Condo scam sentences may be reduced

Two of the men convicted of a scam to illegally convert Huntington Beach apartments into condos will have the lengths of their sentences reconsidered, following a ruling by a panel of federal appeals judges.

The panel ruled May 13 that Judge David Carter might have sentenced Jeffrey Crandall and Michael McDonnell too strictly. Both men are in federal prison on fraud charges related to the scheme, which also involved former Huntington Beach Mayor Pam Houchen and five others.

When sentencing Crandall and McDonnell to 41 and 78 months in prison, respectively, the judge wrongly calculated the financial damage they caused, according to the decision. He should have counted the remaining value of the illegal condos against the total amount of money lost, they decided.

Because only Crandall and McDonnell appealed their sentences, this decision only affects them so far.

Crandall’s lawyer, Dean Steward, applauded that decision.

“We’re actually delighted,” he said. “Judge Carter declined to give any value to the condos that Mr. Crandall sold, but you have to give credit for the value of those units.”

Because federal sentencing guidelines for fraud are based on the dollar amount of damage caused, the men could possibly get shorter sentences this time around.

Carter will still have plenty of leeway on sentencing the second time around, but Crandall’s lawyer said the appeals panel’s decision was a good first step.

Starting in late 1999, about 125 converted condos were sold to unsuspecting residents using bogus documents, which left new owners with substandard properties they were unable to sell. Eight people were ultimately convicted of crimes related to the scheme. The city hired an attorney last month to decide how to hand out about $220,000 received so far to victims.

Steward said he was hopeful about the outcome of a future hearing to decide new sentences.

“As always, it’s going to be interesting,” he said. “Judge Carter’s a very fair guy, and I’m sure he will look at this carefully.”

Crandall has served 16 months so far, and McDonnell has served 20. A hearing date has not yet been set to revisit their sentences.

MICHAEL ALEXANDER may be reached at (714) 966-4618 or at [email protected].