Ex-Mayor of Huntington Beach Faces Fraud Counts

Former Huntington Beach Mayor Pam Julien Houchen and seven others were indicted Wednesday by a federal grand jury in Santa Ana on suspicion of fraudulently converting apartments to condominiums that were then sold for huge profits.

Houchen, the city’s second mayor to face criminal charges in 2 1/2 years, is accused of joining a real estate broker, a title officer and various investors to skirt city laws regulating the conversion of condos. She also is charged with covering up her ownership of an apartment building in a city redevelopment area -- which is prohibited by state law because of the City Council’s oversight of such projects -- that she sold individually as condominiums, making a total profit of $229,000.

Houchen, a 47-year-old mother of toddler triplets, is facing 11 counts of mail fraud and seven counts of wire fraud. Each count carries a maximum five-year prison term.

The former mayor, who resigned her post on the City Council in September, could not be reached for comment. She must appear in federal court later this month.

The case against Houchen involves the sale of at least eight condominiums that she allegedly knew were illegally converted apartments, according to the 74-page indictment. The conversions violate a 1984 city law requiring apartment owners to modify the properties and pay a series of fees before the units could be individually sold. The units sold by Houchen grossed more than $1.7 million.

Also named in the indictment was Phil Benson, 72, a former real estate broker at Pier Realty in Huntington Beach who worked with Houchen. The document described him as the alleged mastermind of the conversion scheme.

Benson faces 50 counts of mail fraud and 24 counts of wire fraud in the conversions of at least 45 apartments in 15 buildings. The units sold for more than $11 million.

The illegally converted apartments left dozens of owners in tough straits, unable to refinance or sell and facing thousands of dollars in city fees.

The title companies that insured the sales have since agreed to pay the fees.

Other defendants include Harvey DuBose, the supervising officer at Stewart Title Co. in Irvine; Michael McDonnell, an investor who allegedly acted as a “straw buyer” for Houchen’s property in the redevelopment zone and on other properties owned by her; Thomas Bagshaw Jr., a real estate agent and notary public who worked with Benson; and Benson clients Howard C. Richey, Jeffrey Crandall and Michael Cherney, who invested in the apartments.

All of the defendants live in Huntington Beach except Benson, who moved to Hailey, Idaho; Richey, who lives in Hemet; and DuBose, of Santa Ana.

Richey and Crandall will be arraigned Monday. The rest will be arraigned Dec. 13. All eight defendants will remain free while the case is pending, Assistant U.S. Atty. Andrew Stolper said.

Houchen also is accused of using McDonnell to purchase property in a city redevelopment zone. Pursuant to a written agreement signed by Houchen and McDonnell, he bought and renovated the property and sold them as condos. Bagshaw later stepped in for McDonnell, the indictment alleges, forging his name to documents and then notarizing his own forgeries so the units could be sold.