The TRUE story behind raising the CCDC cap.
A "rogue" CCDC CEO,
Fred Maas aided by a "rogue" Deputy City Attorney,
CCDC's hidden power
renders your vote irrelevant.
Chula Vista's Prop G
- an analysis.
Would Lorie Zapf bring "strategic fraud" to City Council?
Strong Mayor = Insider Deals
The TRUE story behind raising the CCDC cap.
California State Legislature created a process whereby
cities can borrow against future property tax revenue
for the primary purpose of expanding the supply of
low-and-moderate-income housing. The process is called
"The Legislature finds and
declares that a fundamental purpose of
redevelopment is to expand the supply of low-and
moderate-income housing, to expand employment
opportunities for jobless, underemployed, and low-income
persons, and to provide an environment for the social,
economic, and psychological growth and well-being of all
This original Redevelopment Law required each
redevelopment agency to set aside 20% of its tax
increment revenues and put it into a
moderate income housing" fund, commonly known as the
"affordable housing" fund. CCDC fulfilled its
affordable housing requirement by creating all "moderate" income housing
“low, very low, or
extremely low” income housing. In San Diego "moderate"
income housing is very close to "market" price housing.
The original Redevelopment Law
provided that in the event a redevelopment agency amends
its project plan in any way, it triggers the following
more stringent affordable housing set aside
(1) the 20% set aside would increase to 30%;
(2) expenditure on
“moderate” could only happen when at least 49% had
already been spent on “low, very low, or
(3) total “moderate” could not exceed the
total of “extremely low income” in any 5 year period;
“moderate” could not exceed 15% of the total set aside
fund in any 5 year period;
(5) the number of “moderate”
units could not exceed the number of “extremely low
income” units at any time.
CCDC wished to remove its revenue cap while continuing
to avoid the
“low, very low, or
extremely low” income housing requirement. So, its Los
Angeles-based outside law firm,
& Berkman, found a
in the wording of the Redevelopment Law.
Section 33333.10 (f) of the Redevelopment Law refers
"an agency that has adopted an amendment",
rather than an agency that has "amended" its project
& Berkman therefore advised CCDC that amending its
project plan (e.g. raising its cap) by statute
i.e. by State Legislative action, rather than by
agency action, would not trigger
This is the TRUE story behind raising the CCDC cap at
Sacramento rather than at City Council. Today, Jerry
Sanders, who exploited this loophole in Redevelopment
Law in favor of developers at the expense of citizens,
is asking City Council to re-appoint him as Chief
Executive Officer of the San Diego Redevelopment Agency.
A "rogue" CCDC CEO, Fred Maas aided by a "rogue" Deputy City Attorney,
video clip shows the craziness of City
Council delegating management of hundreds of
millions of tax dollars to an un-elected body like CCDC,
headed by an unelected private developer like Fred Maas.
When asked a simple question by Carl DeMaio, Maas
arrogantly characterized the
questioner's ethics as "Hale-Bopp". That was one of the
worst displays of disrespect for an elected body I have ever seen.
The irony is that Maas's rambling exit speech to City
Council yesterday was more reminiscent of "Do's
Final Exit" than Carl DeMaio's ethics was of
Hale-Bopp. Marshall Applewhite was the lunatic
leader of the Heaven's Gate cult in Rancho Santa Fe who
in March 1997 convinced 38 idiotic
followers to kill themselves in order to board his
spaceship to the Next Level on the Hale-Bopp Comet. Like
Applewhite Maas is gone and good riddance.
So yesterday was a good day for San Diego. It showed the
urgency of getting rid of CCDC and the arrogant developers
who became bosses of our downtown redevelopment and displayed such utter contempt for
our sovereign legislative body, the City Council.
But Maas had help. Her name is Kendall Berkey. She
joined the San Diego City Attorney’s
Office in December 2006. She worked under my good friend
Huston Carlyle who is now legal counsel to a
Florida county. The Winter 2010 edition of the
City Attorney's Newsletter says:
a supervisor, she
has the primary responsibility of providing legal advice
and services to the Redevelopment Agency of the City of
San Diego. The work involves many projects including
negotiating and preparing a variety of agreements for
the development of mixed use, affordable housing and
public works projects, and the rehabilitation of housing
and commercial projects.
The Redevelopment Unit also coordinates and assists the
City on various community-wide planning efforts. The
unit provides legal advice to the redevelopment Project
Area Committees and conducts training sessions on the
Ralph M. Brown Act, ethics, conflicts of interest, and
the impact of new legislation. "
I pulled her
California Bar Association status report and discovered
that she is now working for
& Berkman of Los Angeles, the law firm Maas hired
to advise CCDC regarding the removal of the CCDC cap. In this November 12, 2010
Memorandum to the City Council, Job Nelson Director of
Intergovernmental Relations for Mayor Sanders, confirmed that
both the Mayor's office and CCDC took its redevelopment legal advice
from Kane, Ballmer & Berkman, not from the elected
City Attorney Jan Goldsmith.
Goldsmith has written this
letter to Kane, Ballmer & Berkman asking 11
questions. It is clear that Goldsmith was kept in the
dark by his own Deputy, Kendall Berkey
and that she did not inform him about the legal advice she
was giving CCDC.
Activist Katheryn Rhodes has been
trying for months to get City Attorney Jan Goldsmith to
look at this
Memorandum of Law dated May 21, 2010 that was
prepared and signed by Berkey. It directly
contradicts Section 33021.1
of California Health &
Safety Code which says:
"33021.1. In a city and
county, redevelopment includes improving, increasing, or
preserving emergency shelters for homeless persons or
households. These shelters may be located within or
outside of established redevelopment project areas.
Notwithstanding any other provision of law, only
redevelopment funds other than those available pursuant
to Section 33334.3 may be used to finance these
advised CCDC that "The Agency
not use Agency funds for .... operation of homeless shelters."
The law's reference to Section 33334.3
is to the required 20% set-aside for low/mod income housing. The lawmakers were being careful that low/mod
housing funds would not be used for homeless shelters
but that such shelters would be funded out of regular
The fact that CCDC could not only pay for a homeless
shelter but had an obligation to do so could not be clearer.
Yet Berkey and Maas (who is also an attorney) not only
misrepresented the redevelopment law but resisted
placing the homeless shelter at a CCDC property on
Newton Avenue. Maas simply did not want to get into the
homeless shelter business.
So Berkey gave CCDC the advice Maas wanted. It got her
hired by Kane, Ballmer & Berkman. Strangely, her
Memorandum (MS 59) does not appear on either
the City Attorney's nor the City Clerk's web site. Did
Mr. Goldsmith ever even see it?
Berkey had "gone rogue" long before the "cap" issue.
Mr. Goldsmith needs to regain control of his Department.
In the meantime neither Kane, Ballmer & Berkman nor
Kendall Berkey should be allowed to give any legal
advise to CCDC. We elected a
City Attorney to do that. It is a defining moment for
After the five minute break requested by Councilmember
DeMaio, Council President Ben Hueso allowed Fred Maas to
stand at the podium for as long as he liked. From there
he dominated the discussion until its conclusion. It was
decided that CCDC will now hold a series of "outreach"
PR meetings around the city to justify its existence.
The developer/union alliance will demonize Carl DeMaio
for stirring up the pot and daring to question its
long-standing prerogative of secretly deciding how to
spend our tax dollars.
Outgoing Council President Ben Hueso has been associated
with this powerful developer/union alliance throughout
his political career. It has propelled him to the sleazy
corridors of the Sacramento Assembly where he will fit
right in. The incoming Council President Tony Young is
similarly "associated". Therefore San Diego's
developer/union alliance will continue to control the
purse strings so long as its secretive CCDC powerbase
However, Councilmember DeMaio and City Attorney Jan
Goldsmith are genuinely on the side of openness and the
taxpayer. For DeMaio it is simply good politics.
Councilmember Sherri Lightner is the only truly
independent and honest vote on the City Council.
Councilmember Faulconer is little better than Fred Maas.
Politically ambitious Young and Gloria will remain
captives of the developer/union alliance for years to
come. Marti Emerald will need all the union support she
can get to fend off April Boling in 2012.
So, we must wait and hope that incoming Councilmembers
Lori Zapf and David Alvarez will take the moral high
road, which in the case of Zapf, considering her real
estate shenanigans, might be a little much to hope for.
Perhaps the only one who really knows what Alvarez will
do at City Hall is his well-hidden handler, Al Ducheny,
husband of Senator Denise Ducheny.
The fact that
La Prensa San Diego backed Alvarez carries a lot of
weight with me. I have great respect for that
publication. However I worry
that South San Diego may be neglected for Barrio
Logan/Al Ducheny politics. We will just have to wait and
see if David Alvarez turns out to be another angel like
Sherri Lightner or another depressing Hueso/Inzunza/Vargas
style District 8 politician elected on a few thousand
votes because of deep voter apathy.
CCDC's hidden power renders your vote irrelevant.
Who is the most powerful person in San Diego today?
Few voters even know his name.
Mao Tse-tung (Mao
Zedong) once said that "power grows out of the
barrel of a gun". In a Marxist-Leninist world, that was
probably true. But in the Capitalist world, power grows
out of a pot of money. The bigger the pot of
money, the greater the power.
The biggest pot of money in San Diego today is, without
doubt, CCDC's tax increment money. By far the greatest
growth in San Diego over the past 30 years has occurred
downtown. The shocking truth is that not a dime, not a
nickel of the property tax generated by this vast growth
has gone to city services. It is called "Tax Increment
Diversion" or "redevelopment money".
Who controls this huge pot of money that has accumulated
over 30 years outside the General Fund and continues to
grow every year? CCDC
Chairman and CEO Fred Maas. It has made him the most
powerful person in San Diego while his name has never
appeared on a ballot paper.
Who is this Fred Maas? Where did he come from? What are
his politics? Who does he represent? How did he acquire
such power? How does he wield it?
Where did he come from? As you can see
Wikipedia entry, he is originally from upstate New
where he graduated from Hobart College
in 1979 with a Political Science degree and went on to
obtain a law degree from Syracuse University College of
Law in 1982.
With a political science degree and a law degree under
his belt he moved to Washington DC and was
admitted to the District of Columbia Bar in 1983 at the
age of 26. Clearly this ambitious young Jewish boy from
upstate New York had plans for himself.
What are his politics?
He cut his political teeth with the
Washington Legal Foundation, one of a cluster of
conservative, right-wing, Washington-based think tanks
such as the
American Enterprise Institute, the
Brookings Institution, the
Cato Institute and the
Heritage Foundation. While thus building his
right-wing credentials, Fred was savvy enough to
maintain impeccable liberal Jewish credentials by
volunteering on the Board of Advisors of the Center for
Public Policy for
B’nai B’rith International, a left-leaning,
community rights type of organization.
Who does he represent?
He got involved in
real estate while working for a federal regulatory
lobbying firm called National Strategies and Marketing
Group, that represented
Inc. on legislative and tax matters. He also joined
Potomac Sports Properties Inc., a firm that represented
developing golf resort projects.
During this time he became heavily involved in national
politics as he
climbed the Republican ladder. Thus, he came to
represent Republican-developer interests, both locally
How did he acquire such power? In the
late 1980s the
Inc. was threatening to pull its Buick Invitational
from San Diego’s Torrey Pines Golf Course and leave
town. Maas had become a partner in a subsidiary of
Potomac Sports Properties, Potomac Investment
Associates, the official property developer for
Inc. Through his negotiations with the City of San
Diego on behalf of
Inc and because of his impressive national
Republican credentials, he was readily accepted into the
inner circles of San Diego power politics and land
The Teamsters Union had sold an undeveloped 4,660-acre
tract of land northwest of Black Mountain to a Christian
group that planned to build a Christian University
involving millions of square feet of campus buildings
and thousands of student housing units. The group hoped
to finance it all through the sale of thousands of
The project drove the environmentalists crazy. I
remember it as the hottest “growth” issue in San Diego
during the '80s.
It was known as “La Jolla Valley”.
Predictably, the Christian University project went
bankrupt. It was far too ambitious and naïve for San
Diego at that time. Fred Maas saw the chance of a
lifetime. He easily persuaded his firm, Potomac
Investment Associates to purchase these prime 4,660
development acres out of bankruptcy for the paltry sum
of $53 million or $11,373 per acre. Not bad for a
Syracuse home boy. Fred had found his new home, San
does he wield his unelected power?
His negotiations with the City of San Diego on behalf of
were inextricably bound up with his own negotiations on
behalf of those 4,660 acres that had now transferred to an entity
called Black Mountain Ranch LLC, of which he was the
The City was vulnerable in that it did not want to lose
By constantly threatening to pull the "Buick
Invitational" out of San Diego, Maas succeeded in
getting the City to spend heavily on its Torrey Pines
Golf Course to keep his client the
Inc. in town.
He will tell you now that it was a great service to this
Perhaps. What he will not tell you is how those
negotiations enabled him to coincidentally secure the
density entitlements for his Black Mountain Ranch
project that made him millions of dollars. Density is
the secret to creating value in any development project
and is usually achieved through bare-knuckle politics.
Not only is Maas a master of the subtle art of the
“threat”, he is also a master of the even more subtle
art of “persuasion”. He reached an "agreement” with the
Sierra Club by which that venerable environmental
organization amazingly supported his increased housing
density measure, Proposition K, on the November
1998 ballot. That political feat alone should be
sufficient to enroll him in the political-developer Hall
What can we expect from this unelected power-broker
in the future?
In making his millions on those 4,660 acres, we know
that he could have afforded
to serve as consultant for the
Inc. for free.
The ominous thing is that he now works as Chairman and
CEO of CCDC for free.
Does that powerful position give him the kind of insider
knowledge and leverage he used so effectively against
the City on behalf of
Inc. and coincidentally on behalf of his Black
Mountain Ranch project? He has admitted to recently
orchestrating the midnight elimination of the CCDC cap
so that it can finance a Chargers Stadium. What is that
worth to the Spanos family? Will there be a "Black
Mountain Ranch" side to a Chargers Stadium deal?
Are there other sweetheart projects? Is he picking the
politicians of the future, like Nathan Fletcher?
We only know that his “free” service to San Diego City has
made him a very powerful man without the need to run for
The unions know
the power of
pot of public money. They know that it has the
power to create union jobs and union dues (unions are
businesses just like any other). They have learned that they
in turn can
control which developer gets financing for its project
and which does not by first making "enabling" union deals with CCDC. The
banks have learned that without such a CCDC-union-developer deal
there is no project - the unions get their project labor
agreements, the developers get financing for their
projects and Maas gets to broker the deal. That's real
Recently we got a glimpse of the sometimes petty side of
that CCDC power. The Mayor and City Council wanted to use the
officially vacant former Housing Commission building on
Newton Ave as a temporary homeless shelter. It emerged
that CCDC is letting its contractors use some of it as
storage space. Maas would not budge. In desperation the
City resorted to turning Golden Hall in the City Plaza
into a homeless shelter. That will be interesting. It
was a spectacular display of Maas's raw political power
and of his single-mindedness in using it on behalf of
his developer friends.
B’nai B’rith days are long forgotten in his
new-found wealth and power.
is another reminder of CCDC's power. Sanders knew it
would be useless to try to tap into the hundreds of
millions of dollars CCDC holds in reserve for
developers. Donna Frye didn't even bring it up.
They both know that CCDC's redevelopment money lies
safely outside the dwindling "General Fund" from which
the Mayor and City Council must provide city services.
CCDC is thus beyond the power of the Mayor and City
That was Pete Wilson's plan in creating it. It works
perfectly. Unfortunately our city services are the
poorer for it.
Far from this hidden power diminishing, it appears to be
growing. Current events at SEDC suggest that Maas is
planning the annexation of SEDC to CCDC and
Councilmember Young seems to be a part of it. He has
become the darling of the developer class. He even
received Lincoln Club support in his recent reelection
campaign. He is being groomed as the next Council
President. He will be a powerful (and obedient) friend
of Fred Maas.
Young, who was undoubtedly in on the Fletcher/Maas
midnight elimination of the CCDC cap, tellingly did not
seek to eliminate the SEDC cap. A CCDC-SEDC merger would
automatically eliminate it. Earlier this year he quietly
acquiesced in the laying off of 40% of SEDC's staff and
moving its HQ from 4393 Imperial Avenue into the
non-profit Jacobs Center building at 404 Euclid Avenue.
That raised some eyebrows at the time, including mine.
the current City Manager of Carson in Los Angeles
County, is reported to have accepted the permanent
position of President and CEO of SEDC, replacing Brian
Trotier who held that position on an interim basis since
October 2008 and had himself applied for the job.
We are now expected to believe that Groomes, who
preceded Carolyn Smith
as CEO of SEDC until 1992, will leave a prestigious City
Manager's job at $225,000 for a much-diminished
administrative job in the Jacob Center at $150,000, in
order to "spend more time with his family"?
Anybody who follows San Diego politics knows there is
more to this than they are telling us. My guess is that
Groomes has been promised the CCDC CEO job after it has
absorbed SEDC. Groomes is a developer-friendly guy and
would fit right in with Maas and his developer pals.
Fred probably personally hand-picked him for the CCDC
And so it goes on. Redevelopment is the powerful
unelected government within a government. It does not
have to provide a single policeman or a single
firefighter. Like the pension system it takes a bigger
and bigger share of our tax revenues every year. It is run by
shadowy unelected figures like Fred Maas. It siphons off huge
amounts of public money for private developers while asking us
to backfill the hole with new taxes like Prop D.
this as you enter the polling booth on Tuesday:
all the property tax from all the growth in downtown San
Diego over the last 30 years will continue to be
diverted away from our city schools and city services to
private developers no matter how you vote. Contrary to
the oft-repeated lie, not a penny of property taxes
ever "goes to Sacramento". Only in the sense that
the State is obligated by law to "backfill" local school
deficits due to redevelopment tax diversion, do any
property taxes "go to Sacramento". And more and more the
State is baulking at that backfill.
State law has always intended that local property taxes
be the primary funding for K-12 schools, city and county
services. The problem is that out-of-control growth of
redevelopment is diverting vast amounts of those
property taxes to
private developers. That is unsustainable both at local
and state levels.
Until it is fixed, your vote on Tuesday is irrelevant. Fred Maas and
a few self-appointed
developer-serving insiders will continue to govern
through the Redevelopment Agency. Even if passed, Prop D will not
structural problem once and for all" as
Sanders is falsely promising. The structural problem is
much, much deeper than that. Redevelopment has to be restrained. The
present system of local government funding allows us to be governed by
people like Fred Maas.
Chula Vista's Prop G - an analysis.
The heated arguments over Chula Vista's
Prop G have centered around whether Project Labor Agreements (PLAs) increase
or decrease the cost of public works projects. Both labor and developers accuse
each other of increasing costs through exclusionary labor practices. But I think
there is more to it than that. I think the truth is much deeper. This is not
Read this letter? It is the
best window into the developer/union mind we've got. Does it sound like Gaylord
and the unions were at war with each other? It sounds more like they reached
agreement on how to divide up the profits of the Chula Vista waterfront project
but they failed to find "a mutually beneficial way to fund the infrastructure".
So what is the truth behind the Prop G campaign rhetoric? Is it a union-busting
ploy? Would a ban on PLAs cause Chula Vista to lose jobs? Are the unions
defending working families against developer attempts to import cheap labor, as
the unions claim? They say:
"Proposition G will ban us from working on construction projects in Chula Vista
because we are in a union."
The developers on the other hand
say: "The purpose of this measure is to ensure fair
and open competition for public works projects funded in whole or in part with
public funds; to aid in lowering the cost of public works projects; and to
ensure that all workers, both union and non-union, have a fair and equal
opportunity to work on public works projects."
If the measure passes it will be enacted as the
"Fair and Open Competition Ordinance" in the Chula Vista municipal code. Which
is it? A fair and open competition ordinance or a clever union-busting move by
The answer of course is: neither. This battle is over the
legitimacy of PLAs, pure and simple. The question voters have to answer is:
"do PLAs serve the public interest, or the reverse?" It is clear that PLAs serve
union interests. But what's in it for developers? The
letter shows that Gaylord
would have had no problem signing a PLA in 2008. It also shows that the Chula
Vista waterfront project failed because of infrastructure (public) funding
problems, not labor problems.
So why Prop G? What has changed? Nothing. This initiative is not coming from
Gaylord. It is coming from medium to small building firms who feel threatened by
big deals between big developers and big labor. Only big labor and big business
benefit from PLAs, the little guy on both sides of the labor issue are defeated.
The Internet has many studies and discussions on PLAs. Both unions and
developers always claim that their interests coincide with the public interest.
We must therefore separate the public interest from that of both unions and
developers. The truth is that a PLA is an enabling deal between a big developer
and a big union to craft "a mutually beneficial way to fund the
infrastructure" i.e. it enables them to cooperate in raiding the public
When developers and unions combine their lobbying power it is all but impossible
for elected officials to resist them. Their combined political power succeeds in
brushing aside environmental and public lands issues. For developers the extra
labor cost is outweighed by union help in getting their project approved. The
public interest takes third place behind that of unions and developers.
The City of Chula Vista has become the testing ground for putting the public
interest ahead of union/developer special interests. It is ironic that a
mistaken belief, that union demands for a PLA was the cause of Gaylord's
departure in 2008, became its driving force. As I see it, Prop G is more a
struggle between big developers and small developers, big labor and ordinary
(union or non-union) working families.
Would Lorie Zapf bring "strategic fraud" to City
Lorie Zapf, a candidate for City Council District 6, is
attempting to turn a bust into a boon. Last week Dave
Maass of CityBeat broke a
story busting her for being in default on her family
home in Clairemont. Responding to CityBeat Ms. Zapf
tried to paint herself as the champion of all families
who are attempting to negotiate a modification of their
mortgage with their lender.
Maass asked me for my (real estate) opinion on the
veracity of Zapf's claim, that "strategic defaults" are
now commonplace. I told him it was "B.S." Lenders do not
modify loans for borrowers who have the means to make
their payments. Modification is for families who have
genuine hardship, not slick real estate professionals
like Zapf's husband.
Before responding to CityBeat
I pulled the relevant
Deed of Trust and the
of Default from the County Recorder. The loan on
which the Zapfs are in default is an interest-only Home
Equity Line of Credit (HELOC). A quick look confirmed
that Zapf's "explanation" to CityBeat was indeed B.S.
HELOC rates are already the lowest rates available.
Reporter Maass was now caught between two opinions on
"strategic defaults". Mark Goldman, a real estate
lecturer at SDSU, was telling him "In order to just have
the bank consider your request, they pretty much force
you into going into default. There’s a lot of people in
that situation.” A classic example of "Those
who know, do. Those who profess to know, teach". But the
journo handbook requires that reporters call know-all
Then CityBeat asked me to research another
Notice of Default, this time in Las Vegas. They
wondered if this
too was a "strategic default". Obviously
somebody was feeding them information. So I dug out all the Zapf
documents on their property at 2446 Craigie Castle St.,
Henderson, NV. It turned out to be much more than a
"strategic default". It had all the trappings of "loan
fraud" and "rent skimming". But CityBeat would not touch
it. Perhaps they were afraid of getting sued.
2446 Craigie Castle St. is a 4 bedroom, 2 bathroom
single-family house built in 2004. The Zapfs
bought it from the builder, Dell Web of Arizona, on
September 10, 2004 for $511,875 as a second home.
It was a second home because they used "second home"
financing. They got a $417,950
first loan and a $52,277
second, both from Countrywide. Wife Lorie would have
to be intimately involved. A husband can't get "second
home" financing without a wife's full cooperation.
combined 1st and 2nd loans, $470,277, was 92% of the
That kind of loan-to-value ratio is not available for
investment properties. If Eric rented out this property
as an "investment", he defrauded his lender and Lorie
was equally responsible. Yet that is exactly what Lorie
Channel 10 they did. She said it was an
investment property, owned by her husband.
Notice of Trustee Sale was filed by Countrywide on September 14, 2008. The Zapfs
had not made a mortgage payment since January 1, 2008.
By then the amount owing on the
first loan of $417,950 was $443,153.12.
The Zapfs had "strategically" not paid $25,203.12
on the 1st, there is no information on the 2nd. If
the Zapfs were collecting rent from their tenants from
January to September 2008 while their loans were in
default, they are guilty of "rent skimming".
The foreclosure sale did not go forward. Instead the
sold the property in a "short-sale" on March 27, 2009 to Robert and
Ann Canavan for $250,000. Countrywide, now Bank of
America, took a loss of $470,277 - $250,000 = $220,277
plus delinquent payments on both the 1st and 2nd
together with foreclosure costs.
Obtaining 92% "second home" financing, renting the
property, not making mortgage payments and then selling it in a short-sale has all the appearances of "loan
fraud" and "rent skimming".
Scenting serious fraud, not just "strategic default", I went
back and dug deeper into the financing of Zapf's Clairemont
home. They had
bought it in 1997 for $215,000. They
pulled $180,000 "cash out" in a
refinance with Wells Fargo for $330,000 on March
23, 2004. This was about the time they started "investing"
in Las Vegas.
They took out a further home equity line of credit
HELOC for $230,000 on October 30, 2005. Their
Clairemont home is now encumbered with $560,000.
Altogether they have pulled $560,000 - $215,000 =
$345,000 cash out of it since 1997.
A further search in Nevada's Clarke County public records
revealed that the Zapfs "second home" loan on 2446 Craigie
Castle St., Henderson, was not their first "second
home" loan in Las Vegas. At the time they obtained
their second "second home" loan on 2446 Craigie
Castle St, they already had an outstanding "second home"
loan on another house at 20 Weston Hills Rd, in the same
Henderson project! How did they qualify for all three
home loans? Lenders may not count projected rental
income in a "second home" loan. Did they falsify their
They had purchased the 20 Weston Hills Rd. property 5
months earlier on April 7, 2004, only days after pulling
that $180,000 "cash out" of their Clairemont home on March
23, 2004. To purchase 20 Weston Hills Rd., they had
obtained their first "second home"
loan from the same lender that had
refinanced their Clairemont home, Wells Fargo. How
did Wells Fargo verify the required income to
support these two home loans? There are no "stated
income" products for low-down, owner-occupied
"conforming" first and second home loans. Verification
of income is required.
This Zapf/Wells Fargo deal has echoes of Jim McConville's
"straw-buyer" scam. A person named James K. Crosby, from Hayward, CA,
supposedly bought the house from the builder, Dell
Web Communities Inc, an Arizona Corporation, for $314,416
and sold it to the Zapfs on the same day for $425,000, a
one-day profit of $110,584. This is the classic "straw
Upon close examination I noticed that
Crosby's signature on his
grant deed to the Zapfs
was notarized in Santa Clara County, CA on March 26,
2004, the same day
the builder's grant deed to Crosby was notarized in
This is called a "double escrow" transaction. If the
Zapfs knew of, but failed to disclose the existence of,
a second escrow, they defrauded Wells Fargo. If Wells
Fargo personnel knew about it, they defrauded Wells
The Zapf loan
was a standard Freddie/Fannie "conforming" loan. No Freddie/Fannie-approved lender could
knowingly fund a "conforming" loan in such circumstances.
was the only loan recorded against that property on
April 7, 2004, the closing date of this "double escrow"
transaction, or at any time close to that date. In other
words there is no record of a Crosby loan. Did he pay
cash to the builder?
Unless Crosby (if he even exists) put $314,416 cash into escrow and received $425,000 back, for an
of $110,584, the Zapfs, the builder, Wells Fargo and
Crosby, split the proceeds of
the inflated fraudulent loan between them. It is a well
Those who perpetrate this classic fraud, move the
inflated proceeds of a fraudulent loan between two escrows and record all the deeds
on the same day. That is what appears to have happened
on the Zapfs' purchase of 20 Weston Hills Rd.,
The Zapfs went on to pull another $65,060 out of the property in
2nd mortgage with Wells Fargo on December 13, 2005.
August 2, 2007 the Zapfs
sold the house to Michael Rankin and Faith Matteson
This is the person the Republican Party wants to succeed Donna Frye in District 6.
Do they condone this type of personal ethics so that they
can use it at City
Hall? It would appear so because they have donated $20,000 to her
Strong Mayor = Insider Deals
I went to a strong-mayor forum (Prop D) last night at
the San Diego County Health Complex sponsored by
Common Cause and
San Diego, with
guest speakers Donna Frye and Carl DeMaio. It was well
attended, informal, with lots of great comments and
questions. Carl and Donna are a great double act and the
crowd loved it.
For me, what emerged was a pointed reminder of the
continuous struggle between a secretive privileged elite
and the rest of us. Carl DeMaio,
who by temperament should identify with the forgotten
masses, seems to yearn for acceptance by San Diego's
ruling elite. It will never happen. Those of us who have
lived here long enough know that San Diego is an elitist
Carl doesn't seem to realize that Strong Mayor = Insider Deals.
Unwittingly he is supporting a Prop D that will condemn
him to permanent outsider status just like the rest of
us. No matter how faithful a servant he may become, he will
never be the choice of San Diego's ruling elite. They
already have their yes-man - Kevin Faulconer. Ironically,
DeMaio could actually be a popular mayor under the
old system. His instincts are for open government, not
Sanders-style insider dealing.
Frye argued passionately against the insiderism of a
strong-mayor system. She contrasted the ready
responsiveness of the old city-manager-style staff with
the present bunker mentality of the strong-mayor system.
She told how previously cooperative staff are now terrified to
talk to Councilmembers for fear of being
fired. Everything is routed through the Mayor's office.
Every staff member remembers how Jim Waring, an
arch-insider and favorite land use attorney, was fired for
talking to Donna Frye about Sunroad without permission. Jay Goldstone told
Lance Wade he was fired because he was "not political enough".
The fact is that powerful business interests already
City Hall. Prop D would just make it permanent and
cheaper for them. Look at its
financial supporters. It reads like a "Who's Who" of
San Diego's insiders with McMillan and Sudbury topping
the list. Under Prop D business interests would only
need to own the Mayor and four Council Members to run
the city. Control of local government is a business
gravy train. It issues their permits and funds their
A key part of
Prop D power is the mayoral veto. It would expand City Council from 8 to 9 members
which in turn
would require 6 votes (not 5 as at present) to override
a mayoral veto. Four compliant Councilmembers is all
business would need to achieve a headlock on all city
Here's how a strong-mayor would work. He/she would veto
an item passed by the Council 5 to 4. A super-majority
of 6 to 3 would be required to override that powerful veto.
Insider money would easily own 4 of the 9 votes. They
already do: Faulconer, DeMaio, Young and Gloria (the
Lincoln Club just bought Young's vote). The City Council
would be effectively emasculated. That's what a
strong-mayor would mean. That is the plan.
Thus a bought and paid for Mayor and four
bought and paid for City Councilmembers could deliver
billions of our tax dollars to special business
interests such as the Chargers, while we the citizenry go begging
for city services. But first they must get Prop D
Will an insider elite succeed in persuading enough ordinary
San Diegans to vote for
an insider regime that is the very antithesis of citizen
services? It would be like
turkeys voting for Christmas. I sincerely hope the
citizens recognize Prop D as the developer Santa Clause
that it is and reflect on the stuffed socks of those
four bought and paid for City
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