Land Sales in Desert Focus of Fraud Probes

Authorities in California and Hawaii say they are investigating the role of a Palmdale woman for possible fraud in sales of raw desert land to 253 low-income investors, some of whom lost their life savings.

The investigation centers on Carolina Acio Paredes, who was barred last year from selling real estate in Hawaii and whom California regulators accused earlier this month of continuing to engage in illegal high desert land sales, according to court records.

The Paredes investigation comes as developer Marshall Redman, who is accused in another Antelope Valley land deal, awaits trial on criminal fraud charges. Like Redman, Paredes has been accused by California real estate regulators of illegal transactions involving sales of partial interests in real estate.

“She was selling virtually worthless land for over-valued amounts on property to which she did not have clear title,” alleged Sharon On Leng, complaints and enforcement officer for Hawaii’s Department of Commerce and Consumer Affairs, the agency that barred Paredes from selling land last year in Hawaii.

Paredes reached a settlement in 1996, in which she admitted no wrongdoing but agreed to stop selling real estate in Hawaii.

Leng said that Paredes, who is of Filipino descent, tended to target that population, both in California and Hawaii.

The case is being investigated by the Los Angeles County Sheriff’s Department and district attorney, as well as the Honolulu Police Department.

Paredes has been accused of fraud in a civil lawsuit by nine investors, most of them sugar cane workers and hotel maids in Hawaii and California, who allege that together they lost $500,000 in real estate investments.

Paredes “bought unimproved parcels of real estate in the Antelope Valley, didn’t comply with subdivision laws,” alleged Mark MacCarley, lawyer for the plaintiffs in the lawsuit. “She sold them to Filipino servants, people in villages and in Hawaii. They literally raided their mattresses” to pay for the property.

Sheriff’s Deputy Det. Jo Ann Horne, who specializes in real estate fraud, said Paredes and her company, Hillside Pines Realty Corp., are under investigation. The sales in question were near Palmdale and Lake Los Angeles.

On June 5, the California Department of Real Estate initiated proceedings to revoke Paredes’ real estate license, alleging that she had violated an earlier order to stop selling the properties.

Paredes, who filed for bankruptcy protection on Jan. 24, would not comment on the investigation or the civil case, said her attorney, Rodney Vosguanian of Agoura Hills.

The formal allegations against Paredes are contained in files of California and Hawaii land regulators, bankruptcy filings in federal court in Los Angeles and records in Los Angeles County Superior Court.

In the June 5 allegation, the department of real estate accused Paredes of illegally selling and financing unsubdivided land. Papers in the bankruptcy case alleged that Paredes used mortgage payments she received from small investors to pay off debts she had earlier incurred on the property, in violation of state law. When Paredes failed to make payments, her creditor then seized the property, wiping out the interests of the mall investors.

According to authorities and documents filed in the bankruptcy case, in one instance, Paredes bought Palmdale land in 1989 for $87,000, with the seller financing the mortgage.

She then sold partial interests to small investors that totaled $238,000. She defaulted, and the land is now worth just $18,000, according to records.

“Numerous purchasers lost their entire investment when senior lienholders foreclosed,” the accusation read.

In the lawsuit and in papers filed in Bankruptcy Court, the nine investors accused Paredes of fraud, saying that in the fall of 1993 she phoned them twice a day touting the land as “a great investment.”

Paredes went to Hawaii, the suit alleged, and told them, “You will buy this land. Your grandchildren will inherit the land and make a fortune.”

The land, according to the lawsuit, was not legally subdivided, meaning the investors could not legally build on it. And, according to the suit and the accusations filed by real estate officials, Paredes illegally took out loans against some of the property. When she defaulted on the loans, the suit claims, investors were wiped out.

The nine investors, who together paid Paredes about $500,000, according to court documents, became concerned about fraud in 1995, when they saw a broadcast on Hawaiian television about Paredes.

Authorities there had filed a complaint against Paredes in February of that year, accusing her of misconduct in the case of a woman who had bought a 20% interest in a desert property in California for $30,000.

The L.A. district attorney’s office has been advising Horne on the investigation, said Cliff Klein, head of the district attorney’s major fraud unit, but it’s too soon to know whether charges will be filed.

“I’m still gathering facts and documents and making a determination as to whether a crime has been committed,” said Horne.

Authorities allege that Paredes violated two laws designed to protect land buyers.

Under California laws adopted in response to land scams in the 1950s, public reports must be filed whenever partial interests in unsubdivided parcels are sold to several investors.

Paredes failed to do so, the real estate department has alleged.

Another law forbade Paredes to use small investors’ monthly payments to pay off an underlying mortgage on the property unless the payments were handled by an uninvolved third party such as an escrow company. Paredes failed to comply, according to the real estate department.