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Up to $50 Million Lost in Housing Scheme, U.S. Says : Crime: Southland businessman accused of diverting funds from investors, federal treasury. He pleads not guilty.

August 29, 1994|DONALD W. NAUSS | TIMES STAFF WRITER

COLUMBUS, Ohio — Developer John Goodin hoped the rushed real estate deal he made on New Year's Eve 1990 would straighten out his shaky business affairs.

Instead, it became a legal quagmire that soon pushed Goodin--and several partners--close to financial ruin.

A year and a half later, the 47-year-old father of three found a way out. On the afternoon of June 10, 1992, Goodin walked into the bathroom of his Columbus home, put a 12-gauge shotgun to his face and pulled the trigger.

Goodin's wife blames his suicide on distress over the ill-fated sale of two low-income apartment complexes in Ohio to Gary W. Lefkowitz, a mercurial Southern Californian who sold limited partnerships in low-income housing funded by federal tax credits.

"It put a lot of pressure on him," said Judy Goodin. "He felt guilty having got his friends involved."

In May, a federal grand jury in Minneapolis indicted Lefkowitz, a lawyer who lives in Beverly Hills, on 45 counts of fraud, embezzlement, obstruction of justice and filing false tax returns.

Federal authorities allege that Lefkowitz, owner of Citi Equity Group in Culver City, masterminded a sophisticated scheme to divert up to $50 million from dozens of developers, thousands of investors and the federal treasury to support his extravagant lifestyle.

He has pleaded not guilty and is free on $1-million bail. With his company in Chapter 11 bankruptcy, Lefkowitz is being represented by a public defender and has told the court that he is contemplating insanity as a defense.

Lefkowitz, 41, declined several requests for interviews. But a review of court records involving Lefkowitz and interviews with former employees and associates lay out a story that reads like a portrait of a con artist as a young man.

Even in Southern California's caldron of white-collar crime, the Lefkowitz saga--as set forth in the federal indictment--stands out as a tale of extraordinary greed.

While presenting himself as a do-gooder providing shelter for the nation's poor, Lefkowitz lived a high life with mansions in Beverly Hills and Colorado and a stable of luxury cars and corporate jets at his call. For his 40th birthday, he threw himself a $500,000 bash on the ski slopes of Vail, Colo. Lefkowitz and his wife spent up to $48,000 a month on artwork; meanwhile, he lavished gifts on a girlfriend.

Along the way, developers insist that he pushed them to the edge of bankruptcy, investors say he bilked them out of retirement nest eggs, and government officials claim that he deprived hundreds of poor people of the chance to live in affordable housing.

Said one federal investigator: "This guy's a made-for-TV movie."

*

Gary Wayne Lefkowitz is a product of the San Fernando Valley, where his Midwestern-bred parents migrated to raise their son and three daughters.

As Lefkowitz described it to associates, his was not a happy childhood. Money came and went from the family's Granada Hills home with the swiftness of a Santa Ana wind. In 1979, his father, Albert Lefkowitz, was convicted of income tax evasion and served a year in federal prison.

Young Gary rarely looked back. But one bitter story that Lefkowitz repeatedly shared with friends was that he was given a new car by his father only to have it repossessed a few months later. Albert Lefkowitz could not be located for comment.

A graduate of Granada Hills High School, Gary entered the University of Southern California in 1970, earning a degree in business administration. In 1974, he went on to Loyola University law school.

After graduating, Lefkowitz opened a public interest law clinic in West Hollywood and had some success representing elderly tenants fighting evictions as their apartments were being converted to condominiums. He raised money for then-Gov. Edmund G. (Jerry) Brown Jr., creating ties to the liberal Democrat that earned Lefkowitz a two-year appointment in 1980 as a member of the California Department of Real Estate's advisory commission.

Despite the professional success, his personal life was a mess. By his early 30s, Lefkowitz had been married four times. His third marriage lasted just nine months.

Business partnerships also were short-lived. When a former law partner sued him in 1985, an employee testified that Lefkowitz habitually avoided process servers and "doesn't like to pay bills unless he absolutely, positively has to."

Richard Chier, a Los Angeles criminal defense attorney who shared an office with Lefkowitz in the early '80s, recalls him as "the crudest, rudest man I ever met." Adds Chier: "He was always beating people out of things."

*

Just ask Edith Beck and her son Donald.

In 1981, the Becks hired Lefkowitz, a family friend, to represent them in a real estate lawsuit. He advised Donald to turn over four properties to his mother in case of an adverse court decision. Lefkowitz prepared and held onto four quitclaim deeds. When the deeds later were recorded, Edith's name had been replaced with that of another Lefkowitz client.

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