Torture, Lies and Louis XIII Cognac

At his job, Garcia met another agent also refinancing loans. His name was Lamond Dean.

In July 2004, a loan application came into Argent Mortgage, a sister company of Ameriquest. Mary Ann Parmelee wanted to refinance one of her La Cañada properties.

PHOTO BY TED SOQUI

Mary Ann Parmelee and Daniel Weston opened Lee Ann's Place, a high-end liquor store in La Canada Flintridge.

PHOTO BY TED SOQUI

Parmelee and Weston's 4,000-square-foot ranch house on La Porte Drive in La Canada

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More About

• Lamond Dean
• Mary Ann Parmelee
• Luis Garcia
• Personal Finance
• Consumer Credit and Debt

In the bankruptcy, the home had been valued at $625,000. Now, it was appraised at $1.2 million, a 90 percent jump in one year.

She had told the bankruptcy court that she was an unemployed real estate consultant, with no income other than her monthly alimony check. Now, she produced a Form W-2 from her employer, Weston's Land Development, which showed that she had made $230,000 in 2003 — the same year in which she had previously said she was unemployed.

She also checked a box stating she had never filed for bankruptcy. The bankruptcy that came up under her name in public records "belongs to ex-husband," she said.

In the frenzied lending climate of the time, nothing about the application seemed unusual. The numbers were plugged into a formula, and she was granted a $700,000 loan.

In the subsequent months, Parmelee used the proceeds to buy two large homes on La Porte Drive in La Cañada. She began to remodel them, installing hardwood floors. Later, she would refinance those properties as well, pulling cash out to invest in more homes.

"They just milk the heck out of properties," says Arnold Graham, an attorney who fought the couple in a landlord-tenant dispute. "They pick up properties and flip them back and forth between various owners, some real, some not. Each time they would pull as much equity as they could. Even under the best of market conditions, that's destined to fail."

When they maxed out, they turned to acquaintances. In the fall of 2006, a Filipino nurse named Luzminda Lucero says Parmelee approached her with an investment opportunity. Lucero says Parmelee persuaded her to take out two home equity loans and use the proceeds as a down payment on two properties that Parmelee owned. According to a deposition transcript, Lucero borrowed more than $2 million from Washington Mutual, almost all of which went to Parmelee. Lucero testified that she never moved into either home she had "purchased," never received the deeds and only saw them once.

Sometimes, Lucero got calls from lenders saying that her payments were past due. She would call Parmelee, who, Lucero says, said she would take care of it. Once, Lucero asked for some of her money back, but says that Parmelee told her she didn't have any.

Lucero says that in early 2008, Parmelee stopped returning her calls. Lucero never saw her "investment" again.

"I just believed her," she testified.

Public records show that Parmelee also turned to Pastor Espinoza, an illiterate Guatemalan laborer whom she persuaded to "invest" in a new liquor store. Not having any capital to speak of, he, too, turned to Washington Mutual. In January 2007, the bank loaned him $464,000 against the equity in his house. What the bank did not know was that Espinoza's home was already mortgaged.

A few months later, Espinoza stopped making mortgage payments. The holder of the first deed foreclosed, leaving Washington Mutual with $464,000 plus interest in unrecoverable debt.

As the market crested, Parmelee and Weston still appeared to be living the good life. They had a live-in housekeeper. They opened Lee Ann's Place, a liquor store around the corner from their house. The store had rosewood cabinets and slate floors, and the shelves were stocked with Kauffman vodka and Louis XIII cognac, which sells for upward of $1,500 a bottle. To get the word out, they hosted an event for the La Cañada Chamber of Commerce.

"The inside of the store was so beautiful that it really captured people's attention," says Pat Anderson, the president of the chamber. "People were looking at the inventory and saying, 'Wow, he's carrying the high-end stuff.'"

In an interview with the La Cañada Flintridge Outlook, Weston described the shop as "the Rolls-Royce of liquor stores."

"You can't find the wine we carry anywhere else in Southern California," he said. "If there's a special wine you want that's made out of the country, we'll call and have it brought in."

But according to bankruptcy filings, Weston was paying his distributors with bad checks.

"He was a complete bullshit artist," says one distributor, who asked not to be identified to protect his business. "Everything that came out of his mouth was a line of crap."

Weston was kicked out of the Chamber of Commerce for failing to pay his dues.

As money grew tighter, he became more bold.

Early in 2007, a contractor sued Weston over an unpaid invoice for $9,000 of rosewood. In the course of the litigation, Weston claimed that he had resolved the matter by cashing a check at a Washington Mutual branch, and handing the money to the contractor.

To prove it, he produced a sworn declaration from a bank teller, Oshin Baghram, stating that he had watched the transaction take place. But the contractor said it never happened.

The contractor's lawyer found the Outlook article, which showed that Baghram worked for Weston at the liquor store.