It’s Prison for Ex-Surf City Mayor

She was a darling of City Hall, a strong-minded mayor who rose to celebrity status in Huntington Beach. Pam Julien Houchen was as popular for her political ambition as she was for becoming a new mom in middle age, toting her triplets around town.

Then, investigators say, she got too bold. And too greedy.

On Monday, Houchen learned she would pay a steep price for taking part in a real estate scam that netted her thousands of dollars. She was sentenced to federal prison for more than three years and ordered to pay $140,000 in restitution.

The 37-month sentence issued by U.S. District Judge David O. Carter in Santa Ana punctuates a swift fall from grace for a woman whose world began collapsing shortly after she was identified as one of nine suspects in the scheme to illicitly convert Huntington Beach apartment buildings to condominiums.

Houchen, 49, was one of four defendants sentenced Monday in the scandal, which broke in 2004 after the city learned that as many as 120 apartment units had been illegally converted to condominiums without proper permits or modifications. Houchen had admitted to eight counts of mail and wire fraud in connection with the sale of two buildings for a total of $1.74 million.

Houchen buried her face in her hands and sobbed into a tissue upon hearing her sentence. Her husband clenched his hands together and fought back tears. She left the courtroom before other defendants were sentenced. Outside, she and her husband embraced. They declined to comment.

“We’re very disappointed and think it’s a very severe sentence,” said her lawyer, John Barnett.

Emotions were high throughout the six-hour sentencing hearing. It began with Houchen in tears as her lawyer argued for home confinement so she could help her husband raise their 4-year-old daughters, and concluded after a couple who bought an illegal condo that was later condemned urged the judge to show no mercy.

Renee and Scott Tarnow, who are suing Houchen, said they had lost hundreds of thousands of dollars in construction and legal fees. They said their two daughters were put at risk by the hazardous conditions of their unit and that the court should take that into consideration.

“I have no sympathy for you at all regarding your children,” Renee Tarnow said, directing her anger and her gaze directly at Houchen as both of them wept. “I feel so sorry for your girls.”

Carter said Houchen posed a “real conundrum” for him as he sought to balance her level of cooperation and contriteness with her betrayal of the public’s trust. In the end, he told her, his sentence was actually lighter than he had thought he would issue. It was longer than the 30 months recommended by the prosecutor.

“You’re right at the top of the pyramid,” he said, referring to where he ranked her culpability among all defendants. “Public officials will never be looked at the same. That’s a stain on all of us.”

Carter reserved his harshest words, and harshest sentence, for Michael McDonnell, who acted as the straw buyer for the then-mayor. What was particularly troublesome, Carter said, was McDonnell’s attempts to blackmail Houchen because he knew she had been corrupted. He sentenced McDonnell to 6 1/2 years.

“You tried to shake down the mayor, which is the very thing we fear when dealing with public corruption,” Carter told him.

Two others sentenced Monday were Stewart Title officer Harvey DuBose, who admitted taking bribes to facilitate title insurance but was rewarded by the court for his level of cooperation. He received a two-year term. Investor Jeffrey Crandall, convicted of selling seven illegal units, was sentenced to 41 months.

Assistant U.S. Atty. Andrew Stolper, the lead prosecutor, said the sentences were fair.

“Judge Carter did justice individually and overall,” Stolper said. “There’s no question this is a tragedy for Pam’s husband and kids. But ultimately it’s a victory for justice.”

Houchen’s downfall came as suddenly as her ascension to power. She emerged on the local political scene a relative upstart, gaining experience as chairwoman of the executive board for the city’s Fourth of July parade committee. She also served as president of the Bolsa Chica Alliance, a group that favored large-scale development of the Bolsa Chica mesa.

When she ran for City Council in 1996, she touted her experience as corporate vice president of Catalina Furniture of La Mirada. She became known for her pro-development stance, and, ironically, for her political courage in ousting fellow council member Dave Garofalo.

When Garofalo, who had supported her election, was accused of violating conflict-of-interest laws as the publisher of a local promotions magazine, Houchen led the effort that prompted him to resign. Garofalo was later sentenced to community service and probation after pleading guilty to a felony and 15 misdemeanors.

Houchen’s personal life blossomed along with her political career. She married contractor Brian Houchen in 2000 and gave birth to their three girls two years later.

Even her venture into real estate was successful -- until she began partnering with Phil Benson, a fellow agent at Pier Realty. He was known as a man who favored flip-flops and T-shirts as his most formal business attire. Later Houchen told investigators Benson was a “drunkard” and “slimy.”

Benson billed himself as the go-to guy for condo conversions, telling prospective buyers and investors he was the only agent “grandfathered” to carry out such transactions before a 1984 city law required apartment owners to modify the properties and pay thousands of dollars in fees before units could be individually sold.

He would later plead guilty to grossing about $11 million in the sale of more than 40 units. He died this year before the start of a nearly six-year prison sentence.

Before she was sentenced, Houchen offered an apology -- and no excuses.

“I’m very sorry for the harm that I’ve caused and the shame to my husband and family and community,” she said. “I know what I did was wrong. I hope to have a productive life in the future and raise my daughters with my husband.... I learned a very, very hard lesson.”

Houchen and the three other defendants must begin their sentences by Nov. 6.

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christine.hanley@latimes.com

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The players

Phil Benson: Pier Realty agent and alleged mastermind. Admitted under plea deal to 24 counts of mail and wire fraud for helping sell 47 apartment units as condos for $11.2 million. Sentenced to nearly six years in prison. Died earlier this year before serving time.

Pam Houchen: Pier Realty agent elected to City Council in 1996. Admitted under plea deal to eight counts of mail and wire fraud in connection with converting two apartment buildings into eight condominiums that she sold for a total of $1.74 million. Sentenced to three years, one month in prison and ordered to pay $140,000 to a victim restitution fund.

Harvey DuBose: Stewart Title officer, charged with forging documents to ensure title insurance for the properties. Admitted under plea deal to 20 counts of mail and wire fraud. Sentenced to two years in prison and ordered to pay $679,000 to a victim restitution fund.

Thomas Bagshaw: Real estate agent and notary. Admitted under plea deal to two counts of wire fraud. Served sentence and has been released.

Michael McDonnell: Straw buyer for Houchen. Convicted at trial to 30 counts of wire and mail fraud. Sentenced to six years, six months and ordered to pay $361,000 to a victim restitution fund.

Jeffrey Crandall: Investor. Convicted at trial of nine counts of wire and mail fraud. Sentenced to three years, five months and ordered to pay $63,000 to a victim restitution fund.

Howard Richey: Investor, convicted at trial of 13 counts of wire and mail fraud. Cleared of four counts. Will be sentenced Dec. 11.

Michael Cherney: Investor, pleaded guilty to obstructing justice and sentenced to one year of probation and fined $5,000.

Connie Norris: Notary, pleaded guilty to misusing notary stamp. Paid a $5,000 fine.

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Source: Times research