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Agencies Took Years to Act on Alleged Fraud in Desert

TIMES STAFF WRITER

Despite more than 100 inquiries and complaints to half a dozen government agencies, authorities took 13 years to file a lawsuit to halt Marshall Redman’s sales of desert scrubland to naive working-class Latinos.

Another two years passed before the developer was charged May 14 with theft and fraud in a scheme that allegedly has left hundreds of people without title to the land they had worked years to purchase from the developer’s three real estate firms. As many as 250 still live in Third World conditions on High Desert land north of Los Angeles.

Redman, who has pleaded not guilty, faces up to eight years in prison if convicted. A preliminary hearing is scheduled June 20. He remains out on bail.

Despite Redman’s long-standing reputation among investigators, no effective action was taken by prosecutors, state real estate regulators or local zoning officials until the 1994 lawsuit.

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An examination of hundreds of documents and more than 100 interviews paint a portrait of official oversights and bureaucratic buck-passing throughout local and state government:

* Zoning officials in Los Angeles and Kern counties--where many buyers now live without electricity, water or sewer service--cited Redman properties more than 100 times for building and subdivision violations.

None of the citations, however, led to any changes in the High Desert land sales business, officials in both counties acknowledge.

* State regulators revoked Redman’s real estate license in 1973 after finding that he had illegally sold Antelope Valley land. Yet the state Department of Real Estate did not investigate Redman’s use of “translators,” who prosecutors allege were in fact an unlicensed sales team. It was only after prosecutors filed the civil lawsuit that led to a government takeover of Redman’s firms that the state agency also sued to stop Redman.

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* Memos obtained by The Times show that Kern County officials were prepared to prosecute in 1981 but failed to do so. An undercover operation designed to gather hard evidence was abruptly canceled in 1992, with officials citing budget constraints.

* Consumer watchdogs were first alerted to questionable sales tactics in 1989. But the Los Angeles County Consumer Affairs Department gathered more complaints for three years before turning the case over to prosecutors.

* While slow to stop Redman, records show that Kern and Los Angeles counties did not hesitate to cite his customers for building homes without permits, forcing some to tear down structures and move trailers. Even today, Los Angeles County officials continue to refuse water service to some who purchased land from Redman firms because they cannot prove they own the land they live on.

* Father Joshua Lee, a Roman Catholic priest, and Antelope Valley elementary school Principal James King said they each asked Los Angeles County Supervisor Mike Antonovich, whose district is home to many buyers, to investigate the living conditions of Redman customers, including access to water. Antonovich said he doesn’t remember any such appeals. Antonovich did note that he helped create a task force that has cited numerous Redman customers, forcing some off the land they thought they owned, after fielding complaints from neighbors about their substandard living conditions.

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In each case, officials emphasized that they referred the case to other government agencies, insisting that they did everything allowed by their budgets and staff.

But as government officials exchanged memos and pondered, Redman took in hundreds of thousands of dollars in monthly payments from some 1,500 struggling, blue-collar buyers in three counties--people who made meager livings as janitors, cooks and stable hands throughout Southern California. In return, he enjoyed a jet-set lifestyle that included a home in Beverly Hills, country club memberships and a Paris condominium, according to court records.

To each agency, the litany of buyer concerns was familiar: Some were sold land zoned for commercial use only; others purchased illegally subdivided plots or property that the developer did not own. Hundreds discovered that they shared ownership with strangers.

Redman has repeatedly refused to comment. His lawyer, August G. Carloni, said he was “baffled” by the criminal charges. Carloni said many of the questionable sales were because of bad legal advice Redman received in the 1980s.

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When the system finally acted to help the buyers, its solution was Donald W. Henry, a veteran bankruptcy trustee and well-known receiver who was appointed to take control of Redman’s tangled real estate business and begin marshaling funds to repay buyers.

But as in so much of the government’s response to the Redman case, Henry turned out to be part of the problem.

The 49-year-old receiver was fired in November, 19 months after he was named, amid prosecutors’ allegations of mismanagement and wrongdoing. The allegations include charges that he overbilled the receivership, spent funds without authorization and failed to provide a regular accounting of his expenditures, according to court documents. Henry has repeatedly declined to comment.

Under Henry’s tenure, only three Redman customers received clear title, and Henry’s successor said there may not be enough money to satisfy buyers and creditors.

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*

Over the years, more than 100 complaints and inquiries about Redman have been received by the California Department of Real Estate. The agency revoked Redman’s real estate license in 1973 for illegal sales.

DRE officials said that after that, their only options were to seek an administrative order that Redman stop unfair and illegal practices at his three firms, or refer the case to prosecutors.

Officials produced records showing that between 1972 and 1989 the DRE on at least two occasions referred the Redman case to the Los Angeles County district attorney’s office. Prosecutors said they have no record of referrals involving Redman before 1993.

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DRE regional manager Randolph Brendia said: “Because of our name, people perceive any real estate problem to be our job--they assume the buck stops with the DRE. But our administrative remedies only go so far. In the case of Marshall Redman, we made our case, and we made it stick. He didn’t get his license back. There wasn’t much more we could do.”

Eventually the DRE did do more--but only after prosecutors filed suit. In 1994, the agency formally accused Redman of illegally subdividing land and won an order prohibiting him from doing so. DRE officials said the order was filed to give ammunition to prosecutors who had already sued Redman.

But Brendia acknowledged that the DRE had become so frustrated with Redman that the agency was at first reluctant to even pursue the 1994 order. “Our people said, ‘Oh, no, not him again,’ ” he recalled. “They didn’t want to spend any more man-hours on this guy.”

*

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Investigators with the Los Angeles County Department of Regional Planning said their agency failed to follow up after citing Redman two dozen times for illegally subdividing land in the 1980s and 1990s.

“It didn’t take a rocket scientist to see a pattern,” said investigator Emmet Taylor. “Where was the buck gonna stop? People like Redman were making big money doing these illegal subdivisions. We told our bosses about it, but nothing was ever done. Maybe they didn’t want to rock the boat.”

In interviews, top planning officials denied receiving reports on Redman. The mid-level supervisors alerted by investigators have retired, said Rudy Lackner, administrator of the land use regulation branch of Regional Planning.

Investigators acknowledged that they have no idea whether any of Redman’s violations were ever corrected.

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While Redman was being cited without result, another arm of the agency, responding to complaints from desert residents, was aggressively enforcing building codes.

“We had to run off one old couple living in a travel trailer,” said Wayne Zimmer, a former county zoning officer. “They were happy where they were, but they didn’t have permits. My job is to write citations, not be a social worker.”

*

Beginning as early as 1981, Evelyn Turner recalls speaking with hundreds of Redman customers at her agency’s trailer office in Mojave.

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One by one, they got the bad news from the Kern County building clerk: Most could not legally build on the properties. In some cases, the land didn’t even belong to them.

Said Turner: “I just couldn’t understand why we couldn’t do something about it.”

Turner’s bosses said they were doing their job by citing Redman for illegal subdivisions and by issuing citations to some of his customers for illegal building while referring others to lawyers.

County planners cited the developer on 42 occasions for failing to file parcel maps documenting that required improvements such as roads and proper access had been made before land was subdivided. At the same time, Kern County officials cited Redman buyers 22 times for substandard structures in the 1980s, forcing many to tear down shacks and remove travel trailers, according to records.

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But at that point, they didn’t shut the developer down.

“The reason is that the guy was all over the map,” said Ted James, Kern County Planning Department director. “He was using several different companies. Kern County alone is more than 8,000 square miles. That’s quite a few parcels. We just didn’t see a pattern.”

Paul Blackhurst did.

Tipped off in 1990 by a local attorney, the Kern County building inspector talked to real estate agents and others who had witnessed firsthand the fallout from the Redman sales.

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Eventually, he located 100 Redman customers and in early 1991 sent out a questionnaire, which proved to be the cornerstone of the civil lawsuit that eventually closed down Redman’s firms.

At the Kern County Planning Department, the developer already had a reputation. “People kept saying, ‘Don’t waste your time, we’ve been trying to get this guy for years without success,’ ” recalled Blackhurst, now a deputy county counsel.

In 1991, Blackhurst turned over his files to the Kern County district attorney’s office, which did not join forces with Los Angeles to file its lawsuit for more than two years.

*

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For months, Bud Starr couldn’t even look at the boxes of Redman files piled in his office.

“Every time I did,” he recalled, “I wanted to throw up.”

Tipped by Blackhurst, the Kern County assistant district attorney spent months looking into the developer. In 1992, he was ready to go undercover: He had two Spanish-speaking investigators with aliases ready to try to finally make a case.

That’s when his boss pulled the plug.

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“I had 17 investigators for 7,000 felony cases,” said Kern County Dist. Atty. Edward Jagels. “I simply couldn’t spare any of them on an iffy undercover proposition.”

At a convention the next year, Starr met Los Angeles Deputy City Atty. Fay Chu, who had spent months tracking 10 Redman buyers referred by local consumer affairs investigators. The two joined forces and within a year filed the civil lawsuit that shut down the developer’s sales. Chu and Starr said they chose the lawsuit, which led to a government takeover of the developer’s three firms, as the best way to ensure a maximum recovery for Redman customers.

But in the two years it took prosecutors to act, Redman sold to at least 400 new customers, according to court records.

Said Chu: “It’s hard to stop a developer who regards citations for his illegal activities as merely the price of doing business.”

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As for her own agency’s role, she said the Redman investigation was slowed by the demands of other cases and the difficulties of interviewing Spanish-speaking buyers.

“Redman was slow-going,” Chu said. “Because of the language barrier alone, it often took six hours to interview one victim to find out what really happened.”

After authorities filed the civil lawsuit, Los Angeles County prosecutors opened a criminal investigation. Redman settled the lawsuit last year, agreeing to pay $580,000 in damages without admitting any wrongdoing.

Assistant Dist. Atty. Don Tamura, head of the agency’s real estate fraud unit, said prosecutors had decided to wait until the lawsuit was resolved before bringing criminal charges, which came May 14.

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Reflecting on the case’s long and twisted history with government officials, Tamura said: “It’s a surprise to me it took this long to get to my door.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Key Players in the Case

State and local authorities tracked questionable land transactions by Marshall Redman’s three firms for 13 years before taking legal action that stopped the developer’s sales of High Desert land to working-class Latino families. After further investigation, Redman was charged with seven felonies May 14. He has pleaded no guilty. Here are the major players in the Redman case:

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MARSHALL REDMAN, DEFENDANT. Redman is accused of theft and fraud in a desert land sales scheme

DONALD W. HENRY, FIRST COURT-APPOINTED RECEIVER. Henry, who was named in 1994 to untangle the finances of the Redman businesses, was fired amid allegations of mismanagement and rong-doing after 19 months.

FAY CHU, DEPUTY LOS ANGELES CITY ATTNY. Chu did most of the legwork in preparing the 1994 lawsuit that finally put the Redman firms out of business.

C.M. “BUD” STARR II, KERN COUNTY ASST. DISTRICT ATTNY. Starr helped prepare the 1994 lawsuit along with Chu.

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BETTY STARK, SUPERVISING INVESTIGATOR FOR L.A. COUNTY’S DEPARTMENT OF CONSUMER AFFAIRS. It took her office three years before referring the case to prosecutors in 1989.

EVELYN TURNER, KERN COUNTY BUILDING TECHNICIAN. Turner had to tell Redman customer not only that they couldn’t legally build on the land but in many cases the property didn’t even belong to them.

MIKE ANTONOVICH, LOS ANGELES COUNTY SUPERVISOR. Antonovich said he can’t remember being asked to investigate how Redman customers were being refused water rights in the Antelope Valley.

DON TAMURA, ASSISTANT L.A. COUNTY DIST. ATTY. Tamura filed charges against Redman May 14.

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