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Condo case takes a turn

A former Huntington Beach mayor is scheduled to plead guilty in

federal court today on charges stemming from her role in an illegal

condominium conversion scheme

Pam Houchen, 48, is looking at spending the next five years in

prison, according to information from the U.S. attorney’s office.

On Monday, Assistant U.S. Atty. Andrew Stolper said Houchen’s

alleged participation in the real estate scheme qualified her for 21

to 27 months in federal prison, but according to her plea, Houchen

could face an additional 25 to 30 months in prison for pleading

guilty to a crime resulting in a loss of more than $1 million.

A federal judge can decide whether to tack on the additional

sentence, or reduce her base sentence, Jim Cho of Families Against

Federal Minimums said.

Houchen pleaded guilty to eight counts of mail and wire fraud and

faces a maximum 40 years in prison.

The news sent shockwaves through City Hall, where Pam Houchen

served on the City Council from 1996 to 2004 and was appointed mayor

in 2000. Houchen abruptly resigned from office on Sept. 1, 2004 after

an Orange County Register article detailed her alleged involvement in

the scheme.

“I feel very badly for her family,” former mayor Shirley Dettloff

said, noting Houchen’s young triplets. “The children at their age,

they need their mother.”

On Tuesday, Houchen and four other defendants accepted a deal with

the U.S. attorney’s office that could mean lighter prison sentences

in exchange for cooperating with the government, Stolper said.

Sentencing will take place later this year or early next year.

Three other defendants have pleaded not guilty to fraud charges

and will be tried in federal court Oct. 4.

Houchen could get additional reductions on her sentence, which

will likely be served in a federal minium-security women’s prison,

similar to the Alderton, W. Va., facility that housed Martha Stewart.

Court records show Houchen recently divorced her husband Brian

Houchen after four years of marriage.

Houchen and four others were charged with participating in a

scheme to illegally convert apartments into condominiums without the

proper permits and sell them to unsuspecting buyers. Houchen was also

charged with public corruption for purchasing property in a

redevelopment zone while in office. To avoid state laws baring the

practice, Houchen paid former border patrol officer Mike McDonnell to

buy and then sell the apartment in exchange for help with building

permits at City Hall, the U.S. attorney’s office alleges.

In total, 15 apartment buildings were converted into about 45

condominiums, generating about $11 million. Houchen is reported to

have sold two 4-unit apartment buildings for a total of about $1.7

million. Realtor Phil Benson, who now lives in Hayden, Idaho, and is

suffering from terminal cancer, was said to be the mastermind of the

scheme that prompted state legislation to fix a loophole to prevent

condo conversion fraud. Benson has pleaded guilty and could face $6

million in fines and a sentence of seven to nine years in prison.

Title officer Harvey Du Bose, also pleaded guilty in the case. He

was charged with forging documents to insure the transactions. He

faces a seven-year prison sentence. Realtor Tom Bagshaw and investor

Michael Cherney also accepted the plea deal, the U.S. attorney’s

office said. Bagshaw faces 18 to 24 months in prison for two counts

of wire fraud, while Cherney, who pleaded guilty to making a false

claim to federal authorities, faces up to six months in prison.

The plea agreements were filed in federal court Tuesday and

Houchen and the four defendants will be in court today to reverse

their not-guilty pleas.

Still facing trial are investors Jeffrey Crandall and Howard

Richey, along with McDonnell.

Monday’s plea agreement closes a chapter in the high-profile case

that embarrassed City Hall on the heels of another high-profile legal

battle involving former mayor Dave Garofalo, who pleaded guilty to 15

misdemeanor counts and one felony charge of corruption in 2002.

It took city officials months to sort out the condo conversion

scandal, and the City Council eventually accepted a settlement deal

with insurance companies that included additional development and

housing fees.

Homeowners like Steve Worley agreed to city home inspections on

his property to get the title on his condominium cleared up. Without

the proper permits, he was not able to sell or refinance his

condominium.

Others around City Hall expressed sympathy for Houchen, who has

lost her business, her position on the council and now likely her

freedom.

“It saddens me. I like Pam, and I think she did a lot of good work

while on the City Council. Unfortunately, it seems somewhere along

the way she and some others in her private sector real estate

profession chose to cut some corners and are rightfully being held

accountable,” Councilman Keith Bohr said. “I think Pam has already

paid dearly, given she was a sitting councilwoman at the time, she

has been made the poster child for the whole group with her name and

picture made a part of every headline.”

Councilman Don Hansen also expressed sadness over the entire

episode.

“I’m sad for her family and sad for our community. It will

definitely have a negative reflection for us,” Hansen said. “This

reinforces skepticism toward elected officials. It’s so easy to cling

to negative instead of the positive. It’s not usually the good things

that stick out in people’s minds.”

QUESTION

Is a five-year prison term proper punishment for former Mayor Pam

Houchen? Call our Reader’s Hotline at (714) 966-4691 or send e-mail to o7hbinde [email protected]. Please spell your name and

include your hometown and phone number for verification purposes.

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