Advertisement

Developer Pleads Guilty in Quake Loan Fraud

June 11, 1996|ABIGAIL GOLDMAN | TIMES STAFF WRITER

A Studio City real estate developer Monday withdrew a not-guilty plea in the largest federal loan fraud case stemming from the Northridge earthquake and pleaded guilty to four felonies, acknowledging his role in trying to bilk the U.S. Department of Housing and Urban Development out of $2.7 million.

Thomas E. Bell, 38, president of Bell Diversified Development Inc. and a former deputy director of the California Department of Housing and Community Development, was accused of spending almost $400,000 in low-interest federal loans on jewelry, a vehicle, a down payment on a second Studio City home and business debts.

Those funds had been intended to help repair earthquake damage at Bell's three HUD-insured low-income housing projects in Los Angeles and West Hollywood.

"Mr. Bell accepted full responsibility for defrauding the federal earthquake loan program," said Assistant U.S. Atty. Nathan Hochman. "His conviction should send a strong message that the federal government will forcefully prosecute all abuses of disaster relief programs."

With his guilty plea to two counts of mail fraud, one count of submitting a false statement to HUD and one count of obstructing a HUD audit, Bell faces a maximum sentence of 20 years in prison and a $1-million fine in addition to paying back all the money he is accused of misappropriating. If he had been convicted of all 16 of the original charges, Bell would have faced a maximum of 100 years behind bars.

"Mr. Bell pleaded guilty to acknowledge his culpability and to get on with his life," said his attorney, Donald Etra.

Hochman said that after the quake, Bell applied for $2.7 million in low-interest loans to help repair damage at his three low-income housing projects.

Bell awarded his own company, BDD, $1.6 million to make those repairs and submitted to HUD three allegedly competitive bids from different companies to show that his work indeed would cost the least. Two of those bids, however, were arranged by Bell's friend Mario Ma, who Hochman said has not been charged with a crime.

During a routine HUD audit, Bell also submitted almost $800,000 in invoices and purchase orders for work purportedly subcontracted to Ma's company, M&M Management. Bell offered documentation that M&M had completed nearly $500,000 worth of that work and had received one payment: a $100,000 cashier's check.

Ma later told investigators that the invoices were fakes and that he had never received a $100,000 check, Hochman said.

Investigators later discovered that the check receipt that Bell submitted was real, but that Bell had canceled it the day after it was purchased and bought another check for the same amount to pay off an unrelated business expense, Hochman said.

Advertisement
Los Angeles Times Articles
|
|
|