This next post will reveal just how incredibly petty, vindictive and mean Dr. Gary Michelson can be. I am shocked that he has so far been allowed to get away with this. I can only hope Dr. Gary Michelson will eventually be charged with filing false police reports against people. He has done this is the past. He has caused some people incredible amounts of pain, suffering and grief. Whateverphilanthropic deeds he may have done in his entire life will never make up for this cruel behavior. District Attorney Jacquelyn “Jackie” Lacey should also be reprimanded for aiding and abetting this behavior.
Based on the civil lawsuit Dr. Gary Michelson v Neil David Campbell, Philip Richard Powers, Dr. Gary Michelson believed that he was somehow defrauded by defendants even though no money was stolen or lost. He sued them in civil court. They answered the lawsuits and denied all claims. He basically papered them until they could not afford to respond. They ended up losing by default and are bankrupt. That is not good enough for Dr. Gary Michelson.
I have a feeling Dr. Gary Michelson probably tried to file criminal charges against them in the past but the LAPD, District Attorney probably said “this is a civil matter. Defendants also don’t live in Los Angeles or California. Supposed white collar crime did not take place here but in another country. We have no jurisdiction. There was no crime that we can see.” Then probably declined to file charges just like they did in the Dave Loftus case. There was no crime.
Dr. Gary Michelson has learned over the years that if you want the police or district attorney to do a personal favor for you, you are going to have to give them money. Dave Loftus and I actually told him Gary this in 2006 when we worked for him. Dr. Gary Michelson donated money to the campaign of the new District Attorney Jacquelyn “Jackie” Lacey in the form of buying a ticket to a dinner party to meet her. He probably spoke to her about this case at that campaign fundraiser then handed her the check at the party April 25, 2012. He also donated $13,000 to the previous District Attorney Steven Cooley in 2010, 2011. The investigation was launched May 2012. Michelson then made another donation July 16, 2012. Jacquelyn “Jackie” Lacey was elected as the new District Attorney November 2012.
The investigation was launched May 2012 but they didn’t file charges until March 2013 (Los Angeles Criminal Court case numbers LACBA409225-01, LACBA409225-02, 140 counts each of 487 (A) Grand theft is theft committed in any of the following cases: (a) When the money, labor, or real or personal property taken is of a value exceeding nine hundred fifty dollars ($950)). A sealed warrant was issued. Defendants never knew there were criminal charges against them or that a warrant was issued. They are arrested in Idaho and Texas. Philip Richard Powers was arrested May 21, 2013 (Search criminal case # 189712901010 herehttp://www.hcdistrictclerk.com/eDocs/Public/Search.aspx ). He was extradited to Los Angeles June 5, 2013. District Attorney Jacquelyn “Jackie” Lacey then releases news about the arrest and extradition of defendants to Los Angeles, California June 19, 2013. Bail is set at $10,000,000 each.
From here on out I will only follow defendant Philip Richard Powers. When you are arrested in criminal court this is the basic process. http://www.avvo.com/legal-guides/ugc/what-are-the-steps-of-a-felony-criminal-matter-in-los-angeles-superior-court According to the eighth amendment “excessive bail shall not be required nor excessive fines imposed nor cruel and unusual punishment.” Defendant is also entitled to a speedy trail by a jury of his peers.
Defendant is entitled to bail review within three days of arraignment. Philip Powers would have been arraigned soon after being extradited to Los Angeles June 5, 2013. I don’t have access to all criminal records so I will have to go by what I heard in court September 5, 2013 in Department 40 in downtown LA.
Bail was set at $10,000,000 but of course this is excessive as Defendant is penniless. Defendant requested bail review to reduce the amount of bail. The District Attorney’s office objected to any reduction in bail. The Judge reduced the bail to $2,500,000. One can get a bond issued on real estate if the equity in the property is equal to twice the amount of bail. In this case that would be $5,000,000 worth of equity.
Someone agreed to put up their beach front property at 3500 The Strand, Hermosa Beach, CA for the bond. This is the house that Beverly Hills 90210 was filmed. Here are photos. It was on the market for $10,000,000 May 2010. It has increased in value since then. It appraised at $9,300,000 with approximately $3,600,000 in existing liens for net equity of $6,300,000. The District Attorney’s office reviewed the appraisal and disagreed with the appraised value. The DA is not a licensed appraiser. They can only agree or disagree with the amount of equity, not the appraisal. Nonetheless the DA requests another appraisal from Defendant. Defendant gets another appraisal for approximately $8,800,000.
All the while the DA’s office drags their feet not responding to calls, emails and requests. Almost three months pass and Defendant is still in jail awaiting final bail review. I believe this should have been completed within three days of arraignment though I’m no criminal attorney. The DA then orders their own appraisal even though two have already been done and the values are very similar. The Defendant only needs a value of $8,600,000 in order to have bail approved. The property in question would actually most likely sell for $10-$12M on the open market because it is so desirable.
Let me quickly preface the valuation analysis with my qualifications. I have been an appraiser for 30 years now. I recalculated how many appraisals I have done and it’s actually over 20,000. I have been an expert witness in Los Angeles County Civil and Criminal court besides others. I’ve done appraisals for eminent domain for the Metro and LAUSD. I appraised the Ambassador Hotel for the LAUSD eminent domain case with Donald Trump. I’ve appraised many beach front properties and high end properties. I am qualified to make these comments about the valuation issues.
The DA’s appraisal is complete. It comes in at less than the existing liens at $3.5M! Appraisers on average properties may vary by 5%. That is acceptable. This appraisal varies by 60-62%! At this point this is massive fraud perpetrated by the DA’s appraiser. Their appraiser should have their license revoked. The DA’s appraiser did not use comparables which were located on the beach but blocks away with no views. She also did not adjust for the difference in location! This is a violation of Federal USPAP guidelines (Uniform Standards of Professional Appraisal Practice). If anyone should be in jail, it’s the DA’s appraiser. I believe her name is Linda Frieden of Riviera Appraisals. I called and left a message asking her to confirm or deny but she hasn’t returned my call as of the writing of this post.
The subject is three units but best use is as one unit. The DA’s appraiser only used triplexes as comparable blocks away from the beach. This is based on court room testimony. I did not review the appraisals. The subject is located on approximately two lots smack on the beach. It is unique in that it has west and north facing views which are unobstructed. The DA’s appraiser does not take any of this into consideration and makes no adjustments! This is like comparing a VW bug to a Rolls Royce.
Without boring people to tears appraisal theory is based on matched pairs. We hope to find a property exactly like our subject which sold today on the open market. That of course is impossible. We hope then to find the most similar and recent comparables. Then we make adjustments for the differences. If the subject has a pool but the sold comparable does not, we add an adjustment to value for the subject for the value added by the pool. In this case the DA’s appraiser did not use the most comparable properties. She also did not make adjustments for the differences. The insanity of this fraudulent appraisal does not stop here.
Defendant’s attorney Public Defender John Powers brings his two appraisers to court to tell the judge how they arrived at the values and what they think the property is worth. The DA does not bring his appraiser. In fact she refuses to go to court. Instead the DA brings someone who oversees the bond approval process Mr. Chu. Chu’s job is to verify that the package is complete and there is enough equity to cover the bond. Chu is not an appraiser. He cannot give an opinion of value legally. He already received two appraisals which showed enough equity to cover the bond. I don’t believe he even had the right to request his own appraisal but I’m not positive about that. Defendant’s two appraisals were done by appraisers with 20-25 years of experience. They have been expert witnesses in real estate and even teach appraisal theory.
Chu gets on the stand and states he thinks the value by his appraiser is the better value. He states the comparables used and adjustments made in Defendant’s two appraisals are incorrect. Again, he’s not an appraiser. It’s not his job to appraise or to review an appraisal. Chu is commenting about zoning, units, amount of adjustments, highest and best use, income approach, gross rent multiplier…all things which he is not qualified to determine. He also states this is the first time he has made such a presentation in court. He’s not an expert witness.
Judge Renee Korn in Department 40 presided over this case. She was clear, kind, polite and fair giving both sides time to argue their case. John Powers and his two experts did a wonderful job. I’ve never seen a public defender care as much about justice as Powers. I’ve also not seen one argue as well in court. The DA of course did not have a leg to stand on legally. Deputy District Attorney Robert Knowles kind of rambled and mumbled. You could tell he knew he had no case. He almost seemed embarrassed to be presenting his side to the court.
The following is the court ruling paraphrased to the best of my ability. You can get exact quotes from the transcript.
“One cannot compare beach front property with non-beach front properties. In this situation there is no difference in value between the value of the property as a single unit or three units as the property can be used either way. The appraised value is minimum $8.65 to $9.3M. Appraising is not an exact science. This property is unique in that it has north and west facing beach access. There is additional value for this reason which was not included in the appraisals. Subject’s value would exceed the value of comparables.
The court believes that there is not enough evidence that there is insufficient equity in the property. Court rules that the bond should be approved and defendant released on bail.”
The bond was already recorded July 15, 2013. Defendant was ordered released. He was released three hours after the hearing.
Back to the beginning of the story. Dr. Gary Michelson feels somehow betrayed by a friend and his friend’s business associate. He sues them both in civil court. They deny all charges but can’t afford to respond. They lose by default and are bankrupt. That is not good enough for Dr. Gary Michelson. He wants them in jail to satisfy his need for vengeance for a crime which appears to have only happened in his own mind.
He files a false criminal complaint against Defendants. DA, LAPD most likely don’t want to prosecute as there was no crime, defendants don’t live in California and supposed crime would have been committed outside the United States so they have no jurisdiction. Dr. Gary Michelson then donates the maximum allowed by law to the DA. All of a sudden the DA agrees to go after them.
The DA files a sealed warrant and has these people arrested in Idaho and Texas. They’re extradited to Los Angeles, California for no known legal reason. Bail is set excessively high at $10,000,000 each so neither can afford bail. Public Defender John Powers gets Philip Powers’ bail reduced to $2,500,000 even though DA objects. Powers then gets a bond for $2,500,000 but DA now objects to the appraised value of the property secured by the bond. The Judge finally rules that Defendant’s appraisals are correct. There is enough equity for the bond and bail. The bond is approved. Defendant is released after spending over three months in jail which is a violation of the eighth amendment.
What will Dr. Gary Michelson and the DA do next? Will they continue to violate these people’s rights? Will the DA prosecute these people for crimes which were not committed? Will Dr. Gary Michelson ever be able to satisfy his extreme need for vengeance? I’ll try to follow what happens and post it here. If I ever go missing or am found in a shallow grave in the desert, you’ll know what happened.