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Prosecutor seeks support to toughen penalties against fraudsters
Wednesday, August 20th, 2014
Issue 34, Volume 18.
Deputy District Attorney Raymond Ramirez, a senior prosecutor in the D.A.'s real estate fraud section, is slated to address the Women's Council of Realtors-Inland Valley Chapter during a noon luncheon at the Arlington Library in Riverside. His chief topic: how to put rent skimmers out of business.
"These fraudsters are taking a bad situation and making it worse. Rent skimming impacts distressed homeowners, property investors, lenders and Realtors," the prosecutor told City News Service. "We need the discretion to prosecute these crimes as felonies. But there's a loophole in the law, and our hands are tied."
Rent skimming is the practice of collecting money under a lease agreement that is illegitimate because the person leasing the property doesn't own it, never had title to it and never occupied it.
State law provides that a person who conducts such activity using multiple properties can be prosecuted for conspiracy to commit grand theft and other felonies. However, if evidence of a conspiracy is scant and the number of houses involved are few, the primary statute under which a person can be charged is Civil Code section 890, a misdemeanor.
According to Ramirez, that's inadequate to deter rent-skimming, which mushroomed during the nation's latest economic downturn, when the Inland Empire's foreclosure rates led the state and rivaled most areas of the country for months on end.
Ramirez said he repeatedly witnessed instances in which scam artists would identify vacated homes immersed in the foreclosure process, then turn around and rent them to people -- typically for half the monthly cost of what the property might otherwise fetch.
"Now you have squatters in the home. A mortgage holder trying to unload it in a short sale can't because no prospective buyer is going to touch it with people in there," the prosecutor told CNS. "You can have the squatters removed through the civil process. But that can take months. I had one case where a victim spent $6,000 to have the squatters evicted."
Further complicating matters is a long-held legal doctrine, recognized by courts throughout the state and country, known as "adverse possession." The theory holds that a person may, under certain circumstances, justifiably lay claim to an unoccupied property if it can be shown that the claimant had reason to believe it had been permanently abandoned.
According to Ramirez's own research, courts have recognized that "adverse possessors" have an interest in the property and cannot be booted unless they're deliberately trespassing. However, if there's still mortgage debt or an unsatisfied lien on the property, it's up to the adverse possessor to pay it off in lieu of collecting rent.
But rent skimmers are only interested in one thing -- collecting as much money as they can as quickly as they can, Ramirez said.
He said his prosecutions have ranged from complex to minor. One of the worst cases of rent skimming was committed by Eugene Denman, convicted in 2011 of more than two-dozen felony counts, including taking property worth more than $150,000, perjury and filing false documents.
Denman tried to stand on an adverse possessor defense even though he had filed quitclaim deeds on multiple foreclosed properties that he never owned, arrogating to himself all rights and responsibilities for the homes, Ramirez said. Denman is serving a 23-year prison sentence.
Earlier this month, however, Ramirez obtained only misdemeanor theft convictions against two men who had rented several vacant -- but not abandoned - - homes in the Temecula Valley. Neither Brent Perry nor Matthew Sinay had prior felony convictions, and there were indications the pair had been working for convicted felon Blair Hanloh of Long Beach, who's serving a four-year sentence for perpetrating scams in Orange County.
"Most of the people who commit these scams are concerned about felonies on their record," Ramirez said. "They're not your hardcore strongarm robber or violent assailant. They're willing to take risks if all they're facing is a misdemeanor charge."
According to the prosecutor, he has approached several Inland Empire lawmakers about sponsoring a bill that would make the rent skimming statue, Civil Code section 890, chargeable as a felony. But the response has been unenthusiastic.
"Real estate is big here in the Inland Empire. There's room to grow. Property values don't move in line with Los Angeles and Orange counties," Ramirez said. "Rent skimming has faded a little bit lately, but it's not going away. We need the tools to fight it. Charging it as a felony would send the right kind of message."
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