Grand Theft Trial Begins for Valley Real Estate Whiz

Michael D. Henschel, a Van Nuys real estate man who has been the subject of numerous lawsuits and complaints to law enforcement agencies, went on trial Wednesday on charges of stealing nearly $90,000 from family friends.

In his opening statement to jurors in Los Angeles Superior Court, Deputy Dist. Atty. Thomas R. Wenke said Henschel swindled Gerald and Linda Silverman in a 1991 real estate deal, after the middle-aged couple, neighbors of Henschel’s parents, sought Henschel’s help in investing for retirement.

Wenke said evidence in the case will show that Henschel promised the Silvermans a 10% profit on their investment in the space of several months, but in fact returned only $3,000 of the roughly $90,000 they put into the deal.

In his opening statement, defense attorney Donald Re told the jury of seven women and five men that Henschel had “not defrauded or cheated [the Silvermans] in any way,” and that their problems were of their own making.

Henschel, 46, who was charged in the case last year, faces a single count of grand theft, and a maximum sentence of five years in prison if convicted.

As The Times reported in a May profile, the 46-year-old Henschel, described by friends and foes as a real estate whiz, has faced a barrage of legal problems, but has shown a knack for landing on his feet. At least four times in the past, he has pleaded guilty to felonies or misdemeanors, but has never received a prison term.

In addition to the grand theft trial, which is expected to last at least two weeks, Henschel’s business practices are the focus of a federal criminal investigation involving complaints of bank and bankruptcy fraud.

Expected to last at least two weeks before Superior Court Judge Paul Gutman, the grand theft trial will be a battle over real estate arcana. During his opening, Re jokingly apologized that his use of technical terms might cause jurors to “fall into deep comas.”

Wenke told the jury that Henschel had induced the Silvermans to loan $90,000 against two properties in Burbank and Encino in June and July, 1991. The loans were to have been secured by second trust deeds against the properties.

But according to Wenke, when promised payments were not made and the Silvermans considered foreclosure, they discovered that Henschel had given them a third trust deed on one of the properties and a fifth or sixth trust deed on the other. This meant that other lenders had priority and that, by the time they were paid off, there would be virtually nothing left for the Silvermans, Wenke said.

Wenke said that to further discourage foreclosure efforts, Henschel put one of the properties transferred in the name of a fictitious person, David White, and then filed two phony bankruptcies for White--to take advantage of the automatic stay from foreclosure and other legal actions that bankruptcy provides.

“This is an individual [White] the defendant created simply to transfer title . . . to and then filed for bankruptcy,” Wenke said.

But Re told jurors that Henschel had tried to protect the Silvermans’ investment, arguing that the White bankruptcies were actually designed to stop a bank foreclosure against the property that “would have wiped out Mr. Silverman.”

Re later denied in an interview that he had acknowledged the White bankruptcies were phony. “It will be clear by the end of the case that it was not a false bankruptcy,” he said.