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Man of Many Aliases Named in Huge Fraud Case : Indictment: Capistrano Beach investor Douglas P. Blankenship is accused of masterminding a complex scheme that looted $25 million from financial institutions in seven states.

November 18, 1990|GREGORY CROUCH | TIMES STAFF WRITER

SANTA ANA — If what federal prosecutors say about him is true, Douglas P. Blankenship would have brought the house down on "To Tell the Truth," the old television show in which impostors tried to stump the panel.

Blankenship, a Capistrano Beach resident also known as John Perkins, Kenneth Stall, Randall Sanders and Kenneth Sliz, claims to be one of the nation's largest real estate developers, a genius with a Ph.D. in transportation systems and a wealthy coal baron from the mountains of Kentucky.

Now a 300-page federal indictment is demanding that the real Blankenship stand up. Two weeks ago, he was arrested by the FBI and charged with using aliases, corporate fronts, phony tax returns and false financial statements to mastermind a $25-million fraud against financial institutions in seven states.

Blankenship, 45, is being held without bail in Metropolitan Detention Center in Los Angeles, awaiting a criminal trial on charges of racketeering, bank and mail fraud and fraudulent transportation. He faces a sentence of up to 65 years in jail if convicted.

Defense attorney Kenneth D. Miller said Blankenship is innocent.

"My feeling on this case is that the banks are taking big hits on (former Lincoln Savings & Loan owner Charles) Keating and my opinion is they are looking to point a finger at someone and that is Mr. Blankenship," Miller said.

U.S. Magistrate Ronald W. Rose denied Blankenship bail earlier this month because he said there were too many unanswered questions about him, including "who he really works for . . . who pays his rent, what his real name is . . . where his assets are."

Fourteen people in four states were indicted on lesser charges and 10 of them--including Blankenship's girlfriend--have been apprehended by federal authorities, said Assistant U.S. Atty. Bob Westinghouse. In all, the group is charged with 33 counts of racketeering, fraud and other illegal acts.

The Blankenship case is not the largest alleged scam ever organized and operated in Orange County. Nor are the victims--large financial institutions--the kind that attract public sympathy, even though taxpayers could end up footing the bill for some of the fraud.

But what appears unusual is that the unknown son of an Appalachian coal miner could so easily persuade sophisticated institutions--which might reject a consumer loan because of a single credit blemish--to loan him millions of dollars.

It is that ability to persuade that has landed him in trouble. So good was his line that Orange County attorney Robert L. Green said in a civil lawsuit against Blankenship that he is "a con man rivaling J. David Dominelli and Ferdinand Marcos." (Dominelli is a jailed San Diego financier and Marcos the late ruler of the Philippines.)

Blankenship honed his silver tongue in Kentucky, where he was raised with three siblings in a coal-miner's family in the tiny town of Argo (population 175) just hours from the Daniel Boone National Forest and the hills where the infamous Hatfield-McCoy family feuds were fought.

Pike County Sheriff Charles (Fuzzy) Kessee has known Blankenship "since he was a boy" and was a buddy of his father, Herbert. The local tax commissioner and state senator were family friends too.

Phelps High School Principal Beth Compton said he was a "fine young man, in the top of his class." Just about everyone in the Argo area thought Blankenship was bound for greatness and they weren't surprised when he decided to move to California a few years after his graduation from Eastern Kentucky University.

But that quest has now led to the courthouse. Besides the criminal charges he faces, Blankenship has been named in more than 50 civil lawsuits in California and Kentucky, many of which alleged fraudulent activity.

Green hunted Blankenship for several years as an attorney representing Orange Coast Title Co. and Allstate Life Insurance, two companies that successfully claimed in civil actions that they had been victimized by him.

Earlier this month, after Blankenship landed in prison, Allstate got permission from an Orange County Superior Court Judge to foreclose on his Capistrano Beach home, clearing out his possessions including 20 handmade silk suits and a roomful of accolades including a certificate from Mensa, the society for individuals with high IQs.

Blankenship is described by prosecutors as a Gatsby-like raconteur who lived the high life even though his net worth was nearly nil. In one financial statement, he claimed he was a millionaire 99 times over.

When arrested he was driving a gold-colored Rolls-Royce. The luxury automobile has since disappeared, to the dismay of the U.S. attorney's office. Miller, Blankenship's attorney, said his client's girlfriend owns the car.

"It's not being concealed. It's being garaged, " Miller said.

Blankenship and his associates are accused of using paper corporations--including Pacific Coast National Development Corp. and Pacific Coast Plaza Inc.--to fraudulently obtain bank loans amounting to tens of millions of dollars.

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