Bribery, Fraud and Love at First Sight
Mark Senn’s first foray in real estate law was like doing a heart transplant without medical training
Published in 2022 Colorado Super Lawyers magazine on March 4, 2022
I did not understand a word of my real property course in law school. In fact, the only course I understood was securities regulation. In 1972, a few months out of law school, my professor got me the perfect job with the Securities and Exchange Commission in the Southern District of New York. While waiting for that job to begin, I returned to Denver to serve as more or less an in-house attorney for a wealthy investor named Bruce.
One day, Bruce got a call at 3 a.m. from a fellow on the West Coast named Stanley who wanted to trade a yacht in the LA harbor for a property Bruce had in Las Vegas, which was encumbered by a deed of trust and had been tied up in bankruptcy for five years. Bruce says, “A yacht doesn’t do me a whole hell of a lot of good here, and it’s 3 in the morning, so call back tomorrow.” Two days later, I flew to Las Vegas to meet with Stanley and the trustee appointed to supervise in the bankruptcy.
Stanley asked the trustee bluntly what it would cost to release the property so he could get it. The trustee said $5,000. Stanley reached into his pocket and gave him $4,200 in cash and a check for $800. That’s a bribe of a federal official—no question about it. It was not, “Can we work something out? Can we make something happen? Let’s talk to the lawyers, and do the paperwork in court or something.” No. It was, “I’m just going to pay you.” So although I had not yet passed the bar exam, I figured my career would end before it even began.
Then Stanley, his wife, and I flew to Los Angeles, where I was to prepare escrow instructions for a seven-way exchange—something I had never done, but, with the help of the escrow company, I got through it despite not understanding any of it.
Instead of the yacht, Stanley agreed to give Bruce a small office building on Cahuenga in North Hollywood in exchange for his deed of trust. So we went to see it. The first floor was occupied by an entity grandiosely named something like Intergalactic Talent Agency. It was filled with beautiful people, desks stacked with papers, ringing phones and overflowing file cabinets. The exchange closed, but Bruce didn’t receive next month’s rent from the talent agency. When he called their bookkeeper about it, she said the agency had only been in the building on the day he visited. The space was now empty.
So Bruce calls Stanley and says, “What’s the story here?” And Stanley said, “Look, I hired all those people. They were all there the day you were there, and they were gone the next day, but I wanted the building to look good for you.” And Bruce said, “Well, you know, that’s fraud.” And Stanley said, “Yeah, I know, but I had to get that piece of property in Las Vegas. What’s it worth to you?” And Bruce says, “Capitalize the income that you’d get from a piece of property like that, it would be about $700,000.” Stanley says, “Fine.” And a truck arrives a few days later with a cashier’s check in that amount.
I didn’t know what I was doing. Probably it would be like putting you in the surgical center and saying, “Do a heart transplant.” I’d love to, sounds fun, but I’ve never done one. So I never understood a single thing about this transaction—not to mention this whole thing where you defraud people to get what you want, then give them a check that you could have written in the first place—but I realized that I loved the real estate business and the people in it. So I passed on the SEC and continued to deal with the crazy people in this business for the next 50 years.