On September 2, 2010, Landrum said that he, sheriff’s deputies, and Motz “hit the house.” Inside, they found John Zepeda. John, they didn’t know about. John said that David was in intensive care at Kaiser hospital in nearby Fontana. Leaving others to search the house, Landrum drove to the hospital and found David. Weighing nearly 300 pounds, in bed, and on a breathing tube, he had suffered a stroke one week earlier. San Diego court documents quote John Zepeda as saying at the time that doctors believed David “will neither walk nor talk again.”
Landrum arrived back at the house in time to hear John admitting to the real estate scheme with his brother. He began pulling out the drawers of his desk, then opened the safe in the master bedroom. He took investigators to a second bedroom where piles of forged documents lay. There they were — the fake notary stamps with the names of San Diego notaries Bill Washington, Karla and Joel Magana, Mark Desahagun, among many others. “It was unbelievable,” Landrum recalled. “If we hadn’t recorded it, nobody would have believed us.”
In the Zepeda brothers’ garage Landrum found a truck that contained a “treasure trove” of incriminating material. “The San Diego false [quitclaim] deeds, the San Bernardino false deeds, P.O. boxes in San Ysidro where the stuff was going — it was beautiful.”
In the meantime, investigator Motz got arrest warrants in San Diego for the brothers. They would be tried here first: the evidence of their crimes in San Diego County was strongest. Motz arrested John and David, although David had to remain in the hospital. Motz drove John to the San Diego jail.
From the house, the garage, and the truck, investigators collected $335,000 in cashier’s checks. In a closet they found a Thompson submachine gun, a Mossberg shotgun, and a Ruger Mini-14 with a folding stock. From the safe they catalogued a gold-colored Geneva watch, a gold-colored Rolex, and several diamond bracelets, necklaces, and rings. There was $31,502 in cash; 13 boxes of silver coins with 640 coins per box, totaling 8320; and several hundred boxes of gold troy ounces. In the end, the San Diego district attorney’s office collected 120 banker boxes of evidence, including records of quitclaim deeds from 400 homeowners; rent payments from many of those homeowners, made out to the David Zepeda Trust; and more than 400 forgeries of notary signatures on quitclaim deeds, all of which were filed with the San Diego County Recorder.
In a news conference at the time, district attorney Bonnie Dumanis charged the brothers with 106 felony counts as well as 215 “overt acts” of foreclosure fraud. The felonies included multiple counts each of conspiracy, forgery, using the personal identifying information of another, rent skimming, filing false instruments, and grand theft.
David Zepeda is now in custody in San Diego. Welch said that after the Zepeda brothers’ trials have finished in San Diego, he will file his case against them in San Bernardino. He is ready to go to trial with 74 counts against the brothers.
How the Zepedas Worked the Scheme
In early 2006, after David Zepeda formed Sunset Trust, changed later to Sunset Beach Management, he would drive around San Bernardino looking for distressed properties — anything to suggest a foreclosure in progress and an empty home. An overgrown yard, a cracked window, newspapers piling up in the driveway. Zepeda would place a For Rent sign, with his San Bernardino phone number, in the front yard.
He also researched foreclosure proceedings and contacted the underwater homeowner. He might, as a person commented on the Fallbrook Village News website, knock on the front door, “flash a badge [and say he was] employed . . . by a city’s code enforcement division.” Then he would tell the distressed owner that he knew of a company, Sunset Beach Management, that could save his or her property.
In his criminal complaint, Motz described the scheme. Once the Zepeda brothers identified a foreclosure, they had the homeowner sign a quitclaim deed or John would forge one, and John would forge the name of a local notary onto the deed: the names could not be fabricated because the county recorder’s office would check both names when the deed was filed.
Next, Motz wrote, David Zepeda “rents out the property, in most cases for over a thousand dollars per month.” To “forestall the foreclosure process,” he would transfer the property from one trust to another. He would also buy time — to collect more rent — by filing a bankruptcy petition for the homeowner. “Money is diverted away from the lenders and owners and into Zepeda’s accounts,” Motz wrote. “Zepeda then uses the rent money to support a lavish lifestyle, including the purchase of multiple luxury, high-end automobiles and travel.”
The Torres Family Joins the Circus
Maurice Landrum described yet another ring — a third — composed of Carlos Torres, his sister Patricia, and their father Manuel. Carlos had “learned the Zepedas’ system and branched out” on his own in San Diego. Oscar Macias (unrelated to Luis Macias) was an associate of the Torreses and the Zepedas.
In San Diego, the Torres ring filed about a dozen quitclaim deeds, transferring property to the Carlos Torres Trust. In San Bernardino, two of the people Carlos defrauded were law enforcement officers, who, according to the district attorney’s press release, “were unaware that their names had been forged on quitclaim deeds, or their properties had been rented out.”
After multiple investigations in 2009 and 2010, the case went to the San Bernardino grand jury. Arrest warrants were issued for, among others, Carlos, Patricia, and Manuel Torres and their associate Oscar Macias.
In spring 2010, Landrum arrested Carlos Torres at the federal prison at Lompoc. Torres was serving a two-year sentence, having pled guilty to another charge — conspiracy to transport illegal aliens in California. Vance Welch, San Bernardino deputy district attorney, said that “Carlos is into a lot weirder stuff than we just had him for.”