Tangled Permit Case Is ‘Weird,’ Judge Says : Courts: Couple is accused of illegally erecting home. At a hearing, they call an official dishonest. And a key witness has died.

The judge took one look at the case and said with all the wisdom of his 28 years in criminal justice: “Something weird is going on here.”

Rendered almost speechless by its weirdness, he told the opposing parties that “when you see a case like this, you say, ‘Oh my God.’ ”

And that was before the Northridge earthquake knocked his court out of commission and a key witness died, apparently of an alcohol overdose, three days before he was to testify that he paid $75,000 in bribes to county officials.

A pretrial hearing in the case got started last week with two days of testimony from the first of 20 witnesses who are to be called in a highly unusual motion to dismiss a misdemeanor zoning case.

The defendants, a Topanga couple charged with 14 counts that accuse them of building a 700-square-foot rental house without permits, allege in their defense that they are being prosecuted in retaliation for blowing the whistle on a dishonest county employee.

As a result, they are being allowed to hold a sort of trial-within-a-trial, a hearing at which they can lay out their defense accusing county officials of corruption.

In the hearing which continued Monday, Kathleen Kenny and Art Starz are attempting to convince Santa Monica Superior Court Judge James A. Albracht that they are being harassed by a building official who they say they exposed in a newsletter mailed to 3,000 Topanga residences.

During two days of strained testimony last week, Kenny recounted her three-year dispute with county officials in such expansive detail that Albracht frequently interrupted in frustration, at one point saying he didn’t need to know the “Gone With the Wind panorama” of every incident.

Kenny and Starz contend in court documents that they spent thousands of dollars trying to get a building permit, but that it was withheld because they refused to pay bribes.

“The question is, why didn’t they get the permits?” the couple’s attorney, James Fosbinder, asked Albracht in court.

“We maintain it’s because they didn’t make the payoffs that were attempted to be extorted from them. . . . They have been tortured and harassed by a crooked building inspector,” Fosbinder continued.

The county employee they are accusing, district engineering associate Grant Lawseth, is expected to be called as a witness this week.

Fosbinder said he will also call Lawseth’s wife to explain a trail of complicated real estate transactions. In an earlier court hearing, Fosbinder said the transactions showed that she and her husband apparently received “discounted real estate or gifts of real estate” from individuals seeking building permits.

Lawseth has declined to answer any questions about the assertions made against him, saying he was precluded from discussing the case while it is being tried. But he angrily denounced the couple and their lawyer, saying their accusations are false.

“It’s unbelievable,” he said in a telephone interview. “It’s really incredible that people can make these allegations. Who is this guy who’s all of a sudden coming up here and manufacturing these stories?

“Who is this clown? None of the stuff he is saying is even reasonable.”

The case, originally filed in August in Municipal Court, was elevated to Superior Court after several Municipal Court judges declined to hear it.

In a three-hour pretrial hearing Dec. 16, Albracht said it appeared to him the case had “grown so far out of proportion that, as a person involved in the criminal justice system for 28 years, I say to myself something weird is going on here. Something very weird is going on.”

Ultimately though, Albracht approved calling all but 9 of the 33 witnesses Fosbinder wanted to subpoena in his attempt to establish the defense argument that Lawseth is part of an extortion enterprise.

The hearing was scheduled to begin Jan. 18, but was postponed when the Santa Monica courthouse was closed due to damage from the Northridge earthquake. It finally got started on Jan. 31 in a makeshift courtroom in the basement of the Malibu courthouse.

In her first day on the witness stand, Kenny said she believed that she was solicited for a bribe by a county health inspector, Arnold Fielding, during hours of rambling conversations, parts of which she tape-recorded. She said Fielding introduced himself to her on the first of 16 visits by saying, that “the winds were all blowing up” and he had been sent “to nail her.”

Reading from a two-inch-thick stack of transcripts of those tape recordings, Kenny quoted Fielding as telling her that her house was fine, but that he was being forced by others to pressure her.

According to her transcripts, Fielding told Kenny, “Jump in the boat. . . . I can protect you and assist you and help you if you don’t put barriers in the way.” Kenny testified that he told her: “I’d be more than glad to get Grant (Lawseth) down here to look at your property and say, ‘Hey, what can we do?’ ”

Another time, she testified, Fielding asked her: “So you can’t figure out a way to generate some cash?”

Noting, however, that she did not say that Fielding ever specifically asked for money, the judge said in court that he found the relevance of Kenny’s testimony “tenuous.”

But Fosbinder argued that after 16 visits in which Fielding never cited the house for any violation, it was a reasonable conclusion that he was waiting for Kenny to offer money.

The hearing, which will probably continue at least through this week, offers a preview of the testimony Fosbinder plans to present in a separate racketeering lawsuit he has filed in federal court against Los Angeles County on behalf of Kenny and Starz. That case, seeking civil damages under the U. S. Racketeer Influenced and Corrupt Organizations Act, was filed shortly after criminal charges were brought against the couple by county officials, acting on a report by Lawseth.

County officials have suggested Fosbinder filed the racketeering suit as part of a defense strategy, but Fosbinder said he informed Lawseth that he was preparing it long before the criminal charges were initiated.

The cases arise out of a three-year battle between Kenny and Starz on the one side, and the Calabasas office of the Los Angeles County Division of Building and Safety on the other, over the couple’s plans to develop three tiny lots in the Fernwood Pacific area of Topanga.

The couple lives in a 600-square-foot house they built on one of the lots with proper permits. They are now constructing a house on a second lot after winning a court order requiring the county to issue them building permits.

On the third lot, they refurbished a pre-existing structure in 1990 without taking out permits. They contend they received oral permission from county officials to proceed with the improvement under the “continuing maintenance” rule of the Building and Safety Code.

Their problems began, they say, after they spoke at a community meeting in favor of an unpopular development proposal called Canyon Oaks Estates. Over the next few weeks, they were visited by inspectors from about 15 government agencies responding to complaints about them, they said.

In June, 1992, the county building authorities summoned the couple to a hearing before Deputy Dist. Atty. Joan Clay Manley, at which they were ordered to obtain the required permits for the improvements. Manley filed criminal charges a year later when they still had not obtained permits.

Kenny and Starz contend that they provided everything that was asked at the hearing, spending $8,000 on application and professional fees. They say the county has no reason to deny the permits because the house, which had been completed without permits, meets all legal standards.

Manley said that’s not the issue. It should not have been built at all.

“If you build a structure, remodel a structure or alter a structure, building permits are required,” she said.

When asked by the judge last month what penalty she would demand if she prevailed, Manley said the house should be torn down and the defendants ordered to pay the cost of prosecuting the case.

Kenny and Starz, meanwhile, saying their application for a building permit was in order, had begun to focus on Lawseth, the assistant supervisor in the Building and Safety Division’s Calabasas office, as the source of the delays.

They voiced their growing suspicions in several issues of a newsletter called “The Balance Sheet,” which they bulk-mailed to every residence in Topanga.

The March, 1993, issue led with an article titled, “Who is Grant Lawseth?” It described two real estate purchases for which, it said, records show Lawseth paid about $875,000. It also listed dozens of recent building permits issued “without the usual three-year delay,” including a new house “in an active landslide zone, in less than 90 days from the date of application.”

Later, Fosbinder cited the newsletter story in the hearing before Albracht, saying in court that the couple’s research uncovered a pattern of wrongdoing and precipitated the filing of charges against them.

Manley said that she has made no independent attempt to investigate any allegations against Lawseth, who has accompanied her to numerous court hearings on the case.

“That’s merely hearsay, unsubstantiated by any facts,” she said. “Right now I am gathering the evidence and straightening out the Starz and Kenny case.”

Fosbinder said during last month’s hearing that he would submit “a volume of evidence of real estate transactions that appear to involve permits for favored individuals in exchange for discounted real estate or gifts of real estate.”

For example, a set of handwritten documents recorded with the Los Angeles County registrar-recorder indicates that a Wendy Adams--who is later identified in the documents as a single woman and then as Grant Lawseth’s wife--received property in Agoura from a James Melvin Adams, listed as her husband. A half-interest in the property was later transferred to Grant Lawseth, and the two of them ultimately sold it as husband and wife.

Fosbinder said in a previous hearing on the case that the hand-writing throughout the documents never varies, suggesting to him that the same person filled out all the deeds. He said he didn’t know precisely what the documents mean, but planned to ask Wendy Lawseth to explain them this week in court.

The already convoluted case took a new twist when prospective witness Alan Pacella, a Topanga property owner who alleged that county officials extorted money from him, was found dead in his West Los Angeles apartment three days before the hearing was scheduled to begin.

The couple’s federal court racketeering suit said that Pacella would testify that the extortion began after Lawseth ordered a halt to grading work that was necessary to conduct soils testing in preparation for building a house. The federal complaint said Pacella would testify that he paid Lawseth a combined $75,000 on behalf of himself and two friends who owned lots next to his to have several stop-work orders lifted. None of the houses was ever completed.

Detective Pat Anguiano of the LAPD’s Pacific Division said homicide is not suspected in Pacella’s death, but that the investigation remains open pending determination of the cause of death.

A spokesman for the Los Angeles County coroner said a preliminary finding that Pacella died of an accidental overdose of alcohol and possibly other drugs must be confirmed by toxicology tests that have not been completed.