A Los Angeles Municipal Court judge Tuesday ordered three people, including a former escrow company employee, held for trial on charges of conspiracy and grand theft for allegedly bilking San Fernando Valley home sellers out of the equity in their properties.
Judge Suzanne E. Person ordered Bud Branca of Sun Valley, Debbi Roemer of Burbank and Aaron Shopnick of Northridge to be arraigned in Superior Court on Feb. 17.
Branca, once a prominent Burbank-area dealer in real estate and property loans, and Roemer, who worked as an escrow processor at three firms, are also involved in more than a dozen civil suits and one other criminal matter, based on charges of deception in real estate deals.
'A Very Complex Case'
The judge's order ended a four-week preliminary hearing into what she called "a very complex case . . . a classic case of a trail of paper."
Deputy Dist. Atty. Julie Sergajan accused the three of participating in complicated schemes in which 11 people were swindled out of $305,000.
Sergajan said the prosecution follows an investigation by the state Department of Real Estate and the Department of Corporations, "who, along with some real estate agents, alerted us to this problem and provided information for our investigators."
In one type of operation, which the defendants called "the quickie cash deal," Sergajan said they talked home sellers into giving them deeds to their homes without payment. Escrows were then opened, and the defendants promised the homeowners payment later, Sergajan said. The defendants then took out mortgages on the homes while the homes were still in escrow--without telling the lenders that they still owed the sale price to the previous owners--closed the escrows and kept the loan proceeds, she said.
"Escrow never should have closed, because they still hadn't bought the properties to begin with," Sergajan said outside of court.
The alleged victims included Craig and Jacqueline Schuetta of Canoga Park; Alice Juanita Ward of Los Angeles; Rita Collins of Woodland Hills, and the Bertha Koolish Trust of Beverly Hills.
Sergajan said all the transactions were handled by Roemer, who worked as an escrow processor in the offices of three firms--Burbank Escrow Co., Central Park Realty Co. of Van Nuys and Central Realty Exchange of North Hollywood.
Roemer did not have a state escrow officer's license but could process escrows as long as she worked for someone who was licensed, Sergajan said.
"They refused to deal with anyone unless the escrow was handled by Roemer," the prosecutor said.
The escrow officer's role in a real estate transaction is to make sure that the instructions of all parties to the deal have been followed and that all legal requirements have been met before distributing the funds and recording a deed with the county.
In the other type of operation, the prosecutor said, the conspirators made a 20% down payment and promised to pay off the sellers over a period of years. But the sellers were given a promissory note--an IOU--instead of a trust deed, which is secured by the property itself. They then mortgaged the homes, kept the loan proceeds and defaulted on the loans, leaving the seller with a worthless IOU and no claim to the property, Sergajan said.
The sellers were unaware until it was too late that they did not have trust deeds, which would have protected their interests, she said. Often, the sellers--older people who wanted to retire on the equity in their homes--were given a year's payments in advance, and therefore did not check back with the buyers for some time, she said. By that point, the property had often passed through several hands and was encumbered by loans, the prosecution charges.
The alleged victims included Gilbert P. Pessano of Sylmar, Sam and Ruth Dashosh of North Hollywood, Jose and Maria Loya of Pacoima and Elizabeth Denti of Van Nuys.
Defense attorneys argued unsuccessfully that the charges should be dismissed, that the district attorney's office was interpreting as a "scheme" acts which, by themselves, were legal and accepted practices in the real estate industry.
John Hud, defense attorney for Branca, told the judge that his client was wrongly being held responsible for acts by his brother, Guy Branca of Burbank, but that the brothers had no business relationship. Guy Branca died of a heart attack more than a year ago, Hud said.
"There is no doubt Guy Branca was a crook," Hud said outside the courtroom. "He did all kinds of things. He's the one they wanted to nail but they can't, so they're after his brother instead."
The two Brancas had offices next to each other in Burbank but never did business together, Hud said. Most of the alleged victims never saw Bud Branca and did not know who he was, Hud said.
The prosecutor said the Brancas operated through corporations and front men known as "straw buyers," in part because they were well-known to many real estate agents and title insurance companies, who would not accept any deal in which they were involved.
Branca is on probation for a misdemeanor forgery conviction in Los Angeles County, Sergajan said, and Shopnick is on probation for a grand-theft conviction in Ventura County.
Branca, Roemer and two other men, George Tanous and Mark Pollack, are also facing a conspiracy charge and seven counts of grand theft in another case, also alleging deceptive real estate transactions, Sergajan said. A preliminary hearing in that case is scheduled to begin March 15.
The state Department of Real Estate and the Department of Corporations in 1984 said they were launching an investigation of as many as 100 real estate transactions involving so-called "creative financing" in which homeowners had been tricked out of millions of dollars.