An $18 million California land fraud case, which the state's department of real estate describes as one of the biggest real estate swindle in recent history, has resulted in the revocation of nine licenses. In addition, the state may have to pay about $2 million in compensation to 1,000 victims.
The department's director, David H. Fox recently announced the commission's action against Pre-Builder Land Corp. and its associates, headed by Robert John Koepple, after an administrative law judge found that the company had knowingly made false representations on sales concluded between 1972 and 1974.
Pre-Builder, according to the charges, sold more than 50,000 acres of raw land located outside Los Angeles, San Francisco and Sacramento to investors throughout California as well as from other states and foreign countries. The firm's brochure advertised land at prices below market value when in reality, Pre-Builder was marking it up 50 to 100 percent.
Investors were also told that the firm had a large clientele of builders and developers who would be anxious to buy the land back after they had made their profits on it.
There were no such eager developers and the investors never made their promised profits, the commission said. Pre-Builder, however, is estimated to have made $6 million profit during the three years of its operation.
Fox said the commission learned of the scheme in 1973 but lacked personnel to investigate. It moved this year after criminal investigations of Pre-Builder by the Securities and Exchange Commission and the U.S. Attorney, still in progress, turned up sufficient evidence.
Fox said he does not know if Pre-Builder has any assets from which to pay damages arising from the many civil suits that have been brought against the company. If it is insolvent, however, victims who obtain court judgments against Pre-Builder can seek re-imbursement from the Department of Real Estate's recovery fund. Since 1964 the fund has paid out more than $1.8 million to qualifying persons.