Arson Attempt Discussed by Coastal Commissioner

By BILL RITTER and RALPH FRAMMOLINO

Oct. 26, 1986 12 AM PT

Times Staff Writers

SAN DIEGO — The San Diego County district attorney’s office is investigating tape recordings of two conversations during which David L. Malcolm, a Chula Vista city councilman and state coastal commissioner, discussed blowing up an expensive Mission Hills house to collect more than $1 million in insurance, The Times has learned.

Prosecutors are trying to determine whether the tapes are evidence of wrongdoing by Malcolm or whether they were used in an extortion attempt against Malcolm, according to Steve Casey, a spokesman for the district attorney’s office.

The tapes, copies of which were obtained by The Times, apparently were recorded in January and February of 1985 in Malcolm’s Chula Vista real estate office by William M. Hirsch, who was advising Malcolm about renovation of the house. The tapes were turned over to the district attorney’s office on Thursday by Hirsch’s attorney, Michael J. Aguirre, who declined to say how the recordings were made.

Malcolm, in an interview Saturday, said that he was merely leading Hirsch on during the conversations. Malcolm said that he contacted the district attorney’s office six months ago to report that Hirsch had tried to use the tapes to extort “hundreds of thousands of dollars” from him and his partner, local businessman Dennis Schmucker.

Casey confirmed that Malcolm had contacted the district attorney’s office but said that investigators had little to go on until they received the tapes Thursday.

“I would have to characterize it as a front-burner investigation,” Casey said. “It hasn’t been up until now because we haven’t had anything with which to work.”

No attempt was ever made to destroy the 7,200-square-foot house, which eventually was remodeled and sold in June of this year for $900,000--about half the listed sales price.

Items Discussed

On the tapes, a man who identified himself as David Malcolm--his voice often drawn into a whisper--discussed his financial problems with the house, how it should be burned, how the insurance money would be divided, how the arsonist would be paid and the alibi Hirsch should use to throw off investigators. In most cases Hirsch initiated conversation about the proposed arson.

At one point, Malcolm asked Hirsch: “Why couldn’t somebody just go in and turn on the gas downstairs, leave the burner on upstairs with a candle burning and when the gas gets to that, it would just blow up?”

Later, Malcolm insisted Hirsch work quickly. “We got to get that to burn,” he said.

Malcolm said Saturday: “Mr. Hirsch himself acknowledges my having ‘led him on.’ When he realized this, he attempted to extort me.

“My having personally initiated contact with the district attorney’s office six months ago, and my full disclosure of all conversations with Mr. Hirsch, speak for themselves.”

Doctoring Suggested

Malcolm and his attorney, Charles Goldberg, said they have not heard the tapes, but suggested they could have been doctored.

“I don’t believe there are any tapes in which (Malcolm) does anything improper,” Goldberg said. “Any claims . . . made to that affect are absolutely outrageous, considering the fact that Malcolm continued to pour money into the project and did absolutely nothing to evidence such an attempt.”

Malcolm and Goldberg declined to elaborate, however, and would not discuss any conversations between Malcolm and Hirsch.

Schmucker said he, too, first learned of an extortion attempt about six months ago. “The moment I became aware of it,” he said, “I alerted the district attorney.”

Hirsch, 45, talked to prosecutors five months ago, although he did not turn over the tape recordings until Thursday, one day after he retained a new attorney, Aguirre, who has instructed Hirsch not to comment.

“From the moment I heard about these matters, the tapes were located and immediately turned over to the district attorney’s office,” Aguirre said. “Whatever the tapes provide, they speak for themselves.”

Aguirre denied that his client tried to extort Malcolm and Schmucker. “As far as I know . . . it would be an absolutely, totally false thing to say. All the information’s been released. There’s nothing to extort anybody about.”

Hirsch apparently wired himself for sound and secretly taped the conversations, which were interrupted several times by phone calls. One of the men on the recording answered the phone calls as “David Malcolm.”

Malcolm, 32, is a real estate developer who was elected to the Chula Vista City Council in 1982. Malcolm, a Republican, was appointed to the San Diego region of the state Coastal Commission in January, 1984, by Assembly Speaker Willie Brown (D-San Francisco).

Malcolm and Schmucker, a successful San Diego businessman, took over the luxurious Mediterranean-style Mission Hills house in early 1984 after foreclosing on a $450,000 loan they made to the owner, Chittenden Trust. The house carried an insurance policy of more than $1 million, according to Goldberg.

Hirsch had dealt with Malcolm and Schmucker as a representative of the owners, Chittenden Trust, and was “responsible for building the house,” Schmucker said.

Court records show that Hirsch was sued in 1980 for allegedly fraudulently inducing a Connecticut man to loan him $340,000 in 1978. The suit was dropped before trial.

In January, 1983, Hirsch pleaded guilty to a misdemeanor drunk driving charge and was put on six months probation, court records show.

In a civil proceeding in the spring of 1983, a Superior Court judge ordered Hirsch to refrain from harassing two of his neighbors, who claimed he had kept them under surveillance, telephoned them, yelled obscenities and made verbal threats.

On the first tape, apparently recorded in January, 1985, Malcolm and Hirsch commiserated that a problem with underground water would require several hundred thousand dollars in repairs.

Eventually, Hirsch nudged the conversation into the direction of whether Malcolm would be willing to have the house blown up to collect the insurance.

” . . . You don’t want to take a bath and certainly I don’t want to take a bath, there’s no question about it,” Hirsch said. “And the place has got to go sayonara. We all know that.”

Several minutes later, the men talked again about getting rid of the house and Malcolm apparently was concerned that the house might not burn completely.

Malcolm: “You know what? There is one important thing you have to remember.”

Hirsch: “What?”

Malcolm: “If that home burns down 25% . . . “

Hirsch: “I know.”

Malcolm: “ . . . we’re all screwed.”

The Chula Vista councilman expressed his concern once again during the January conversation that the house be leveled by a blast or fire. Hirsch suggested filling the home with natural gas.

Hirsch: “I mean it would go boom.”

Malcolm: “Bill, I know it. If it goes boom, it blows out the windows but . . . . We need to get it to burn.”

Minutes later, Malcolm asked Hirsch: “Why couldn’t somebody just go in and turn on the gas downstairs, leave the burner on upstairs with a candle burning and when the gas gets to that, it would just blow up?”

Hirsch told Malcolm that it would take between $1,000 and $10,000 to pay an arsonist.

“You can’t go down to the bank and take out that kind of cash,” Malcolm said, adding minutes later: “We’ll give him gold coins.”

Malcolm told Hirsch at one point: “I will guarantee you right now if that home goes down I will get you a minimum of $400,000.”

Hirsch countered, “You get me a minimum of $500,000.”

During the second conversation, apparently recorded on Feb. 6, 1985, the men agreed there would be an investigation of any explosion. “They’ll look for arson,” Malcolm said. “They’ll be able to tell.”

When Hirsch said that he, as a former owner on the house, would be a prime suspect, he asked Malcolm for help in constructing an alibi. “How do I explain my position?”

Malcolm: “You’re back East when it happens.”

Hirsch: “Won’t that look a little funny?”

Malcolm: “No.”

Hirsch: “ . . . I mean, I don’t have to be here, but wouldn’t that look funny?”

Malcolm: “No, I don’t think so. If you go back and see your brother . . . . What better thing to have then if you’re back on the damn East Coast.”

Hirsch: “That’s not going to fool anybody, though.”

Malcolm: “You know what? They have to prove beyond a reasonable doubt. They aren’t going to find the arsonist. How in the hell are they going to prove that you did it?”

At another point, Hirsch told Malcolm that “when you say take care of it now, believe me, one’s got to cover their tracks on something like this.”

Malcolm: “I understand. But do you know what? I want to be able to sit down when those son of a bitches ask me to take a lie detector test . . . yes, I’ll sit there and when they say, ‘Do you know anything about it?’ ‘No.’ ‘Do you know who did it?’ ‘No.’ All right?’

Hirsch: “They can’t force anyone to take a lie detector test.”

Malcolm: “I know, I know. I don’t want to know anything. I am the one that arranged it because, you know what, if I know then, that’s two people who know. You know what? We only want one person to know.”

After a while, Malcolm tried to shoo Hirsch out of his office because of another appointment, but Hirsch stayed, insisting that the councilman talk more about the purported arson.

Malcolm: “Bill, I’ve got to get ready for a meeting.”

Hirsch: “At what point do you think this should happen?”

Malcolm: “Now . . . . We got to get that to burn.”

Nearing the end of the second taped conversation, Malcolm talked about how he was gathering cash to pay off Hirsch.

“I’ll have to give you the cash. I’m already gathering cash . . . You just can’t go in there and do that in one day,” Malcolm said. “I stashed $1,000 yesterday. I meant Saturday. I’m just doing every check I get, instead of putting it into the account, I’m just cashing it so that it doesn’t even go through my account. Nobody knows I got it.

“I’m just taking that cash and I’m putting it away.”

The house itself has a controversial past.

Chittenden Trust bought the house in 1980 for a reported $212,000, and began an ambitious remodeling of the property. But construction was delayed over the next few years by constant financial problems, lawsuits and mechanics liens. The unfinished house became something of a neighborhood joke.

Selling the finished house proved nearly as difficult as completing construction.

Listed at $1.75 Million

The house was appraised at $2.1 million but was listed at $1.75 million--significantly higher than most Mission Hills homes, according to a real estate broker active in the neighborhood.

The real estate listing said the house has 7,200 square feet, six bedrooms and six bathrooms on a 9,300-square-foot triangle plot of land fronting Presidio Park. It has a sauna and steam room, pool and Jacuzzi, stained glass skylights, marble and granite floors, European crystal chandeliers, 20-foot vaulted ceilings 46 leaded and beveled glass windows, and 36 exterior French doors.

After months on the market, the house sold last June for $900,000--about half the listed price.

Malcolm and Schmucker each lost about $100,000 on the deal, according to a source familiar with the house.

Times staff writer Armando Acuna contributed to this story.