Attorney: Brothers Used Ponzi Scheme to Cheat Santa Monica Judge’s Widow

By City News Service

Two brothers employed a Ponzi scheme to cheat the widow of a longtime Santa Monica judge out of more than $1.2 million in real estate investments she made to help her and her late husband financially after his retirement, a lawyer for the plaintiff told a jury today.

In his opening statement to a Los Angeles Superior Court jury, Ruth Light's attorney said his 81-year-old client relied on Charles and Saleh Hasbun to make safe investments for the woman and her spouse, Superior Court Judge Leslie Light, beginning in about 2000.

The judge retired in 2002 after 33 years on the bench and died in March 2010.

“She accepted some of the risks inherent in investments,” plaintiff's attorney Malcolm McNeil said. “But she did not assume the risk they would be dishonest, charge exorbitant fees and engage in self-dealing.”

Greta Curtis, an attorney for the brothers, did not make an opening statement. However, their previous attorney, Henry Guzman, stated in a trial brief that the siblings disclosed the risks of her investments to Light; that only a handful of loans did not turn out as she anticipated; and that her income was affected by “the real estate market crash and the recession.”

According to McNeil, the Hasbuns used one company, Baypoint Mortgage Inc.,to sell and solicit loans. Another of their entities, Valley Trust Deed Services, serviced the loans, McNeil said.

Light made about 30 to 40 loan transactions with the Hasbuns over the course of about a decade, McNeil said. They involved first trust deeds and construction lending, he said.

“She was repeatedly assured not to worry and that all loan-to-value rations were adequate,” McNeil said.

In one transaction, the brothers said they would use a $55,000 investment by Light to help a borrower, Joe Bravo, perform improvements at a Bellflower home, according to McNeil.But the Hasbuns distributed the funds to Bravo without ensuring that any of the construction took place, McNeil alleges in court papers.

Although Charles Hasbun assured her that construction was nearly complete, the improvements were actually never made, according to McNeil.

The Hasbuns also granted subordinate deeds of trust to borrowers on loans in which Light and other clients had invested, McNeil said. When borrowers defaulted, the brothers foreclosed on the subordinate deeds rather than the first trust deeds, negatively affecting affecting the investments of clients such as Light, McNeil said.

The state Department of Real Estate conducted an audit and eventually stripped Baypoint and Valley Trust Deeds of their licenses, McNeil told jurors.

The Hasbuns' broker, Gregory Abeson, surrendered his license, McNeil said.

A month after Light sued the brothers and their companies in December 2011,the Hasbuns began using the services of another broker, McNeil said. In addition, some assets of the companies were transferred via checks to Charles Hasbun's two daughters, McNeil said.

Light, the trial's first witness, said she typically invested about $20,000 in each loan transaction with the Hasbuns.

“I couldn't afford to buy the whole trust deed,” she said, telling jurors that she had expected interest returns on her investments of 9 to 12 percent.

Light said she graduated from Dorsey High School in 1950 and did not attain any further education other than a real estate sales license. She said she has lived in Venice for 33 years and that her husband handled criminal cases while on the Santa Monica bench.