U.S. Seized Land Developer Sold to Drug Suspect

A firm owned by developer Marshall Redman, charged with running a massive land fraud scheme, received $121,800 in cash payments for high desert land--money that a federal judge later ruled had come from drug trafficking, The Times has learned.

As a result, federal prosecutors seized three tracts of land in Kern County in 1994 that Redman’s company had sold five years earlier to suspected drug dealer Miguel Cervantes Pulido, federal court records show.

Los Angeles Police Department narcotics investigators had interviewed Redman about the sales in 1992. At that time, Redman said his real estate firms routinely avoided state and federal requirements to report cash transactions of $10,000 or more within 15 days to the Internal Revenue Service, according to court documents. Neither Pulido nor Redman was charged with any crime in connection with the investigation.

“When we receive large amounts of cash from them, we deposit it in our bank accounts, you know, some on this day, some the next, and so on, in amounts less than the reporting requirements so that we don’t have to involve ourselves with the IRS,” LAPD search warrant documents quote Redman as having told investigators.

Redman recently declined to comment on the transactions. He faces theft and fraud charges in what authorities allege was a massive desert land swindle that victimized as many as 1,500 low-income Latino buyers.

When recently questioned by The Times, a Redman lawyer produced documents showing that the transactions between Pulido and Redman had been reported to the IRS three years after they took place and several weeks after Redman was interrogated by police.

Another lawyer representing Redman, Harland W. Braun, said the fact that the developer deposited the funds into his accounts in amounts less than $10,000 does not make him a knowing accomplice of drug traffickers.

“There are a lot of people like Marshall Redman who don’t like to file reports with the government and that, essentially, was what he was avoiding,” Braun said. “He deposited the money into his own accounts. He paid taxes on the money, so there’s no accusations of tax evasion.

“At the time these transactions took place, this was a very confusing area of the law. But the point is, they had to prove he knew it was illegal to deposit money in such a fashion. And that was not the case. No one came in to Redman and said, ‘Hey, I’m a drug dealer and here’s what we have to do.’ ”

Pulido was convicted in 1992 of forging immigration documents and is now a federal fugitive. Prosecutors said it is not uncommon to seize the property of suspected drug dealers--even though they have not been charged or convicted of drug offenses--if evidence suggests it was acquired with drug profits.

The federal forfeiture lawsuit stated that the land was bought with “the proceeds of illegal narcotics trafficking” and identified Pulido as a drug trafficker. In a sworn statement in a prosecutor’s files, an LAPD narcotics detective said that Pulido was one of five men who ran a ring “involved in trafficking cocaine, heroin and marijuana from Mexico to the United States and [the ring] had been netting millions of dollars in drug proceeds since 1976.” Four of the five, including Pulido, were identified as fugitives hiding in Michoacan, Mexico. According to the statement, police had “seized illegal drugs, money and real estate tied directly to” the five ringleaders.

Neither local nor federal officials pursued criminal charges against Redman for failing to promptly report cash received from the sales. Under federal law, willful failure to file the reports is punishable by up to five years in prison and a fine of up to $500,000.

Structuring cash transactions to avoid the requirement is also against California law. Assistant Dist. Atty. Don Tamura, head of the real estate fraud unit for the Los Angeles district attorney’s office, said his office knew about the allegations in 1994, when LAPD investigators presented the case. But Tamura said the decision was made not to proceed because there were no victims of the alleged violations.

Today, the statute of limitations would bar any prosecution, according to Mike Carroll, head of the district attorney’s Major Fraud Unit. Carroll said his office is reviewing the Redman files for other possible violations.

Federal officials said they could not determine why the Pulido transactions were pursued for land forfeiture, but not for failure to file the required reports.

On Dec. 3, 1992, Los Angeles police searched Redman’s former offices on Santa Monica Boulevard as part of an investigation into Pulido’s suspected role in a cocaine trafficking ring that authorities alleged in affidavits had made millions of dollars since 1976.

The search produced documents showing that in August 1989, Pulido had purchased two tracts of Kern County land from Redman Investment Co.--one 10-acre parcel and another 3-acre property. He put down $20,500 in cash of the total $71,900 purchase price for the two parcels. In November 1989, Pulido paid the balance in cash, according to federal documents.

But Redman’s companies did not directly deposit the cash. Instead, authorities say, they engaged in a dispersal of funds to different banks, an illegal technique police call “structuring.”

“The money paid to Redman Investment Company on November 21, 1989, was structured into five accounts through two banks over the course of three days so that the company would not have to report the transaction to the Internal Revenue Service,” according to allegations in the federal forfeiture case.

That same month, Redman Investment Co. sold Pulido a 10-acre undivided interest in a 40-acre Kern County parcel for $49,900, federal records show. The property was also paid for with cash, authorities say.

When police searched Redman’s business, Redman employee Wilson Sanchez told investigators that Pulido had asked him to come to a Downey address to receive a cash payment for some of the properties.

“He took me to an upstairs bedroom and pulled a large cardboard box from a closet,” Sanchez told detectives. “Inside the box were brown shopping bags full of money. The money was mainly in $100 bills and bundled in $2,000 increments with rubber bands. It was a lot of money. He then counted out 43 bundles totaling $86,000 to pay off the properties.

“I counted a couple of bundles to make sure each had $2,000 in them. He told me not to worry if the count was off. He said he would make it up to me.”

Redman told LAPD investigators during the search that most of his clients were Spanish-speaking customers who preferred to pay in cash. “We don’t ask where the money comes from and we don’t care,” he told investigators, according to the sworn statement from the LAPD investigator.

Richard Myerson, Redman’s son-in-law and at the time chief financial officer for Redman Investment Co., told police officers in 1992 that he routinely avoided reporting procedures, according to documents.

“I don’t ever deposit over $10,000 in cash at the bank at any one time,” police quoted Myerson as saying. “I deposit a portion of the money on one day and then the balance the next and so on. . . . I have been told that it is a hassle to report the deposit of $10,000 or more because of documents and other paperwork.”

Myerson could not be reached for comment.

August G. Carloni, another Redman attorney, last week produced documents showing that on Dec. 23, 1992, Redman filed the paperwork required by law--three years after the cash was received from Pulido and three weeks after the police search warrant was served.

Said Carloni: “There were three instances where reporting was required and they were made.”