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For Con Men, Orange County Is the Land of Opportunity

September 01, 1988|DANA PARSONS | Times Staff Writer

Agnes Mitchell remembers being very impressed with the man, especially after he invited her to his home on Easter Sunday to meet his wife and two young sons. She was so taken with the boys, about 7 and 9, that she gave each of them $5 in an envelope.

But that was nothing compared to what she gave their father, who convinced the 80-year-old woman that he could do wonders with her money. And over several months, Mitchell (not her real name) gave the man $57,000 to invest in various real estate ventures.

The initial requests for money--in increments of $5,000, $7,000 and $15,000--were for properties he was fixing up, he told Mitchell. The last time, the man drove Mitchell out to a lot that had two "for sale" signs. He told her that he owned the property and was going to build homes on it. She could buy into the venture, he told her, for another $30,000.

The man paid back the first $5,000. But that was the last Mitchell ever saw of her money. Eventually, she and a friend did some checking and found that someone else owned the lots.

Today, about two years after her dealings with the man ended with her losing $52,000, Mitchell said, "Everything he did was crooked."

Possible legal action against the man's Newport Beach operation is pending, with investigators saying there may have been as many as 1,500 victims with total losses of more than $10 million.

The operation is just one of dozens of swindles that are operating at any one time out of Orange County, local, state and federal prosecutors say. From small-potatoes scams in which victims send $50 for pen-and-pencil sets, to elaborate schemes in which people lose life savings, Orange County has proved fertile ground for swindlers.

The problem grew to such proportions that as recently as 2 1/2 years ago, federal officials were calling Orange County "the fraud capital of the nation."

Federal prosecutors, citing dozens of successful state and federal prosecutions in the last couple of years, say they have dented the problem. However, one federal official said, "if someone wanted to be honest with you, they'd probably tell you we're getting our butts kicked."

Federal officials say there may be as many as 100 illegal telemarketing operations in Orange County. These are swindles initiated over the telephone, in which con men, usually working from large computerized lists of names, try to entice people to invest in such diverse interests as precious metals, real estate, or oil and gas leases.

Besides those operations, where individuals are conned, the county has also proved lucrative for swindlers defrauding businesses or other financial institutions. Much of that fraud involves real estate transactions, federal prosecutors say, such as obtaining loans or other financing through fraudulent representations.

Nancy Wieben Stock, who heads the U.S. attorney's Santa Ana branch, which opened in January, said, "Per capita, (fraud in Orange County) is just really out of hand. It's really pretty amazing."

The problem has become so serious in recent years that, because of the heavy workload, federal prosecutors sometimes turn down cases if the loss from the scam isn't at least $1 million.

How did the home of Mickey Mouse and oranges become a haven for swindlers?

According to local police and federal officials, Orange County's susceptibility to con games is the product of several factors, many of them the same things that make the county appealing to honest citizens.

"For a swindler to sell a package, it's much easier to sell the California promise with a yacht in the front yard, palm trees and girls in bikinis, as opposed to, say, Palm Springs, where all you can show is a desert and a couple of Gila monsters crawling around," said Kacy McClelland, who heads a five-member U.S. Postal Inspection Service team in Orange County.

"I'm from the Midwest," McClelland said, "and when I pictured California, the first thing I thought of was a home in Newport Beach, a boat in the front yard, a glass front on the house, the sun setting right behind you. I think they market that kind of promise to the investor."

Part of the county's problem, not surprisingly, is its size. "Whenever you have a large population, you're going to have a certain segment of the population who engage in illegal white-collar crime," said Terree Bowers, who heads the U.S. attorney's major fraud section in Los Angeles.

"In Orange County, we've got another aspect, in that it's a fairly affluent area. There's a lot of nouveau riche, a lot of people legitimately making a success out of entrepreneurial ventures. . . . But what you have is a lot of people attracted to this area and they see people and their success, and the life styles of the rich and famous or whatever you want to call it, and rather than go through the work and time that is required to develop a legitimate business, they want immediate gratification, so they'll go in and establish scams where the sole objective is to get as much money as they can."

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