In June of 1999, Nicholas Charles Herbert (aka Nick Ashton and Nick Hanson) was jailed in San Diego and charged by the district attorney’s office with selling homes out from under the owners — elderly people who had no idea what was going on. To effectuate his thefts and fraudulent sales, Herbert forged such things as escrow instructions, deeds, notes, trust deeds, and appraisals, the district attorney charged.
Herbert later confessed, “On or about November 23, 1998, I stole approximately $240,000 from Carlin T. Elmendorf by unlawfully selling his property at 3811 Kendall Street, San Diego, CA, without his knowledge or consent. I netted approximately $213,000.” (It was one of several Herbert confessions for illegal sales of houses owned by the elderly.) According to proceedings in a civil suit initially filed March of 2007 in superior court in San Diego, Herbert had pulled off the stunt by forging Elmendorf’s name on a deed that purportedly transferred the property to someone supposedly named Ian James Grossman.
In August of 1999, Herbert was sentenced to five years and eight months in state prison. After he got out, and after his probation period was over, Herbert took aim a second time at the very same house on Kendall Street. According to the 2007 civil suit, in which defendants filed several cross-complaints, Herbert forged Grossman’s name on another document that transferred the property to Gold Coast Realty Investments, a company Herbert controlled. Then Herbert took out a $700,000 loan on the property and later transferred the home to an Orange County company through a fraudulent deed, according to multiple complaints in superior court. (Herbert is now in jail in Orange County, awaiting trial for other alleged real estate scams, but I will get into that below.)
“Ian James Grossman does not exist,” says Edward (Sean) Doheny, who represented Elmendorf in the civil suit. “We looked for Grossman. He is a straw man. Gold Coast is an alter ego for Nicholas Herbert.”
So who is Carlin Elmendorf? Well, “He’s insane and mentally incompetent,” says Doheny, and those afflictions helped Elmendorf get his house back. As Doheny showed at the civil trial, Elmendorf, 78, suffered a brain tumor while he was in the Marines in the 1950s. The resulting surgery has affected his mental capacity ever since. A psychiatric expert testified that he has the executive functioning capabilities of a typical third or fourth grader. Elmendorf has never held a job and doesn’t even collect the payments he receives from the U.S. military. His grandparents built the 3811 Kendall Street home 76 years ago. His mother lived in it until 1973, when she died and it passed to Elmendorf.
In attempting to filch Elmendorf’s house a second time, Herbert had competition. That’s what all those civil complaints were about. One Justin Killman attempted to claim the Kendall Street house on the legal theory of “adverse possession.” Killman sued Elmendorf, Gold Coast (Herbert), the Orange County firm, and some other entities, claiming that the house was his. “Herbert no-showed. He was on the lam in Tennessee,” where he was recently arrested and returned to Orange County, says Doheny.
Under adverse possession, a person can claim title to an empty home if, among several things, he occupies it openly, pays taxes on it, and is on the property uninterruptedly and continuously for at least five years (with an exception that eventually snuffed out Killman’s claim).
In the complaints that were tried in June, Judge Michael Anello had several problems with Killman’s assertions. For one thing, Killman’s testimony “is subject to certain credibility problems,” declared the judge. Killman couldn’t show that he occupied the house openly; neighbors didn’t notice him there for a long time, although some complained of “rowdy parties,” said the judge. There were other reasons why Killman couldn’t meet the test of adverse possession, but perhaps the most important one was Elmendorf’s insanity. As Anello explained, under California law, the normal five-year period doesn’t apply in the case of a minor or someone who is insane. Under such circumstances, the period of required occupancy can run to 20 years, and the clock doesn’t begin to run until an insane person is cured. Pronounced the judge, “If Mr. Elmendorf was the legal owner of the subject property, and if he was insane at the time Mr. Killman commenced his purported adverse possession of the subject property, and if he has been insane ever since that date, then the prescriptive period hasn’t even begun to run yet, and for that reason alone Mr. Killman could not prevail on his adverse possession claim.”
In his trial brief, Doheny noted, “Killman is a professional adverse possessor who preys on those who cannot defend themselves and are incapable of managing their properties.… Killman carries out his plan of taking properties belonging to the elderly and mentally infirm through a perversion of the adverse possession doctrine.” Judge Anello noted in his decision that Killman was trying to get a house on Bancroft Street through adverse possession at about the same time that he was working the same strategy on Kendall Street. Killman disagrees with the decision and has appealed.
According to Judge Anello, attorney Felipe Hueso, a friend and boss of Killman, told him about the house on Kendall Street. Hueso, brother of city council president Ben Hueso, had in the mid-1990s unsuccessfully attempted to adversely possess a Market Street property belonging to Elmendorf. Said the judge, “It was Mr. Hueso who introduced Mr. Killman to the subject of adverse possession, and it was Mr. Hueso who told Mr. Killman that the subject Kendall Street property might be a good opportunity for him. Against that backdrop, it is more likely than not that Mr. Killman knew that Mr. Elmendorf was elderly and mentally challenged even before he [Mr. Killman] ever saw the subject property for the first time in or about October 2000.”
In his trial brief, Doheny said that Killman was following “in the footsteps of his mentor, Felipe Hueso, the self-proclaimed expert on adverse possession.”
Patrick Tira, an attorney who assisted Doheny in the case, says, “Adverse possession may not make as much sense as it did centuries ago. It is designed to make vacant property productive. It should not be turned into a business. And it certainly should not be used to target the elderly.”
That’s particularly true when plenty of money is at stake. Although it is only 1500 square feet, the 3811 Kendall Street house is worth $718,000, according to Zillow.com. A few years ago, it was worth more than double that, says Doheny, greatly because it is located in the desirable Crown Point area of Pacific Beach.
And what of Herbert, now in jail in Orange County? A federal grand jury charges that he persuaded straw buyers (relatives and friends) to buy real estate at inflated prices through his Gold Coast Realty operation. Herbert told them he would make all the payments. Then Herbert and his confreres would create “fraudulent loan packages,” according to the grand jury, that persuaded the lenders to finance the purchases. Herbert raked in the fees and commissions, and the straw buyers would quickly go into default. As foreclosures followed, mortgage lenders lost $2.5 million, says the government.
According to court documents, Herbert, 47, had threatened by phone to cut his wife’s head off. They are getting a divorce. Then, in Tennessee, he got a 23-year-old woman pregnant. She had earlier been convicted of theft and prostitution. Noting that Herbert had enrolled in a domestic violence program that also addressed alcohol and drug treatment, the magistrate judge on December 8 decided that he was a flight risk and he should be transported in custody back to Orange County for trial.
However his trial comes out, there is a nagging question: Will he make a third raid on that Kendall Street house?