Real Estate Investor Gross Gets Home Detention, Probation

A real estate investor who had been accused by prosecutors of running a rent-skimming scheme involving hundreds of properties was sentenced to six months of home detention and 2 1/2 years of probation Monday on a bankruptcy fraud conviction.

A jury found Bernard Gross, 54, guilty on three felony charges in February. He was sentenced by Judge Robert M. Takasugi in U.S. District Court in Los Angeles.

The sentence probably will be delayed pending Gross’ appeal to a higher court, in which he will attempt to have the case against him thrown out, said David A. Katz, his defense lawyer.

Beginning in the 1980s, Gross was believed to have controlled a real estate empire that at one point spanned 800 rental properties. According to court papers, Gross’ agents gained control of the properties from owners who faced foreclosure and pledged to renegotiate the loans while allowing the owners to remain as renters.

Gross allegedly delayed repaying lenders through a complex series of bankruptcy filings that allowed him to keep generating rental income. During a four-year period, Gross had used about 30 separate bankruptcies to protect hundreds of properties from foreclosures, according to reporting by the Los Angeles Times in 1995.

But after bringing a wide-ranging indictment against Gross, federal prosecutors eventually narrowed their case to accusations that Gross had made false statements on a single August 1996 bankruptcy filing in Orange County. That filing was made after authorities seized thousands of pages of Gross’ records, leading to the inaccuracies, Katz contended.

After the February conviction in that case, prosecutors had asked that Gross spend between 21 and 27 months in federal prison, but the judge denied the request based on Gross’ health, said Thom Mrozek, spokesman for the U.S. attorney’s office.

Gross has diabetes and cardiological and neurological problems, some of which he developed while in federal custody, Katz said.