Officeholder Says Fiance Took $159,000 From Her : Crime: A months-long campaign by Inglewood Councilwoman Judith L. Dunlap leads to his arrest. His attorney says he is innocent.

When county marshals showed up at Inglewood City Hall last year with a court order attaching part of newly elected City Councilwoman Judith L. Dunlap’s salary as part of a rent dispute, Dunlap said publicly that her financial troubles had been caused by a long illness.

But another source of financial troubles, according to court documents and testimony, was an earlier romantic relationship with Steven Michael Ferguson, who allegedly fleeced her out of more than $159,000. By the time the relationship ended, Dunlap said she had been devastated emotionally and financially and left unable to pay her rent.

What made a bad situation worse for Dunlap was that Ferguson may have used some of the money he allegedly took from her to make more than $100,000 in court-ordered restitution payments in an earlier criminal case involving fraudulent bank loans, a prosecutor said during a preliminary hearing in that case.

Those restitution payments were part of a plea-bargain agreement that required Ferguson to serve no prison time, despite a subsequent probation report that strongly recommended incarceration. The report described Ferguson as a man who posed a high degree of risk of victimizing others if he remained free.

Outraged at what Ferguson allegedly did to her, and at the legal system that she believes permitted it, Dunlap waged a months-long campaign to have authorities bring criminal charges against him, assembled information on Ferguson’s activities and bombarded police and prosecutors with phone calls demanding action. All this came before she was elected to the council in June, 1993.

Dunlap eventually persuaded an LAPD fraud detective to investigate Ferguson, who was arrested and charged with three counts of grand theft of more than $350,000 from Dunlap and two other alleged victims. For the past year, he has been in County Jail awaiting trial.

Ferguson’s attorney, H. Clay Jacke II, said his client is innocent, a legitimate businessman who had a run of bad business luck.

“When all is said and done, it will shed a far different light on this than what she (Dunlap) has been saying,” Jacke said.

Dunlap said she is still trying to put her life back together.

“I lost everything I had,” said Dunlap, who declined to comment further.

Court documents and interviews paint a picture of Ferguson as a man who while posing as a doctor was able to persuade numerous banks and individuals to hand over almost $1 million in loans, lines of credit and investment funds on not much more than his good name--or rather, names. He used several, according to court records.

Ferguson, whose age is variously listed in court documents as 43, 39, and 35, is a former St. Louis, Mo., restaurant/lounge manager who apparently came to California in the early 1980s. According to his attorney, he never attended medical school. A sturdily built, slightly graying man, he manages to appear dignified even while wearing orange jail coveralls in court.

In 1988, Dunlap, now 49, a divorced Inglewood elementary schoolteacher, began what she has described as a personal relationship with the father of one of her former students, a man she knew as “Dr. Michael Stevens.”

Although she knew Stevens was married, Dunlap said he told her that he was getting a divorce.

They became engaged in 1988, Dunlap testified. Stevens also revealed to her that “Dr. Michael Stevens” was his “corporate name”; his real name, he said, was Dr. Steven Ferguson.

Dunlap testified that at Ferguson’s urging she gave him substantial sums of money to invest on her behalf or as personal loans, including $50,000 from a loan on her El Toro home to buy a Burger King franchise and $40,000 from her teacher’s retirement account for special medical care that he said he needed.

“He had my complete trust,” Dunlap testified.

In 1989, Dunlap testified, she learned that Ferguson had been arrested in Orange County, but Ferguson told her that it was simply because of a problem with his driver’s license.

The arrest did involve a driver’s license problem: According to court testimony in the bank fraud case, Ferguson had had three California driver’s licenses since 1982, in three different names. But unknown to Dunlap, the arrest also involved charges of felony bank fraud against Ferguson.

According to court records, in 1985 and 1986 Ferguson, using the name Dr. Mark C. Stevens of Stevens Medical Group Inc., had obtained $100,000 in loans from Union Bank in Beverly Hills, which were not repaid. About the same time, he also obtained more than $300,000 in other loans and lines of credit from a variety of credit card companies and Los Angeles area banks, most of which were never repaid, according to court records.

In 1989, Ferguson was arrested on multiple charges of grand theft in obtaining the Union Bank loans and perjury in obtaining the driver’s licenses.

Three months later, in a plea bargain with the Torrance branch of the district attorney’s office, Ferguson pleaded no contest to one count of perjury before then-Torrance Judge Cecil J. Mills, now supervising judge of Los Angeles criminal courts. The other, more serious charges were dropped. The plea-bargain deal specified that Ferguson would serve no prison time if he paid $111,000 in restitution to Union Bank.

Dunlap was unaware of any of this, she said. She later testified that when she sold her home in 1990, receiving $97,000 in equity, she gave almost all of it to Ferguson for real estate investments and personal loans. That was the same month that Union Bank reported that Ferguson’s restitution had been paid in full.

A month later Mills sentenced Ferguson to three years probation, despite the highly unfavorable probation report. In 1991, Mills expunged Ferguson’s felony conviction from the record.

Shortly after he paid the restitution, Ferguson told Dunlap that he was going back to his wife. About the same time, she left her teaching job. She later reported suffering a stress-related intestinal ailment, blackouts and irregular heartbeat; she lost 40 pounds.

In August, 1990, Dunlap testified, someone who knew Ferguson finally told her the truth about him.

“I learned that everything he ever told me was a lie,” she testified.

Dunlap began researching Ferguson’s financial dealings. She also filed a complaint with the district attorney’s office about the earlier plea bargain with Ferguson. At the very least, she believed, a man charged with major fraud should not have been allowed to make huge restitution payments without anyone checking to see if the money was obtained illegally.

Dunlap said she never received a response to her complaint.

Mills defended the probation sentence, saying that had he sent Ferguson to prison, Union Bank might never have received restitution. He said there was no indication at the time that the restitution payments were not legitimately obtained.