State Targets Real Estate Broker, Firm

State regulators are seeking to revoke the license of a Los Angeles-area real estate broker who has acknowledged cheating investors out of more than $11 million through fraudulent loan transactions.

The California Department of Real Estate filed the action against Richard M. McDowell, 52, and one of his companies, Active Home Loans. The agency also has referred the case to the FBI and Los Angeles County district attorney for possible criminal prosecution.

At least 30 clients who invested through McDowell in real estate trust deeds have filed lawsuits or complaints with the state agency or law enforcement agencies in the last couple of years. Last year, McDowell was hit with fraud judgments exceeding $11 million in a series of civil suits filed in Los Angeles Superior Court. Because a number of alleged victims were not covered by the suits, total losses are thought to be higher.

McDowell, who has operated from offices in Glendale, Eagle Rock and South Pasadena, reportedly is still in business. Efforts to reach him were unsuccessful.

Spokesmen for the FBI and the district attorney’s office declined to say if they are investigating.

McDowell solicited clients to fund real estate loans, promising returns of as much as 16%. Investors received trust deeds securing their interest in the properties. Another company operated by McDowell, M & M Loan Service Inc., serviced the loans, collecting monthly payments and sending them to investors.

But according to court papers and other documents, McDowell used a variety of schemes to divert investors’ funds. In some cases, properties were sold and the loans paid off but investors were not told nor given the loan payoffs. To keep them in the dark, McDowell for a while continued sending the monthly payments as if the loans were still active, according to documents and interviews. Other times, investors allegedly got trust deeds that had already been sold to someone else.

Losses suffered by a number of investors ran well into the six figures.

Paul Bubendey, who would describe his loss only as a “painful amount,” said he has abandoned hope of recovering any of the money “just to preserve my own sanity.”

McDowell, who met a number of the victims at the Oakmont Country Club in Glendale, was described by a former associate as “a handsome, good old boy.” One victim--who asked not to be named--said McDowell is “loaded with charisma.”

Complaints filed by the Department of Real Estate aim to strip McDowell and Active Home Loans of their broker’s licenses. Should McDowell contest the action, the case would be decided by an administrative law judge.

Separately, the agency filed papers to void the real estate salesperson’s license of McDowell’s wife, Jo Ann McDowell. She declined to comment Monday.

His brother, Randy P. McDowell, a real estate appraiser also involved in the business, said he had “no knowledge of . . . any wrongdoings.”