Father, son face fraud charges for allegedly inflating property appraisals

Dec. 21, 2009 | KPCC Wire Services

SANTA ANA (CNS) - A father and son from Laguna Beach who operated an Irvine-based real estate appraisal firm are expected to be arraigned next week on charges of inflating property appraisal values.

James Merritt Eaton, 60, his son Brian Chandler Eaton, 28, and real estate appraisal executive Michael John Bell, 32, of Corona del Mar, are each charged with a felony count of conspiracy to defraud another of property, 17 felony counts of grand theft by false pretense, two felony counts of identity theft, and two felony counts of false impersonation, according to Deputy District Attorney George McFetridge.

They also face sentencing enhancement allegations for white-collar crime in excess of $100,000 and property damage of more than $50,000. They could face up to 18 years in prison if convicted.

Laguna Beach police arrested Eaton Tuesday and his son turned himself in to Laguna Beach police on Friday. They are free after posting $100,000 bail and are expected to be arraigned Dec. 30, McFetridge said.

An attorney representing Bell said he would surrender to authorities Tuesday, McFetridge said.

James Eaton owned and operated Landmark Equities Group in Irvine between June 2005 and August 2007. He hired his son Brian as president and Bell was an executive.

The firm worked with collapsed subprime mortgage firm Quick Loan Funding, which was owned by Daniel Sadek, who was the victim of a crime this month when four men broke into his Newport Coast home and robbed several people inside.

The three allegedly inflated appraisals to make the properties more appealing to lenders, McFetridge said. The lenders can make more money if they can offer bigger loans on property with higher appraisals, he added.

The Eatons and Bell accessed legitimate appraisals done by other Landmark employees between Dec. 17, 2005, and August 2007 by obtaining their computer passwords, McFetridge said.

The three allegedly would get into the legitimate appraisals and remove negative comments about the properties to increase the value and then submitted the revised versions under the appraiser's name or their own, McFetridge said.

Between April 17, 2006, and Dec. 30, 2006, they doctored 15 appraisals, bumping up the values from $4,000 to $40,000, McFetridge said.

"They would tweak them usually by $5,000 to $7,000 — just bump it up a little bit, which means the homeowner generally doesn't know,'' McFetridge said.

"Most of their deals were for refinancing,'' McFetridge said, making it especially tough on homeowners who were borrowing money on the value of their homes and were unaware of the alleged fraud.

James Eaton allegedly flew to the company's office in Dublin in Northern California, on Aug. 9, 2006, to fire an office manager when she refused to give him her computer password and the passwords of her co-workers, McFetridge said.

On Aug. 30, 2006, the three submitted a fraudulent appraisal on a Los Banos property and falsely claimed the appraisal was done by someone who wasn't working there anymore, he added.

McFetridge also cited how they supposedly did appraisals in Arizona and Northern California on the same day.

"Obviously you can't be in two places at once. You could say it was a clerical error, but it happened more than once,'' McFetridge said.

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