A La Puente real estate broker has been charged with 19 counts of grand theft in connection with a second-trust deed investment plan that allegedly bilked hundreds of Southland investors of an estimated $8.5 million.
Joan Betts Diplarakos, 62, faces the possibility of 10 years in prison and fines for her role as owner of a real estate firm that offered big profits to investors willing to contribute money derived from second mortgages on their homes, Deputy Dist. Atty. James E. Green said Friday.
Much of the money was siphoned off and never used for the intended investments, Green said. Some of the investors, including elderly or retired persons with low incomes and almost all their savings tied up in their homes, lost them as a result, he said.
Diplarakos, whom authorities have not been able to locate, faces arraignment Tuesday in Los Angeles Municipal Court. The charges were filed last Monday. She and her attorney, Gary Pohlson of Santa Ana, could not be reached for comment. Diplarakos could be charged with many more counts, but only 19 investors were chosen because any more than that would make the case unwieldy, Green said. Their losses accounted for slightly more than $1 million.
Liquidation of Firm
Diplarakos' firm, First Home Investments Inc. of La Verne, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in February, 1982. The filing status has since been changed to Chapter 7, which calls for a complete liquidation of the firm's assets to pay creditors.
A company in Chapter 11 is allowed to remain in business while it develops a plan of reorganization.
Under the firm's investment plan, Diplarakos and First Home asked homeowner-investors to take out second-trust deeds on their homes. First Home sold the second mortgages to other parties and claimed that it would use the proceeds to invest in real estate developments through limited partnerships.
The homeowner-investors were to get back their contributions plus profits from the investments in a few years, and in the meantime, payments on the second mortgages would be made by First Home.
About 275 investors, mostly from the San Gabriel Valley, contributed between $7 million and $9 million for about 45 limited partnerships, mostly investing in developments in the Valley and western San Bernardino County, First Home attorneys said at the time of the Chapter 11 filing. They said then that some of the investments went sour because of the recession and high interest rates.
Prosecutor Green contends, however, that some of these investments were never made and that Diplarakos siphoned off money for personal investments. As a result, First Home could not pay many of the second mortgages, and homeowners lost their homes through foreclosure.
Herb Wolas, the court-appointed trustee in charge of liquidating First Home's assets, said he has so far come up with only about $200,000 to pay off investors, although he is still trying to find other assets to liquidate.
"Ten cents on the dollar sounds high," he said when asked how much the investors might get back. Some individuals lost as much as $200,000, prosecutor Green said.