Real Estate Fraud
Whistle Blower

Monterey County in California is just about everyone's dream location. The city of Monterey is on the ocean and was the back drop for John Steinbeck's novel Cannery Row.

For John Thompson and his family, the dream of living in Monterey, and owning their dream home, seemed too good to be true. It was and Thompson soon found himself in the middle of a real estate nightmare that would lead him to blowing the whistle on his bosses for graft and corruption. Thompson is a prison guard at Soledad Prison.

Dream Home Becomes Nightmare

Monterey County Herald
Jan 05, 2007
08:47 PM

The deals between Moreland Corp. and the prison employees were facilitated by former Salinas Valley State Prison Warden Anthony Lamarque. Some of the transactions took place at the prison, on state time. State officials say Lamarque may have violated state policy by promoting the deal at the prison on state time.

"The warden wanted to find a developer to build homes reasonably for our employees in the area," said Lt. Jorge Sareli, a counselor at the Correctional Training Facility in Soledad. "He organized the deal with the developers."

Ed Caden, who was chief deputy warden under Lamarque before being removed from his job, said the warden often talked about the developments during meetings and breakfast with employees, and fliers were posted around the prison. Caden claims he was removed from his job in retaliation for being a whistle-blower at the prison.

"Tony was very involved in going down, sitting with folks, having a cup of coffee, having breakfast and talking about a variety of issues, and (Cipriani Estates) came up fairly frequently as the project started becoming more of a reality," Caden said. "It looked like this thing was actually going to go. They were talking about the style of houses, the square footage, the lot sizes, things of that nature."

Efforts to reach Lamarque by phone, in person and through his attorney were unsuccessful.

Representatives from Cipriani Estates and Moreland Corp. could not be contacted and did not return phone calls, despite repeated attempts to reach them over several days.

Caden said he was concerned about the appearance of impropriety on the part of the warden, because discussions were taking place on state property and on state time. But Lamarque repeatedly said he had no stake in the developments and it was an opportunity for his staff, according to Caden.

"Quite frankly, I thought that was a very admirable thing to be saying," Caden said.

Caden is not so sure of that now. After he was removed from his job, Caden retired from prison work.

Early this year, Caden asked the state Office of the Inspector General to investigate possible misconduct at the prison. Specifically, Caden made note of what appeared to be "reservations" being taken by Sareli for homes in Cipriani Estates.

"At one point Lt. Sareli had the developer's map in his office and was taking checks as deposits for new homes in the development," Caden stated in his report to the Office of the Inspector General.

Asked whether it is appropriate for a warden to invite private business or conduct private business at a state facility, California Department of Corrections spokesman Todd Slosek said, "The short answer is 'No.'

"Clearly the department wouldn't tolerate the misuse of state resources by any of its employees, be it supplies or time," Slosek said.

Slosek said he couldn't comment specifically about Lamarque because he is being investigated by the state on another, unrelated issue.

He said all prison employees undergo training about codes of conduct. The ethics policy regarding state employees is handled by the state Department of Personnel Administration.

Lynelle Jolley, spokeswoman for the personnel administration, said government code states employees may not use "state time, facilities, equipment or supplies for private gain or advantage."

Jolley said, "In general, you can't use state equipment, including an office, or state time for private business."

At the time of the alleged transactions, Sareli was the community resource manager for the prison. When asked to respond to allegations of his involvement, Sareli said, "I can't speak on that."

Caden said that when he saw Sareli taking deposits, he pulled Sareli aside and asked for an explanation. Caden said he was told the reservations were for the staff and that no one was making money off of them. Caden said he then confronted Lamarque, who reiterated Sareli's response.

"My problem is it looks like we're running a real estate office out of this office using state time, state facilities and state resources," Caden said. "You can't do that."

Whatever the appearance, people knew to contact Sareli about Cipriani Estates. John Thompson was one of those interested in buying a home.

"(Lt. Sareli) basically said they had some homes set aside for correctional officers that worked at Correctional Training Facility and Salinas Valley State Prison and (asked) if I was interested," Thompson said. "I said yes. He said they could put my name down and I was put on a list. I came out on the list for plot 41."

Five days a week, Thompson rises at 4:30 a.m. to be on the road for his 6 a.m. shift at the Correctional Training Facility in Soledad, where he has worked five of his 10 years in corrections.

The father of two preteens and a 6-month-old, Thompson has always rented. Buying a home "was one of those things where we looked and prices were just a little bit out of our reach," said Thompson. "This came along and it was the perfect timing, perfect deal, perfect everything. It was like this is going to happen for us now, for my wife, my kids, everybody."

Thompson is not the only prison guard who hasn't been able to afford a home. Since the late 1970s, the cost of housing in Monterey County has strained recruitment and retention of prison employees. Little has changed.

In its assessment of Salinas Valley State Prison, the Monterey County Civil grand jury noted in its 2004 report that the 20 percent turnover at local prisons is more than twice the state average because of the high price of housing.

"When you look at the median cost of a home in Monterey County ... correctional officers can't afford them, let alone the support staff, the clerical staff, the records staff, maintenance," Caden said. "Those kind of people can't afford to buy anything in the area."

Cipriani Estates, Thompson says, was affordable.

"From what I understand ... if you wanted to get in at a decent price, this was your opportunity. You didn't have to come up with $30,000 to $40,000, so I signed up."

In November 2003, Thompson attended the groundbreaking ceremony. Some 71 homes, including 20 for low-income families, were going to be built on the 13.9-acres wedged between Highway 101 and train tracks, just north of a winery and a fruit processing plant.

"There was a handful of people there. There was the mayor of the town, the people that did the housing project, the builder. ... There were probably about 50 to 100 people there," Thompson said. "They had sodas and cake and they had some ceremonial shovels. They dug into the dirt, they wished us all good luck with our new homes and they had a little party."

He said he remembers seeing Sareli there as well. Sareli also has a plot in the development.

"Everybody was happy to be getting a new home, something you could afford," Thompson said.

Thompson's home, from the moment the concrete foundation was poured to the last section of the roof installed, should have taken no more than two weeks to build because it was going to be a pre-fabricated home, according to Gonzales Planning Director Bill Farrel. Thompson said he didn't know the home was pre-fab.

Farrel also said that Moreland had made adjustments to the house models and as far as he was aware, none would be two-story homes. The home Thompson put a deposit on, however, was two stories.

Finally, more than a year after he received his confirmation letter, Thompson received a phone call from his real estate agent. She told him his home would now cost $536,900 and that he had three days to commit to the new price or his lot would be sold to another buyer.

Sareli said Thompson is not the only one asked to pay more.

"I'm one of them," said Sareli. "The price went up for me too."

The two others who filed suit over the pricing are Edward Russell, a recently retired correctional officer, and Cecilia Villegas, another employee at Correctional Training Facility.

Villegas was informed last year that her home would cost $20,000 more than what she was originally told. She signed a letter agreeing to the increased price, but wrote in the margin, "I am accepting the terms and conditions but I am very disappointed as I was told when I gave my $2,000 that the price would absolutely not change."

Moreland "tried to make a deal for the people in the area but the prices went up over the years," Sareli said. "Their intentions were good. It's just that the market went up."

Thompson says he doesn't want a fuss or publicity -- he just wants the house in which he planned to retire.

"It was my affordable home, my dream home. I don't have a four-year degree where I can go out and get a job that pays $100,000," Thompson said. "That doesn't matter. They've put me in a situation where because of the delays, I'm in a worse situation."

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Copyright (c) 2007, The Monterey County Herald, Calif.

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