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By Courtney Hamilton
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By Charles Lam
Huntington Beach City Councilwoman Pamela Julien-Houchen, under investigation by the FBI on at least eight counts of bank fraud, could face several years in prison thanks to her role in the city's ongoing scandal over illegal condominium conversions.
The Weekly first reported in October 2003 that Houchen, a real-estate agent who has served on the council since 1996, might have illegally converted a Huntington Harbor four-plex into four separate condos for a gross profit of $500,300. Following that story, Huntington Beach Police Chief Kenneth Small sent detectives to interview at least one unsuspecting couple who bought a bogus condo from Houchen.
After the Weekly recently published an open letter chastising Small for inaction in the case ("Arrest Houchen Now, Ask Questions Later," July 16), the chief told The Orange County Register that the FBI had taken over the investigation.
Assistant U.S. attorney Andrew Stolper, who is supervising the federal probe of Houchen and other suspects involved in roughly 120 suspicious transactions, refused to discuss the investigation. But a source familiar with the probe said Small revealed the FBI's involvement to the Register because of his embarrassment over the Weekly article.
"Chief Small wasn't happy with the article," said the source, who requested anonymity. "So he started leaking information."
According to the source, the FBI took the Houchen probe from the Orange County district attorney's office because it involved millions of dollars' worth of questionable bank transactions and because Houchen, an elected official, was personally involved in the scandal. He said FBI agents are cooperating with Huntington Beach police detectives in the investigation.
"This just smells like a federal case," the source said. "If you're the chief of the Huntington Beach Police Department, there's no win for you here. If you prove a city council person is corrupt and 120 condo conversions are illegal, the City Council will hate you. If you don't prove these things, [critics will think] you are incompetent and corrupt. That explains why [the investigation] got outsourced."
Orange County district attorney's office spokeswoman Susan Schroeder refused to confirm the FBI's role but did say her office was no longer involved. "Responsibility for the prosecution of this case has been shifted to another agency," she said.
While it's unfortunate for Houchen, the fact that responsibility for the probe has been removed from the DA's office is good news for anyone who wants to see political corruption in OCactually punished. During his run for DA in 1998, Tony Rackauckas asserted that his predecessor had been too aggressive in pursuing political-corruption cases. His platform included a promise to "de-politicize" such prosecutions.
Rackauckas investigated but did little to prosecute former Huntington Beach Mayor Dave Garofalo, whose political demise began when the Weekly reported his nasty habit of voting to provide lucrative city contracts to his political contributors. Shortly after the FBI took over that investigation in 2002, Garofalo quietly resigned from the council and pleaded guilty to one felony and 15 misdemeanor charges of political corruption. He is now banned from seeking public office.
The FBI's takeover of the investigation is similarly bad news for Houchen, who faces strict federal sentencing guidelines if convicted. Because she was involved in at least eight potentially fraudulent transactions—each of which carries a maximum penalty of 10 years in federal prison—she could face decades behind bars if convicted.
The cracks are already starting to show: Jan Shomaker, Houchen's appointee to the city's planning commission, recently stepped down from her post. Shomaker owns Pier Realty, where Houchen worked as a real-estate agent at the time of the alleged bogus condo sales.
Houchen has not resigned from the council nor offered any defense publicly. She has refused to speak to reporters about the case and has now retained John Barnett, a high-profile Orange-based defense attorney who most recently worked on the defense team in the Gregory Haidl rape trial.
In the past, Barnett represented Jeremy Morse, the Inglewood cop who brutalized a black teenager on videotape; Michael Harris, a former Catholic priest whose alleged molestations cost the Orange diocese $5.2 million; as well as one of the LAPD officers in the Rodney King incident.
Barnett did not return calls seeking comment for this story.