State investigators have seized the financial records of developer Stanley Sirotin, claiming that he lied to investors in several of his Pasadena commercial projects and funneled their funds, as well as construction loans, to himself.
Search warrants were signed by Los Angeles Municpal Court Judge Elva Soper earlier this month for financial records from five partnerships being kept at a Covina accounting firm and a Bank of America office in downtown Los Angeles.
The financial records are expected to show that Sirotin "accepted the funds of investors and used them for purposes which included his personal benefit," said Alonza Lomas, an investigator for the state Department of Corporations, in affidavits seeking the search warrants.
Sirotin also "extracted parts" of a $10-million construction loan from Bank of America "for his personal benefit," the affidavit said.
Now Living in England
Sirotin fled the country a year and a half ago amid a flurry of bankruptcies and lawsuits filed by creditors who claimed that he defrauded them of millions of dollars. Sirotin, who now lives in England, has said in published interviews that he has no money to pay his debts.
Sirotin, 61, began buying several downtown Pasadena sites for commercial development in 1978. He has claimed, in various published interviews, to have built bowling alleys throughout Europe, operated a tool firm and developed office buildings in Madison, Wis., before coming to Pasadena.
He formed at least five limited partnerships to control his Pasadena holdings. Among his developments were The Commons, an office and retail complex at 142 S. Lake Ave., and the nearby Burlington Arcade. Both became financial failures. Bank of America, which gave Sirotin a $10-million construction loan for The Commons, foreclosed on the mortgage in May. The Burlington Arcade, heavily in debt and unable to lease much of its office space, was sold to an Orange County developer in 1984.
The state Department of Corporations has been investigating Sirotin for two years in connection with possible felony violations of corporate securities laws. Also under investigation is Fred Gottfurcht, a Beverly Hills real estate agent who allegedly solicited investors for Sirotin's development projects.
False Claims Alleged
Lomas said in the affidavit that interviews with investors and county and state records indicated that Gottfurcht secured investments for Sirotin's projects by making false claims to investors about Sirotin's financial security and past development projects.
According to the affidavit, investors were promised a 55% profit on their investments in various Sirotin projects in Pasadena. Most investors received little, if any, return on their money, the affidavit said. A state audit in 1983 determined that Sirotin benefited by more than $1.8 million from another of his Pasadena projects, a nine-story office building called Les Bureaux, while investors lost about $3.5 million.
Attempts to reach Lomas for comment on the investigation were unsuccessful.
In the past two years, a dozen civil judgments totaling almost $6 million have been awarded against Sirotin for complaints including fraud and unjust enrichment in connection with his development projects. Another dozen suits are pending.
If felony charges are filed against Sirotin, the developer may be subject to extradition if the charges filed are also violations of British law, state officials said.