A Laguna Beach parcel with an expansive view of the hills and the Pacific Ocean beyond. The perfect place to build a home, and priced so low it looked like a steal.
It was, prosecutors say.
Last June, someone stole the identity of a real estate agent in Mystic Hills, a neighborhood of striking, multimillion-dollar estate homes. Authorities say an unsuspecting buyer quickly purchased the empty lot with the tempting price tag.
He was out more than $500,000.
Orange County’s housing market is back in high gear, with bidding wars driving up prices and properties selling quickly. Whether home sales are going boom or bust, accusations of real estate fraud persist.
The District Attorney’s Office in 2009 set up a special unit to prosecute real estate-related crimes. Over the next several years, Orange County law enforcement agencies investigated the highest number of such cases among the state’s highly populated counties, according to a report by the Legislative Analyst’s Office.
As the housing market evolves, the type of fraud cases change and they can take years to get to court. Loan-modification scams, for example, are no longer as rampant as they were during the recession, but authorities still get calls about them. In a case now pending trial, prosecutors say $13.5 million was taken from 3,500 victims in what is one of the largest loan-mod schemes tried in the nation.
“Real estate cases are very complicated,” said Bruce Moore, head of the Orange County District Attorney’s real estate fraud unit. In a robbery, he noted, the crime is obvious, but in a property transaction, everything may appear fine, at first. “They’re just harder to unravel.”
Here are examples of the types of real estate fraud charges now winding through local courts.
Former pro surfer sought
A warrant was issued this month for the arrest of Conan Hayes, who once competed on the World Tour as a pro surfer and co-founded a clothing brand bought by Billabong.
Hayes is charged with short-sale fraud on a house in Costa Mesa. In a short sale, a bank agrees to the sale of a home for less than the amount owed on the loan. The warrant says Hayes gave Bank of America false information regarding his net worth, “which was in the millions of dollars.”
Hayes wound up in a program for people suffering financial hardships, even though prosecutors contend that in the previous nine months he sold his interest in a business for about $8 million and bought a $1.39 million house in Los Angeles County for cash. The felony complaint says the bank lost $586,245 on the short sale.
Hayes has not been arrested. He could not be reached for comment.
Authorities also have issued an arrest warrant for Edmara Nazaryan, one of the people they say took part in the fraudulent Laguna Beach land sale involving someone who masqueraded as the listing agent.
Nazaryan is wanted on charges of conspiring to commit several crimes, including grand theft and money laundering. In this case, signatures were forged and the buyer’s money was placed in escrow, according to court records. But after a couple of wire transfers that investigators say Nazaryan and an unidentified man ordered, the money was gone. Prosecutors suspect that Nazaryan went to Moscow.
The cases below are awaiting resolution. The defendants have pleaded not guilty, and trials are pending.
Thomas Franklin Tarbutton of Newport Beach faces 29 felony counts in a scheme that prosecutors say took in more than $3.2 million.
Officials say Tarbutton’s Villa Capital Inc. solicited money from private real estate investors for about seven years. But instead of using it to generate income or profits, they say, he ran a Ponzi scheme.
Investigators suspect he made small interest payments to investors using funds from their initial investment, then stopped when the real estate market collapsed.
Tarbutton was extradited to Orange County from Panama.
Loan mods and law offices
Authorities believe a loan-modification case involving a Huntington Beach lawyer and six other defendants is among the largest of its type prosecuted in the U.S. They say more than $13.5 million was scammed from 3,500 people.
Defendants including Pamela Gressier, the attorney, are accused of illegally charging upfront fees for loan modifications and telling victims they were eligible for loan mods with no basis for that claim.
The indictment came in May 2014 after a raid in Newport Beach, when investigators seized documents and computers from several related companies in a small office park near John Wayne Airport. Dozens of people across the country also told the Register they were victims of companies connected to Gressier, including Remedy Center Law Associates and Prudential Law Group.
Investors and distressed homes
Two women were charged with stealing more than $2 million in a scheme prosecutors say preyed on local Vietnamese Americans and involved homes in foreclosure and phony investments.
Loan Thituong Nguyen is accused of soliciting investors for the properties, though neither she nor Lynn Eichenberger, also charged, had any financial or legal claim to them.
Nguyen told investors they’d have to pay 50 percent of the cost of the home upfront to get it into escrow, prosecutors say, and she also solicited the homeowners in foreclosure, saying if they paid her 50 percent of their mortgage balance, she’d get them a loan mod. Investigators say money from investors and homeowners wound up in a business account set up by Eichenberger, which the pair later drained.