later determined he did not own, and failed to appear at later court hearings.

Court officials have issued two no-bail warrants for Dunn’s arrest, but he remained at large early this week.

“We’re actively pursuing any lead,” said Las Vegas Metropolitan Police Detective Jeff Dick. “He’s a pretty hot item for Glendale and for Las Vegas. . . . We just hope this guy’s still in the country.”

The Las Vegas charges stem from allegations that Dunn stole almost $12,000 in advance fees from four people after offering to sell them houses, or condominiums, that he did not own, Nevada authorities said.

“It’s not an old scam, and it’s not a very common one--fortunately,” said Frank Ponticello, a Clark County, Nev., prosecutor. “It just takes a real smooth talker. And Dunn is a real smooth talker.”

Investigators say Dunn and Ruel operated their PM Enterprises business in Buena Park, Orange County, during 1990, before relocating to Glendale in December.

The partners shared space with Inter-Cal Properties, a real estate business, at 425 W. Los Feliz Road. They offered no-down-payment financing to customers brought in by ads and Inter-Cal’s real estate agents, investigators said.

PM Enterprises catered to people who believed they could afford monthly home mortgage payments, but did not have the hefty down payment usually required by lenders.

Police say Dunn and Ruel promised that their firm would buy a house, then resell it to the customer without the down payment.

Most of the victims were unsophisticated buyers trying to get a first house with modest resources, investigators said.

Several business people say they also were stung.

Martin Satrustegui, a former Inter-Cal agent, said one of his clients was so anxious to sell his house in Los Angeles that he agreed to put up the $2,000 advance fee for a prospective buyer who applied under Dunn and Ruel’s no-money-down plan.

“The time went by, and nothing happened,” the agent said.

Dunn and Ruel disappeared with the money, he said.

The home-seller, who lost the $2,000 advance, “got mad, so I had to pay him out of my own pocket so he would cool off,” said Satrustegui, an Atwater Village resident.

Satrustegui has been attending Ruel’s court hearings, hoping Ruel will be ordered to make restitution.

“I want to get my $2,000,” he said. “But more than the money, the principle is important.”

Robert Pace, who owns a property management business in Whittier, said a friend at Inter-Cal persuaded him to make a short-term loan of $21,200 to PM Enterprises in January. Dunn and Ruel claimed the cash was needed because all of PM’s funds were tied up in tentative home sales.

Pace said he believed it was a safe investment. Dunn and Ruel showed him a receipt indicating the company had $500,000 in an escrow account, he said.

But O’Connor, the Glendale detective, testified Tuesday that this $500,000 was based on the deposit of a check that later bounced.

When his loan was not repaid, Pace said he tried, unsuccessfully, to find Dunn and Ruel.

“They did a good job of hiding,” he said. “It really makes me angry.”

Before Tuesday’s court hearing, Ruel’s attorney, Donald Levinson, denied that his client cheated her customers, even though PM’s customers never moved into their dream houses. “There were no homes purchased, because the times were bad, and people couldn’t qualify,” Levinson said.

He also maintained that Dunn was “the brains behind the business,” not Ruel.

“There’s no question about it that she’s being made a scapegoat,” the lawyer said. “Because she is the girlfriend and because she signed papers and is the only one available, she’s the only one being heavily prosecuted.”

“She may have been a follower in that he was the leader of the two,” Deputy Dist. Atty. Stephen M. Plafker said. “But I have no doubt that she was an active participant with full knowledge of what she was doing.”