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Fraud Alleged in Bankruptcy Title Transfer

February 27, 1986|BILL RITTER | San Diego County Business Editor

SAN DIEGO — A San Diego man whose real estate investment and management company went bankrupt more than four years ago was indicted by a federal grand jury Tuesday on 18 counts of mail and bankruptcy fraud, as well as filing false declarations in bankruptcy court.

Lewis W. Shurtleff, 65, was charged with transferring title to two apartment complexes from his company, Frontier Properties, to himself, his wife and his brother in July, 1981, one month before the company filed for bankruptcy.

Bankruptcy court officials didn't know that the property existed, according to Assistant U.S. Atty. Charles F. Gorder Jr.

Shurtleff is charged with lying to bankruptcy officials by failing to report both the existence and the transfer of the properties, located in El Cajon.

If convicted, Shurtleff faces up to 90 years in prison and fines of as much as $30,000

Shurtleff, now residing in the East Bay Area, is expected to surrender to authorities in the next week, according to Peter Hughes, Shurtleff's attorney.

Shurtleff did not pay the first and second mortgage holders of the property during the bankruptcy period but continued to collect rents from the apartment tenants, authorities charge.

Under bankruptcy law, the banks holding the trust deeds to the property were prohibited from foreclosure.

Because of that, the banks believed that the matter was being resolved in bankruptcy court, while the company's bankruptcy trustee knew nothing of the property, according to a source familiar with the company.

The alleged scheme was uncovered when one of the banks made a motion to lift a court-ordered stay on foreclosure proceedings. The motion was the trustee's first knowledge that the property existed.

The trustee subsequently assumed control of the property.

Shurtleff allegedly pocketed about $20,000, authorities charge.

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