Benign Neglect

There's a pot of money available to investigate real estate fraud, but Terence Hallinan isn't using it

The supervisors apparently have never asked why Hallinan's office has not produced the legally mandated annual reports, and at least two supervisors say they don't even remember the program, though they voted to set it up.

Supervisor Barbara Kaufman said she had no recollection of the legislation, and Mike Farrah, aide to Supervisor Gavin Newsom, said the supervisor had no knowledge of it either.

Judging by the success real estate fraud units have enjoyed in nearby counties, there is a strong argument to be made that San Francisco would benefit from a special unit.

Tom Dougherty

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In Alameda County, which began collecting the money two years before San Francisco, Deputy District Attorney Bill Denny says he currently has almost 40 active fraud cases. His annual report showed that the Alameda unit investigated 32 separate cases in 1998. Alameda has two full-time attorneys, an inspector, and a part-time lieutenant of inspection, all dedicated to real estate fraud. Alameda has nearly $1 million in its real estate fraud trust fund account, and spends about a half-million each year on the program.

Santa Clara County has two attorneys and three investigators working on its real estate fraud unit, says Deputy DA Paul Colin. "Last fiscal year we got over $880,000" to pay for the special unit, Colin says. Has it been successful?

"No question about it," Colin says. "This is an example of when government money is targeted to a specific purpose. It is a very clear way to measure. The moneys for this can only go for criminal real estate fraud investigation."

In contrast, no one at Hallinan's office could cite specific examples of any current real estate fraud investigations. "We have a whole Special Prosecutions unit that deals with fraud of all kinds including real estate fraud, elder abuse, and that kind of thing," said spokesman Clarence Johnson. "I'm reasonably certain we don't have people who only deal with real estate." Johnson said he did not know how many cases of real estate fraud are now under investigation in Hallinan's office.

This year's city budget does contain $138,300 that is supposedly slated for hiring a part-time attorney and investigator for real estate fraud. The money has been budgeted since July, but the positions have not been filled.

Prosecuting real estate fraud is a tricky task, and attorneys say it calls for lawyers and investigators who specialize in learning the wily ways of scam artists.

"The field is fascinating but frustrating," Denny says. "There's tremendous inertia. If you have 17 boxes of paper, it's challenging to make a case from them. And how do you stop a jury from going comatose?"

"What's attractive to a crook about real estate fraud is that [it] is just a big piggy bank," Santa Clara County Deputy DA Colin observes. "And in today's Northern California real estate market it's not hard to turn real estate into cash. But it can be complicated and that's where the crook gets their edge."

The $357,000 San Francisco has collected thus far could go a long way to rooting out fraud, experts say. But only if Hallinan decides to use it.

"If there's money we can use for this purpose the city should take advantage of it," says Matt Davis, a deputy city attorney. "My sense is there is plenty of real estate fraud out there."

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