LAWSUITS CLAIM INVESTMENT FRAUD ON A.V. PROPERTY; LOSS PUT AT NEARLY $1 MILLION.

Byline: Karen Maeshiro Daily News Staff Writer

Fifteen investors from as far away as Australia are suing two Bay Area real estate brokers, alleging the pair fraudulently sold them land in the Antelope Valley.

In one of the lawsuits filed in Lancaster Superior Court against Chen and Victoria Wang, 14 people say they were duped into paying $950,000 for what they thought was 20 acres of prime commercial property but was in fact land that floods in the winter and is located near a sewage treatment plant.

``It's essentially a duck pond, and there's zoning restrictions on it,'' said William DeGarmo, the San Francisco-based attorney for the investors. ``What's worse is that once they found out about it, they hired an appraiser who said it's worth about $80,000.''

The Wangs and Redwood City-based EIC Group Inc., which Chen Wang heads, already are targeted in a class-action lawsuit filed in October on behalf of 5,000 investors in California, Taiwan, and the Philippines, accusing the Wangs of a 17-year scam to defraud small investors of $200 million in life savings from Individual Retirement Accounts.

Attorneys for the Wangs said they will hold off commenting on the Lancaster lawsuits until the outcome of a motion they have filed in Los Angeles Superior Court to have the class-action suit thrown out. The motion will be heard next week.

``We are alleging that there are causes of action that lack merit and will not stand up in court, in particular with regard to the statute of limitations,'' said David Gillen, an attorney representing the Wangs.

The second lawsuit against the Wangs was filed by an East Bay resident named Minzi Xu, who was sold part ownership in 75 acres near 60th Street East and Avenue G for more than $12,800.

The lawsuits claim that sometime in the 1970s, the defendants began acquiring undeveloped land very inexpensively in isolated parts of the Antelope Valley.

The defendants organized a ``boiler room'' operation in which telephone salespeople would make unsolicited calls to individuals to sell undivided interest in these parcels, the lawsuits state.

``The target audience were relatively unsophisticated individuals who had Individual Retirement Accounts. The telephone salespeople were given `scripts' designed to encourage investment from such accounts,'' the Xu lawsuit said. ``These telephone salespeople were told by defendants . . . to frame their `pitch' as an investment as opposed to the purchase of real property.''

To entice potential investors, the defendants inflated land values and promised substantial investment returns, the lawsuits said. The California Commissioner of Real Estate issued an opinion which ``advised defendants, in no uncertain terms, that such unimproved land could not be represented as having investment value,'' the lawsuits said.

``Once the telephone salesmen had identified a prospect, an outside salesman or `closer' would be utilized to facilitate the sale,'' the Xu lawsuit said. ``Although these buyers were typically small, unsophisticated buyers (many of whom were not even fluent in English), defendants required them to sign a document declaring that they were sophisticated and knowledgeable buyers who neither needed nor wanted the help of the Real Estate Commissioner.''

The investors who purchased the 20 acres for commercial development had retained Chen Wang as their agent in 1990.

``In the Chinese community, relationships are extremely important,'' DeGarmo said. ``Since one of their members had a relationship with Chen Wang, they used him as a broker. He was on each side of the transaction. He owned a piece of the property and acted as a broker.''

The investor group in 1995 learned that the land was subject to restrictive zoning because it provided a refuge for migratory waterfowl. They hired an independent appraiser, who valued the land at $50,000 to $70,000 and at the most no more than $120,000, court records said.

``In October 1997, plaintiffs read in the Chinese language press a story about the activities of defendants,'' the lawsuit said. ``At this time, and in this manner, they first discovered that they had been defrauded.''

In the case of Xu, the lawsuit claims the defendants greatly overstated the value of the land, which she bought in 1981, and pledges of high investment returns never materialized.

``Defendants . . . represented to plaintiff . . . that she had purchased real property when in fact she had actually purchased investment contract securities,'' the lawsuit said.

DeGarmo said the defendants gave Xu a preliminary title report, which she signed. The document she was given did not show any liens against the land, but after she signed it, someone put in liens and filed it with Los Angeles County, DeGarmo said.