Panel Formed to Protect Victims of Land Fraud

Calling for an “early warning system” for land fraud, the Los Angeles County Board of Supervisors on Tuesday created a task force to protect customers of such developers as Marshall Redman, charged last month in a series of desert land sales to unsophisticated Latino buyers in the Antelope Valley.

Citing disclosures on the Redman property sales contained in recent Times articles, Supervisor Mike Antonovich said the lack of response of several county watchdog agencies to the land sales--which spanned more than 16 years--was inexcusable.

Antonovich called for Dist. Atty. Gil Garcetti to appear before the board in two weeks to explain why charges were not filed sooner in the Redman case, despite numerous warnings of the allegedly bogus sales.

“The fact that one slick salesman could run roughshod through the state and local regulations to bilk so many people certainly does not speak well for these regulatory processes,” Antonovich told the panel. “A number of questions must be asked and new solutions found to prevent the reoccurrence of these schemes.”

Supervisor Gloria Molina directed the formation of a group to offer immediate help to the estimated scores of Redman customers who live in the far-flung Hi Vista area of Los Angeles County, many without utilities or running water.

She called for the county’s director of public works to return in 30 days with specific steps required to “provide legal, technical and administrative remedies to the defrauded property owners.” Molina said the county should work to bring water service to affected customers, as well as electricity and building permits necessary to secure county services.

“The system certainly did fail,” Molina said. “Many of these people whose intentions were to own a piece of property became victims. Now we need to work with them and operate as their advocates. These families have nowhere else to go. All their money was invested in these properties. So let’s help them get to the bottom of this.”

Between 1978 and 1994, three companies operated by the 67-year-old Redman sold undeveloped high desert land to about 2,500 mostly working-class Latinos who were allegedly promised that water and utilities would soon be provided on parcels that remain desert outposts.

Many other Redman customers were allegedly sold land zoned for commercial use only or plots that the developer did not own, prosecutors say.

Redman was arrested last month on seven felony charges stemming from the sales. He pleaded not guilty and his attorney says problems associated with the sales stem from bad legal advice the developer received in the 1980s. Redman is out on bail.

Antonovich asked that a task force of county government and industry groups return in six months with recommendations to stem land fraud schemes. He also called for an inquiry to determine whether “changes need to be made to state law regarding the use of contracts of sale,” such as those used by Redman’s firms.

Under the land sale contracts, Redman kept the deed to properties until customers finished making monthly payments. The arrangement has left hundreds of buyers unable to produce documents the county says it needs to offer such services as water.

Pastor Herrera Jr., director of the Los Angeles County Department of Consumer Affairs, said the county should consider new laws to require public disclosure of such land sale contracts, and whether to require escrow and title searches on all property sold within the county. Currently, land sale contracts do not need to be disclosed under law.

“These victims wouldn’t be victims today if a title search was done to explore the status of the land they bought,” said Herrera, who was asked by Molina to spearhead the county report on reforms. “The Times stories pointed out some real holes in the system. Rest assured changes will be made.”

Supervisor Zev Yaroslavsky criticized county investigators for not recognizing the red flags of the allegedly illegal sales when visiting the properties of several Redman customers to cite them for building code violations.

In the early 1990s, Antonovich helped form a task force to cite hundreds of high desert residents--many of them Redman customers--for zoning violations and building without permits. Several were removed from their properties.

Antonovich aides said the supervisor received numerous complaints from residents about substandard structures, prompting the formation of the task force, made up of health, building and fire investigators.

On Tuesday, Yaroslavsky said the task force should have looked beyond its narrow focus of upholding the building codes to see hundreds of victims in real need.

“What happened? Why weren’t alarm bells set off when our people were sent out to clear them off the land? Shouldn’t that have set off some kind of a warning bell among our inspectors to say, what the hell was going on here?

“You had a population of people who are living on land who were undoubtedly telling our county personnel similar stories,” Yaroslavsky continued. “Where did things break down in-house? Why didn’t our building inspectors or public works people come back and say, ‘We have a problem here?’ ”

Yaroslavsky said it was ironic that while government took years to act on the developer’s sales program despite mounting evidence, it was quick to move the victims from their land on the slightest provocation.

“What got to me is the amount of time it took for the victims to get attention. That time was long, but the amount of time it took to get people off the land was like two seconds, which says something about our state of mind here,” he said. “Our workers need to be sensitized to the fact that if they see circumstances that don’t look right, maybe there’s a problem here.”

Added Molina: “Too many people in our system said, ‘This is not our job. I just do citations.’ There was far too much of that kind of thinking. Sometimes we have to send a signal to the bureaucracy that it isn’t just about your part, it’s about what really is going on.”

Antonovich on Tuesday also criticized the county district attorney’s office for its delays in filing charges in the Redman sales, despite having been informed of the alleged scheme by several local agencies, including his own office, which he said referred cases to county prosecutors in 1994 and 1995.

“The district attorney promised to actively pursue the cases,” Antonovich said, “but no charges were ever filed.”

Assistant Dist. Atty. Don Tamura, head of the agency’s real estate fraud unit, said prosecutors had known about Redman since 1993 but decided to delay criminal charges until other agencies--the offices of the Los Angeles city attorney and the Kern County district attorney--filed a civil lawsuit against Redman in 1994.

“There’s always been a plan to approach this case in a specific manner,” Tamura said. “We haven’t varied from that.”

He added that a task force comprising state and local agencies--including the county Department of Consumer Affairs, the state Department of Real Estate and the district attorney’s office--already meet regularly to discuss land fraud cases, including the Redman sales.

“Antonovich says there should be a task force? Well, there’s already a task force,” Tamura said.

Also on Tuesday, attorneys for Redman’s creditors packed into Los Angeles Superior Court Judge Ernest M. Hiroshige’s courtroom to try to pry money they said they were owed from receiver Richard Weissman, the man hired to clean up the financial mess.

Weissman and local and state officials argued that no money should be disbursed until the receivership’s assets are thoroughly inspected. That way, they argue, banks and wealthy investors able to afford attorneys won’t drain the receivership, leaving no assets for the hundreds of Latino families Redman allegedly defrauded.

The creditors’ attorneys argued that their clients have a right to the assets they lent Redman, especially assets that have not been identified as part of the alleged fraud. “These parties here today are all victims,” said Jules Kabat, attorney for First Charter Bank. “Their rights are being trampled.”

Hiroshige refused to dole out any assets, ruling that Weissman needed to make a full report for a July 16 hearing.

Outside the courtroom, Kern County Deputy Dist. Atty. C.M. “Bud” Starr called the ruling “great news for the victims.”

“We were concerned that well-represented past lenders were going to come up here and cut up the corpus of the receivership,” Starr said. “All those people out in the desert can feel a lot more secure because the judge is on top of it.”

Meanwhile, Weissman said he planned to visit the offices of several supervisors today to press for a temporary solution to get water and utilities to Redman customers in Los Angeles County while authorities determine land ownership issues.

“We’re about to come into the hot season,” Weissman said. “These people need our help and they need it now.”

Glionna is a Times staff writer and Riccardi is a correspondent.