County OKs Land Fraud Safeguards

Responding to allegations of fraud involving controversial developer Marshall Redman, the Los Angeles County Board of Supervisors agreed Tuesday to enact sweeping public-interest reforms that will provide buyers of undeveloped land broad new protections.

Following the recommendations of a task force study commissioned by Supervisor Mike Antonovich, the board approved an ambitious early warning system for fraud that includes public education programs, new communication avenues between county agencies and disclosure laws designed to give purchasers crucial information before they buy.

The panel also referred to the county Planning Commission three proposed ordinances for public hearing. The new laws would require sellers to disclose zoning information to would-be land buyers and document all sales with county officials.

Real estate industry members, however, were critical of the suggested legislation, calling the proposals confusing and misleading and saying they would be ignored by land swindlers and add cost and time to honest land transactions.

But supervisors assured critics that their concerns would be addressed in the public hearing process and called the recommendations a good place to start.

“This being the Christmas season, I think these proposals are timely for any Scrooge who would cheat real estate clients out of their money,” Antonovich said.

“Land fraud is a problem endemic to this county and to the entire country. And I think these are good initial steps to solve a very pressing problem.”

The task force was one of two created by the Board of Supervisors in response to a series of land sales by millionaire developer Marshall Redman, who between 1978 and 1994 sold more than 2,500 parcels of Antelope Valley land to unsophisticated buyers.

In some cases, properties were not legally subdivided or zoned for residential use. In others, the land was not owned by Redman or already had been sold to other buyers, prosecutors say.

Citing a series of Times articles on Redman’s activities, the county has sought ways to immediately assist victims who live in the High Desert.

Dozens of Redman customers relocated to far-flung parcels only to find that water was costly to obtain. County officials removed others from the land because they could not obtain permits to build on the property.

The panel has helped some receive water, and is developing a plan to help Redman purchasers buy foreclosed government-owned homes at a discount.

Also Tuesday, Carlos Jackson, head of the county’s Community Development Agency, met with federal Housing and Urban Development members to explore ways that Redman victims could buy foreclosed properties at discounts of up to 30%.

Rep. Howard “Buck” McKeon (R-Santa Clarita) last week called for swift action by the federal government to help dozens of Spanish-speaking families living on land purchased from the Santa Monica-based Redman in McKeon’s High Desert district.

The 68-year-old Redman has been charged with fraud in connection with the alleged sales scheme and is scheduled for a preliminary hearing next week.

In a 35-page report, the county’s Land Sales Fraud Task Force listed a host of recommendations, including an aggressive public education program featuring an anti-fraud tip sheet written in both Spanish and English to be circulated at county agencies, public libraries, title offices and other outlets.

Under the task force plan, the county’s Department of Consumer Affairs would be the designated contact group to collect complaints and monitor any pattern of fraud as well as keep better communication between county agencies about such crimes.

“We believe we’ve come up with the perfect working blueprint for other counties to follow,” Pastor Herrera Jr., director of the county Department of Consumer Affairs, told supervisors. “These measures should go far to alert the public that there are people out there who would like to rip them off.”

The task force report also suggests several changes to county law, including an amendment that would require land sellers to provide documentation to buyers that land was legally subdivided before it was sold. The laws would force developers to meet “truth requirements” when dealing with both buyers and advertising outlets such as television and radio stations.

Most of Redman’s 2,500 property sales were made by “invisible” land sale contracts that were not reported to county agencies until years after the sale, when buyers finished making long-term payments to the developer and received a deed, prosecutors say.

The alleged fraud went undetected, officials said, because no single agency had responsibility for handling fraud reports, and there were no legal requirements for sellers to disclose zoning information to buyers.

In what officials believe would perhaps set a precedent nationwide, the task force report recommends that the county require all land sale contracts to be recorded with government officials so agencies can track developers such as Redman.

Task force members said they will recommend that the proposed laws, once approved by the Planning Commission, be incorporated into state law.

In approving the recommendations, Antonovich suggested that a toll-free number be established so would-be victims could call investigators free of charge from anywhere in the county.

He also suggested that the task force expand the types of transactions that would be disclosed to government agencies to include all types of land use, not just the requirement for residential-zoned land included in the task force report.

Two real estate industry officials, however, told supervisors they should scrap the recommendations and send the task force back to the drawing board, saying the proposed laws were redundant and should be rethought even before going to the Planning Commission.

“The language and intent of the proposed ordinances are so confusing that we don’t believe they could be implemented in the extremely unlikely event they would be approved,” said Lorraine Morrison, past president of the Los Angeles County Boards of Real Estate.

Morrison, a Rosemead Realtor, called the proposed laws disastrous.

“I’m down there where the rubber meets the road. I’m a real estate broker and a former planning commissioner--this is what I specialize in,” Morrison said in an interview. “I’m very familiar with ordinances that are good enough to be implemented. I don’t think any of these are.”

Robert McMurry, a local land-use attorney consulted by the task force, said he can understand the real estate industry taking a stand against “more weight to an already burdensome bureaucracy.

“But when you have things like a Marshall Redman and those 1,500 families, you have to respond. You have to assume that the system is not working. These proposed laws were taken from other localities that had the same problem and they felt these were positive steps.

“The real estate communities in those states were able to accommodate them. Transactions did not grind to a halt. So we think these proposals are doable, effective and manageable.”