Kern Officials Seek Levy to Beat Land Fraud

Inspired by the Marshall Redman case, Kern County officials are pushing a plan to levy new fees to pay for an early warning system against land fraud.

If successful, Kern would become only the fourth county in California--joining Los Angeles, Santa Clara and San Diego counties--to take advantage of a new law authorizing local prosecutors to charge an additional $2 in real estate recording fees to pay for such time-consuming and expensive probes.

“Lord knows, we can use the help,� said Kern County Supervisor Steve Perez, whose panel must first approve the plan. “Chasing down these people takes money.�

The law grew out of concern about the impact of land and home equity fraud in California. A study by the San Francisco-based Consumers Union estimated that in 1993 and 1994 in Los Angeles County alone, residents lost more than $183 million in such scams.

“Statewide, the annual loss reaches into the hundreds of millions--maybe more,� said Norma Paz Garcia, the attorney who wrote the report.

The legislation, sponsored by state Sen. Theresa Hughes (D-Inglewood), offers counties new autonomy to actively pursue real estate fraud, rather than rely on regulatory agencies such as the Department of Real Estate, which has been criticized by consumer advocates as ineffective in policing land-sale crimes.

“We’re giving local prosecutors more firepower to go after real estate fraud,� Hughes said of the law, which took effect in January. “This is not violent crime, but it’s still terrible because most people’s life savings go into the acquisition of a home or property. And to lose it all because some charlatan decides he’s going to take it away is just unspeakable. We ought to go after these people like we do murderers and carjackers. Maybe now we can.�

In recent months, Kern officials have cited budget frustrations for their inability to move more effectively against Redman. The 67-year-old Redman faces trial on theft and fraud charges in what authorities allege was a massive, decade-long scheme involving the sale of 2,500 parcels of raw high desert land to working-class Latinos, as many as 250 of whom now live scattered across the Antelope Valley without water or other utilities. He has pleaded not guilty.

“We’ve got a lot of land here in Kern County,� said Kern County Assistant Dist. Atty. C.M. “Bud� Starr II. “Most of it’s raw land, which brings about a different kind of fraud than you have in big cities. Raw-land fraud is a rural county kind of thing. It takes a certain expertise to combat it.�

The law allows supervisors to create the fund by placing a $2 surcharge on the recording of some financing documents associated with a property sale, including trust deeds, notices of default and notices of conveyance.

In Los Angeles County, the new law this year enabled prosecutors to start a new real estate fraud unit--complete with three district attorneys and five investigators.

Deputy Dist. Atty. Don Tamura, who heads the new unit, says the county expects to bring in up to $2 million annually from the fund--money that will be split 60%-40% between prosecutors and law enforcement. In the future, Tamura hopes to hire as many as 10 district attorneys and 10 investigators to pursue cases involving lender fraud, home equity and land fraud.

As well, Tamura says his office has fielded inquiries about the fund from authorities in Sacramento, San Francisco, Santa Barbara and other smaller counties.

“The problem is that a lot of district attorney’s offices in these smaller counties have maybe only four prosecutors, so they have to rely on the state attorney general’s office to prosecute these fraud cases--and those don’t always get first priority,� he said.

“This is such a good deal for prosecutors that you’d think every county would want to join in, especially in Southern California,� Tamura said.

San Diego County Deputy Dist. Atty. Jeffrey Brodrick, who heads the real estate fraud unit his agency formed with the projected $600,000 annual budget from the new fund, has taken a more consumer-oriented approach, placing ads in real estate publications and producing videos.

“Right now, there is more than $135 billion in property in San Diego County--that’s a lot of temptation for abuse,� he said. “One of the good things about this legislation, prosecutors will be networking. And the earlier you can coordinate with various agencies, the better. I think that every county will come on board ultimately. It’s too good to pass up.�

Santa Clara County Dist. Atty. George Kennedy said a projected $300,000 annual take from the fund has already made a difference, enabling prosecutors to start a new real estate fraud unit there as well.

“We’re going full speed,� he said. “We can already see a marked difference in the way we look at these cases. In past years, we didn’t have the resources to do these things. We’d send them off to the Department of Real Estate and it took them, like, four years to do anything.

“By the time they did, more people would have been ripped off. It would turn into a scandal of major proportions. Defendants had time to hide assets and move to the Philippines if they wanted. We weren’t serving the public very well. Now we can do these things in-house the way it should be done.�

The Consumers Union report was also critical of the Department of Real Estate, saying it needed to be more aggressive in pursuing real estate fraud. For example, in fiscal year 1993-94, the department had jurisdiction over 337,000 licensed property-sale brokers. In that period, the department received 8,850 complaints, which resulted in just 146 license suspensions and 562 revocations, according to the report, released last fall.

“Consumer advocates, victims’ lawyers and law enforcement officials interviewed for this report consistently accuse the Department of Real Estate of being weak and indifferent in its enforcement efforts,� the report said. “Legal advocates, in fact, say they rarely report cases to the DRE for investigation because it does little good.�

Betty Ludeman, assistant commissioner in charge of enforcement for the agency in Sacramento, would not comment on the report or its conclusions.

Garcia, the Consumers Union attorney who wrote the report, says the new funding law will allow local prosecutors to take matters into their own hands when it comes to real estate fraud.

“Overall, we’re disappointed with their performance,� Garcia said of the real estate agency. “The DRE has a lot of room for evolution with their management style and investigative output. It’s a vicious circle, with local district attorneys waiting for referrals from the DRE, which simply is not acting. The system isn’t working.�