Condo victims to be aided

The City Council voted this week to start drawing up a plan to let victims of an illegal condo conversion scheme make claims on restitution money from the people convicted of the scam.

Council members voted 7-0 Tuesday to have City Atty. Jennifer McGrath come up with a claims system that would allow victims to apply for some of the money recovered from the guilty parties and plead their case before a hearing officer. But there probably won’t be very much to spread around to those who bought the 122 condos in question, McGrath said.

“It’s safe to assume the $220,975 we have now is the largest amount we’re going to get,” she said, adding that those in prison or under supervised release will only have to pay $25 every three months. “Usually that’s all that’s available.”

In 2004, an investigation found that more than 100 condos in the city didn’t have permits; the schemers had used phony documents and the units weren’t built to code. Those who unwittingly bought the condos before then were stuck with huge fees and were unable to sell or take out loans on their property. The city ended up negotiating a deal to skip some requirements and save the owners many costs, but the money in question now is all that’s left to make up for the rest of the damage.

U.S. District Judge David Carter ordered the city to come up with a system to give money to victims of the scam in May, when he sentenced seventh guilty defendant Howard Richey. Also among the seven convicted or pleading guilty was former Mayor Pam Houchen.

Most of the money — $220,000 — comes from Richey, 82, who paid the sum in a deal to get two years of home confinement instead of prison time.

But Carter didn’t give much direction on how to distribute that money other than to make sure it went to those who were harmed after unwittingly buying illegal condos, McGrath told council members.

“Restitution was ordered to be paid to ‘the city of Huntington Beach in a segregated fund for the benefit of the good faith purchasers of fraudulently converted condominiums,’” she quoted Carter as saying. “That’s all the guidance we received.”

Condo owner Norma Rodriguez said the money so far should go to fix the 12 units Richey was responsible for, not be split among all the victims.

“Howard Richey has already paid his fines,” she said. “We are tired of waiting. We are tired of fighting. We will be here every week to fight for our rights until this matter is resolved.”

Renee Tarnow, another victim of the scheme, gave council members a court transcript and said Carter’s suggestions should be followed and a claims process should be set up.

McGrath will now work on such a process along with city staff, and the council will be able to vote on their findings Nov. 19.