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L.A. County Launches Bid to Fight Fraud in Real Estate

TIMES STAFF WRITER

A year after millionaire developer Marshall Redman was indicted on charges of fraud and grand theft in Antelope Valley land deals involving 2,500 families, the 68-year-old developer remains out of jail on bail, selling windows on the Westside.

As Redman awaits trial, though, reforms inspired by his case are beginning to occur, led by a new real estate fraud hotline.

The hotline, which started nearly two months ago, offers recorded information 24 hours a day about a variety of real estate fraud. It is staffed during regular business hours by county investigators.

Several other measures, including ordinances that would ensure that buyers and sellers register their transactions with the county, are in the works, wending their way through committees of the Board of Supervisors.

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“I would like to see the 800 number posted on every refrigerator in Los Angeles County,” said Tim Bissell, chief investigator for the county Department of Consumer Affairs.

The hotline is being run on a shoestring. The county has appropriated just $60,000 for the program, which includes a tip sheet on how to spot fraud that will be made available to lenders, escrow companies and others involved in real estate transactions.

The budget is just enough, Bissell said, to hire one investigator, although he moved two from another hotline to work on this one. Later this summer, the county registrar-recorder will add its own anti-fraud message to the hotline, and funding will go up. At that time, Bissell said, the staff will be increased to four.

The county plans to mount a publicity campaign in the next few weeks to tell consumers about the hotline. Part of that campaign will involve distributing the fraud tip sheet.

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Among the tips: If you buy property thinking you can build on it but are turned down for permits, it could mean that the property was misrepresented and is not suitable for building. Also, if you don’t receive a property tax bill, that can be a clue that someone might have fraudulently taken title to your property.

Even without publicity, about 300 calls have come in over the line since it was set up just over six weeks ago, Bissell said. So far, though, it has not turned up a case like the one Redman is accused of perpetrating.

“The Redman case was a very, very unusual case,” Bissell said. “It was one of those once-in-a-decade-type cases.”

Redman is alleged to have targeted poor and working-class Latinos, many of them Spanish-speaking and relatively new immigrants, offering land in the countryside.

His television commercials, which ran on Spanish-language stations, showed property that bore little resemblance to the dry desert parcels he was actually selling.

Once on the land, owners learned the sad truth: Many did not actually own their property, and the parcels were illegally subdivided. Until a series in The Times publicized their plight, many had no access to water, and about 250 families lived with their children in unheated trailers and shacks amid the Joshua trees in the high desert.

Redman, meanwhile, has been working as a commission-based salesman for a company that sells and installs windows.

The owner of the firm, who spoke on the condition of anonymity, said Redman has been there for several months, and “we have had no complaints. All of his contracts are solid.”

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Redman, who settled a civil case filed in 1994 by the Kern County district attorney’s office and the city of Los Angeles, is charged criminally with five counts of grand theft and two counts of attempting to file forged papers, all felonies. If convicted, he faces a maximum of seven years in state prison.

He has hired high-powered defense attorney Harland Braun, who is expected to argue in a hearing next month that the charges should be dismissed because the state has already sued Redman and imposed damages. Charging him criminally, Braun contends, would amount to double jeopardy.

The U.S. Supreme Court has ruled several times in recent years that seizing a defendant’s assets as part of a civil suit does not preclude criminal prosecution. But Braun says that Redman’s case is different because the settlement defines about $330,000 of the money paid by Redman to the city of Los Angeles and Kern County as “civil penalties.” That, Braun argues, amounts to punishment.

“They screwed up in the way they handled the big settlement of the civil case,” Braun said. “They clearly laid out that it was punishment.”

The $330,000 was part of a total settlement of $830,000 plus 50% equity in Redman’s real estate business. Of that, $250,000 was set aside to compensate his former clients.

If the double jeopardy argument fails, Braun said, he plans to argue that Redman was misled by the attorney he used to advise him in the land deals, and did not mean to defraud his alleged victims.

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David Mintz, the prosecutor on the case, dismissed Braun’s defense strategy, saying: “I think the recent case law goes in our favor, and I think ultimately the motion is going to be denied.”

Redman can blame his former business lawyer, Mintz said, but “there was sufficient evidence to charge him with five counts of grand theft and two counts of filing a forged instrument, which was a trust deed. The liability for those acts falls on him.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Fraud Warning Signs

Some common warning signs of property fraud from the Los Angeles County Department of Consumer Affairs Real Estate Fraud and Information Program. Hotline: (800) 973-3370.

* Building permits are denied. In cases of undeveloped land fraud, the seller may have claimed that it’s legal to build on the property, when in fact it isn’t.

* The property or its uses are different than what you were sold. Buyers may find that the land they were sold was not the land they were shown in pictures or on trips with the seller. Buyers may also find that the land has been improperly subdivided and may not be used as intended.

* A missing property tax bill. It could just be a slip-up, but it also could be a sign of home equity fraud, in which someone has forged your signature on a deed and then taken out loans against the equity in your home.

* Offers of help out of foreclosure. Beware of solicitations received while you are in foreclosure. In one scam, perpetrators promise to help homeowners get back on their feet but actually set up an elaborate equity fraud scheme.

* You are notified that a property document has been recorded regarding your property. At the end of the summer, the county registrar-recorder will begin notifying property owners when a deed or other paperwork has been filed regarding their land. This renewed notification system was designed to alert property owners to potential fraud.


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