A Federal Case
Photo by Jack GouldA federal grand jury on Dec. 1 charged former Huntington Beach mayor and realtor Pamela Houchen with 11 counts of mail fraud and seven counts of wire fraud. The indictment—which named Phil Benson, Houchen's former partner at Huntington Beach-based Pier Realty, as the mastermind of the scheme—capped a yearlong investigation by the FBI and Huntington Beach Police into illegal condominium conversions.
Specifically, Houchen stands accused of fraud in a total of eight illegal condo conversions. "Houchen owes a duty to the people of Huntington Beach for her honest services," said assistant U.S. attorney Andrew Stolper. "And when she uses the mails and wires to breach that duty, that becomes a federal crime."
Houchen's troubles first arose more than a year ago when the Weekly revealed her role in the city's ongoing condo conversion scandal, in which the city discovered unscrupulous realtors had illegally converted hundreds of rental units into condos ("Condomania, Oct. 17, 2003). That story revealed that in 2000, Houchen, 47, purchased a four-unit apartment building on Green Street in Huntington Harbor, then illegally converted the building into condominiums before selling them for a total of $1,102,500. The article also reported that the ex-mayor's soon-to-be-ex-husband, Bryan Houchen, had done construction work on the units without bothering to apply for city permits.
Several months after the Weekly broke the story, the Orange County Register reported that Houchen had also illegally converted a building in the city's redevelopment zone, thereby violating a city ordinance prohibiting elected officials from owning property in redevelopment areas. While the Register has repeatedly sought to take credit for breaking the entire story of Houchen's involvement in the scandal, a "timeline" that ran with the paper's Dec. 2 article about the indictments noted that an unspecified "local paper" first broke the Houchen story in October 2003.
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The indictment from the federal grand jury in Santa Ana charged Houchen with grossing more than $1.7 million from the illegal sale of eight units, as well as receiving a $25,000 kickback from Benson in return for locating a customer who wanted to convert his apartment unit into condos. Also charged was Howard Richey, a 78-year-old real estate investor who sold Houchen the Green Street building, with eight counts of mail fraud and six counts of wire fraud. In return, Richey, who owned several apartment buildings in Huntington Beach, allegedly received Pier Realty's assistance in fraudulently converting and selling eight of those units.
Also named was Harvey Du Bose, an official with Stewart Title Co. The grand jury charged Du Bose with conspiring with Houchen and Benson to forge paperwork that would make it appear as if the Green Street building had been converted to stock cooperative units before 1986, which would have allowed them to be legally converted into condominiums.
Pier Realty owner Jan Shoemaker, who resigned as a city planning commissioner in May after Houchen nominated her for the post, was not named in the indictment, apparently because there was no evidence she knew about Houchen and Benson's fraudulent conversion scheme. But a source close to the investigation said Shoemaker should have known the conversions violated city law, and prosecutors have reported her role in the scandal to the California Department of Real Estate, which licenses real-estate salespeople.
Being named in a federal grand jury indictment means that Houchen has followed in the footsteps of Dave Garofalo, Surf City's most infamous ex-mayor. After the Huntington Beach Independent initially broke the story on possible corruption by Garofalo, it was the Weekly that launched an extensive investigation and originally reported his nasty habit of voting to extend lucrative city contracts to friends who advertised in his throwaway rag, The Local News. Shortly after the FBI launched its own investigation in 2002, Garofalo quietly resigned from office, and then pleaded guilty to one felony and 15 misdemeanor charges of political corruption. He is banned for life from public office.
Houchen resigned her job for unspecified personal reasons on Sept. 2. One reason could be the fact that she separated from her husband in July, leaving her on her own to care for three young triplets despite an increasingly uncertain legal future. Unlike Garofalo, it now appears all but inevitable that Houchen will go to prison.
"For each defendant, imprisonment is a real possibility," Stolper said. "The more transactions and the more money each defendant was involved in, the greater the likelihood they will face more serious consequences."
If convicted, Houchen faces a maximum penalty of 90 years behind bars, but it's more likely she'd spend two to four years in prison. She will be arraigned at Santa Ana's federal courthouse on Dec. 13.
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