Auctioneer Is Accused of Scheme to Defraud U.S.
William W. Lange, an auctioneer who has worked for tycoon Donald Trump and sold some of Orange County’s properties in bankruptcy, was accused in a civil lawsuit of creating a phony female-owned business to win federal contracts.
The suit, filed by the U.S. attorney’s office, also accuses Lange, his wife, Alisha, and her brother-in-law, Richard H.W. Bennett, of covering up evidence of the alleged sham company and of overbilling the government as much as triple the going rate.
The recent lawsuit seeks $3.6 million that government agencies paid in commissions and expenses to Alisha Lange and her LFC Real Estate Clearinghouse, which prosecutors called a front for William Lange and his Lange Financial Corp.
With trebling of damages and other penalties sought for false claims, the total amount the government is seeking is $43.5 million.
The lawsuit stems from work Clearinghouse did in the early 1990s for the Resolution Trust Corp. and the Federal Deposit Insurance Corp., agencies that were disposing of assets from, respectively, failed savings and loans and failed banks.
U.S. Atty. Nora M. Manella said that in helping to clean up the S&L; debacle of the 1980s, “Mr. Lange masterminded a multifaceted fraud that allowed him to profit illegally from the savings and loan crisis and from programs designed to help women.”
John Petrasich, attorney for the Langes, denied that his clients did anything wrong, calling the lawsuit “nonsense.” Clearinghouse, he said, “is and was from its inception a wholly owned company of Alisha Lange.”
He acknowledged that William Lange was an officer in her company, but that fact didn’t make it ineligible for special consideration under federal rules granting preferences to minority- and female-owned businesses in contracts awarded by the RTC and the FDIC.
The agencies regularly used outside contractors to manage, market and sell real estate, securities and other assets held by failed financial institutions.
Clearinghouse handled more than a dozen auctions nationwide of primarily residential real estate for the two agencies in the early 1990s, according to both sides.
By then, Lange Financial, founded in 1986, was becoming a major auctioneer nationwide by helping financial institutions, real estate developers and others market and sell properties that weren’t otherwise moving.
Lange Financial auctioned luxury condominiums and town homes at Trump Plaza of the Palm Beaches in 1990, picking up $8.8 million for real estate baron Donald Trump and his disgruntled bankers. More recently, Lange Financial was hired in 1995 to auction properties that Orange County wanted to sell to raise money for creditors during its bankruptcy.
William Lange also reached an agreement with Century 21 to perform RTC auctions jointly. But that agreement apparently fell apart, and the government contends in its lawsuit that Lange instead used Clearinghouse, a company he allegedly formed with his wife listed as president and sole owner.
But, the suit asserts, Alisha Lange “was merely the straw or fictitious owner on corporate documents” and rarely appeared in her office.
Instead, William Lange ran the operation, owned 49% of the company and used his other companies as subcontractors to handle marketing, advertising and other auction work for Clearinghouse, the suit contends.
Bennett, an executive in several William Lange companies, “negotiated a sham contract with Ms. Lange” to conceal her company’s existence as a front for her husband, the suit charges. He wasn’t available for comment.
When the RTC sent auditors to check the company’s female-owned status, the suit alleges, the Langes used an employee’s office as Alisha Lange’s to dupe regulators.
The suit contends that because the defendants obtained the contracts through fraud, some 2,500 invoices and reimbursements they submitted are false claims, warranting a maximum penalty of $10,000 for each claim--about $25 million.
The suit also accuses the trio of overcharging the agencies. Assistant U.S. Atty. Mark Labaton said the agencies were charged as much as $80 an hour for work that cost $24 an hour. The suit accused Bennett, especially, of submitting inflated claims.
Petrasich charged that the lawsuit is simply the government’s response to a breach-of-contract suit that Clearinghouse filed May 19 against the FDIC. That suit seeks more than $500,000 in commissions and payments that the FDIC allegedly owes the company for work in 1995.
