Fraud Case Widens Against O.C. Auctioneer

Federal investigators charge that an Orange County auctioneer who allegedly created a phony female-based business to win federal contracts also fraudulently hid legal difficulties that would have kept him from winning federal contracts during the early 1990s.

The amended suit, filed in U.S. District Court in Los Angeles on Thursday by the U.S. attorney’s office, alleges that Corona del Mar resident William W. Lange and his wife, Alisha A. Lange, failed to tell federal regulators about judgments against related companies for fraudulent actions in Nevada and South Carolina.

“Simply put, they would not have gotten contracts if they told the truth about these cases,” Assistant U.S. Atty. Mark Labaton said Thursday. “They hid the fact of these judgments to get federal contracts.”

The Langes, through their attorney, on Thursday reiterated their innocence.

Federal officials “are trying to ruin these people with adverse publicity with no factual foundation whatsoever,” said attorney John Petrasich. “And they’re doing it vindictively because [Alisha Lange’s] company has sued [federal agencies] for money due her. And this is how she’s being repaid.”

Earlier this month, federal investigators alleged that Lange, who in the past handled real estate auctions for tycoon Donald Trump and Orange County, created a sham company to win land-auction contracts from the Federal Deposit Insurance Corp. and the Resolution Trust Corp.

With treble damages and other penalties included, total damages being sought against Lange and his wife total $43.5 million. The suit also names Lange’s brother-in-law, Richard H.W. Bennett, who had acted as Lange’s attorney.

The original lawsuit and the amended complaint stem from the early 1990s, when federal agencies used private firms to help auction off real estate held by troubled S&Ls.;

Federal officials allege that Lange concocted a phony real estate auction company supposedly headed by his wife. The company, LFC Real Estate Clearinghouse, won several contracts through programs designed to help women- and minority-owned businesses.

Federal prosecutors allege that Clearinghouse was really a front for Lange Financial Corp., a company owned and operated by Lange. The suit also alleges that Lange’s company illegally inflated the value of work done under federal contract.

Thursday’s amended complaint alleges that Lange and his wife fraudulently misled the FDIC and RTC by failing to report two civil court cases in which, federal investigators allege, Lange’s companies were ordered to pay nearly $1.6 million to disgruntled customers.

In one case, court documents allege that LFC Real Estate Marketing Services and Lange tried to secure a consulting fee by fraudulently lining up a buyer--identified as Richard Chang, a wealthy Hong Kong resident--for three parcels in South Carolina.

Chang, court documents state, bid $4.4 million for the properties but the deal subsequently died when Chang refused to make a down payment. Court documents state that Lange’s client later learned that Chang was “a retired tailor living in El Torito, [sic, El Toro] California,” and a longtime friend of Lange’s father.

In the second case, a disgruntled property owner in Reno alleged breach of contract and fiduciary duties in connection with work that a company associated with Lange did in connection with the proposed sale of four parcels in Nevada. A judge concluded that Lange Financial Corp. was guilty of “blatant, substantial and repeated” violations of Nevada real estate law.

Petrasich rejected the federal government’s allegations, saying that Alisha Lange never held any interest in the companies that were ordered to make payments for fraudulent activity. Petrasich also argued that Lange had sold his stake in Lange Financial prior to the Reno transaction and didn’t own the other company at the time of the alleged fraudulent activity in South Carolina.