Mastermind of O.C. Condo Scheme Gets Nearly 6 Years

A former Huntington Beach real estate agent who admitted masterminding a scheme to make millions of dollars selling illegally converted condominiums was sentenced Friday to nearly six years in federal prison.

Phil Benson, 73, arrived in a wheelchair at U.S. District Court in Santa Ana, looking frail and breathing with the aid of an oxygen tube. Judge David O. Carter had issued an arrest warrant last week after Benson refused to travel from his Idaho home for sentencing. He said he was dying of lung cancer.

Benson pleaded guilty last year to 24 counts of fraud for helping sell 47 apartment units as condominiums for $11.2 million, even though they were never legally converted.

Former Huntington Beach Mayor Pam Julien Houchen, a real estate agent who worked with Benson, also pleaded guilty to fraud charges and will be sentenced later this year.

The judge gave Benson a reprieve until April 11 to begin his 70-month sentence, most likely at a Bureau of Prisons hospital in Springfield, Mo. He said he was giving Benson time to complete a round of chemotherapy, a concession Carter made after he spoke over the phone in court with Benson’s oncologist.

Benson said little during the sentencing, but when he did, he answered in a strong voice. Asked afterward if he had anything to say, he replied: “Not a thing.”

Two of Benson’s victims had plenty to say about what they’ve endured after buying one of the illegal condos in May 2002.

Renee and Scott Tarnow took Benson to court and got a $450,000 judgment, which they said he hasn’t paid. They’ve spent $200,000 on remodeling and court fees, they said.

“I wanted to see him leave in handcuffs,” Renee Tarnow said of Benson after the sentencing. “He has crushed us.”

She said she had heard twice before that Benson was dying of cancer, as he attempted to delay the civil lawsuit against him. “We’ve been hearing he’s been dying for 2 1/2 years,” she told Carter. “He’s used the system to hurt us and hundreds of others, and we feel he thinks he’s above law.”

Carter said the sentence was difficult but just. He acknowledged that Benson probably would die in prison. “I’m trying to balance the appropriate punishment with some humane care,” he said.

The judge warned Benson not to take advantage of the court by failing to report for his prison term. “I’m not impressed with your prior cooperation, quite frankly,” Carter said.

The condo conversions reverberated through Huntington Beach after it became clear that Houchen, a popular mayor first elected to the City Council in 1996, was involved. She resigned in September 2004, three months before being indicted.

The scheme attempted to circumvent a 1984 city law requiring apartment owners to modify their properties and pay a $7,000 conversion fee before the units could be sold. Eight people eventually were indicted in the scam.

This month, real estate agent Thomas Bagshaw was sentenced to four months in prison and four months of home detention and ordered to pay restitution for forging signatures on condo documents. Another real estate agent, Michael Cherney, was sentenced to a year of probation and fined $5,000.

Investors Michael McDonnell and Jeffrey Crandall will be sentenced March 20. Another, Howard C. Richey, has pleaded not guilty, and his trial is set for August. Houchen and an eighth defendant, Harvey DuBose, are expected to be sentenced after that.

Benson was also ordered Friday to pay $679,000 in restitution to Stewart Title, which insured the sales.

Scott Tarnow said it was unfortunate that the money would go to the title company and not to the residents who unwittingly bought a total of 122 illegal units.