Contractor Accused of Defrauding 400 Property Owners

About 400 property owners in Los Angeles and Orange counties, including many low- and moderate-income minority families who put up low down payments, may have been fleeced out of as much as $1 million or more by a West Los Angeles contractor who promised to build homes and apartments for them at bargain prices, state and local investigators said Thursday.

The Los Angeles County district attorney’s office announced Wednesday that it had arrested three executives of Delta Homes Inc. on charges of grand theft.

They are Joseph Polifroni, 46, of Corona del Mar, the company president; Antonio Abellos Escario, 47, of Irvine, its vice president, and Ruth Ray Levy, 64, of Los Angeles, the firm’s former secretary-treasurer and sales representative.

Delta Homes Inc. apparently received down payments ranging from $2,500 to $20,000 from each of the customers over the last three years for homes that were almost never built, investigators said.

“It’s a big, big case of fraud,” said state Deputy Atty. Gen. Dora Levin, who is scheduled to appear in Los Angeles County Superior Court today to seek a court order shutting down Delta Homes.

Levin said she would charge Delta Homes with several violations of the state Business and Professions Code, including failing to construct housing units after the firm had taken money from its customers.

The arrests of the three company executives took place while authorities were executing a search warrant on Delta Homes’ headquarters at 10913 Venice Blvd., where contracts and other records were seized. The executives are to be arraigned Jan. 22.

After the arrests, the three suspects posted $5,000 bond each in Culver City Municipal Court.

Larry McNeely, an investigator with the Contractors State License Board in Sacramento, said in a telephone interview that “we believe it’s one of the largest new-home construction fraud cases we’ve seen.”

David Phillips, director of the southern region of the state contractors board, headquartered in Santa Ana, said most complaints his agency investigates deal with allegations of substandard work, “but at least the work is done. . . .

“What concerned me in this case mostly was that it appears people were giving their money and getting nothing for it. Over 90% of the projects never got built,” he said. Further, the investigators fear there may be many other victims that they don’t know about, he said.

An Encino attorney representing Polifroni, James E. Blatt, said he informed McNeely that his client intended “to make restitution and complete the (housing) projects. Polifroni is not going to run away from anything.”

The Los Angeles County prosecutor’s deputy in charge of major frauds, David R. Disco, said his investigation took the better part of last year and was carried out with the support of a number of agencies, including the contractors board and the Los Angeles Police Department.

Relied on Ads

Authorities said Delta Homes relied heavily on newspaper advertising, including ads in The Times and on radio stations. Its lure was a program promising that for just a few thousand dollars down it would quickly construct a complete house or small apartment complex on a lot already owned by the customer.

“They promised everything,” lamented Manuel Soberanis, 32, a North Hollywood resident who owns a gardening service. He gave Delta Homes a $2,500 down payment last year to build a four-unit apartment building. The apartment complex, which Soberanis said the firm asserted it could construct for $57,000, was never built, he said, and his down payment has not been returned.

Called a “turn-key” operation in the construction industry, the Delta Homes package purportedly included all housing permits, plans and all construction materials needed to produce a ready-to-move-in home. But investigators said that, in effect, Delta officials took customers’ cash and ran.

“We can find less than 20 homes started (among 400 customers),” said the contractor board’s McNeely. “We think one or two were completed.”