Condo case takes a turn
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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
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