2 Ex-Officials Included : 8 Indicted for Alleged $10-Million Swindle

Eight men, including a former Del Mar Fair board member and the former city manager of Norwalk, were indicted Friday by a federal grand jury on 23 counts of mail fraud, conspiracy and aiding and abetting for allegedly defrauding hundreds of investors out of more than $10 million.

The indictment alleges that, through two companies, the eight men--four of whom are San Diegans--lured hundreds of people to invest in real estate with artificially inflated property values. Most of the investors were from Utah, although a handful were from San Diego, prosecutors said.

Much of their money then was funneled to Lanseair Corp., a Rancho Santa Fe-based holding firm that owned the properties, the indictment alleged.

No investor funds remain, according to San Diego Deputy Dist. Atty. John R. Heisner, who was assigned as a special assistant U.S. attorney and led the 23-month investigation of the scheme which, the indictment alleges, occurred over a 2 1/2-year period ending in August, 1983.

The funds originally were invested in American Factoring Corp., a Salt Lake City, Utah-based company that authorities claim persuaded clients to make investments supposedly secured by the properties owned by Lanseair.

American Factoring allegedly promised annual returns to investors of up to 48% through “factoring,” a common business practice of buying a firm’s accounts receivable at a discount. The outstanding accounts then are collected by the factoring company.

American Factoring did not engage in factoring, federal prosecutors alleged, but instead simply lured funds from unsuspecting investors and transferred most of the money to Lanseair.

The funds were spent on “personal consumption” items by the defendants, said Heisner, including luxuries and illegal drugs.

Among those arrested Friday morning in San Diego were Lynn Dale Bogart, 36, the “chief organizer” of the plan; Charles Carrasco, 50, a former member of the Del Mar Fair Board; Frank Consoli, 26, owner of Solar Equipment Sales; and Alan L. Williams, 40, an attorney. All four are San Diegans.

Arrested in Los Angeles were William H. Kraus, 46, the former city manager of Norwalk; Edward E. Wingender, 34, of Long Beach; and Rudy Decker Lang, 60, of Borrego Springs.

Still at large is Michael R. Moore, 46, president of American Factoring and a Salt Lake City resident.

Kraus resigned under pressure as Norwalk city manager on Aug. 20, 1983, after an independent investigation by a Los Angeles attorney uncovered questionable business deals involving Kraus.

The 19-page Franscell Report accused Kraus of falsifying his involvement in a financial imbroglio that included defaulted loans and soured business deals. Kraus said at the time that he might have committed a crime when he used a worthless property deed to finance a house in San Diego in 1978.

The investigation also centered on Kraus’ past business deals with convicted criminals. He resigned after the report was submitted.

Bogart and Wingender have criminal backgrounds. Both pleaded guilty Feb. 20 to federal charges of distribution and conspiracy to distribute cocaine, and will be sentenced on April 22 by U.S. District Judge Leland C. Nielsen.

Bogart currently is in the Metropolitan Correctional Center for violating terms of probation relating to a counterfeiting conviction in Los Angeles in 1980.

He will be arraigned on the new indictment on Monday.

In San Diego on Friday, Consoli was released on a $75,000 bond, while Carrasco and Williams were released on $25,000 bonds.