ESCROW AGENT WHO EMBEZZLED NEARLY $4 MILLION BEING HELD FOR 24 CALIFORNIA CITIES SENTENCED TO PRISON

LOS ANGELES – The president of a now-defunct Huntington Beach company that held grant money and loan proceeds in escrow on behalf of local governments was sentenced today to 37 months in federal prison for embezzling nearly $4 million that belonged to San Francisco, Pomona, Seal Beach and 21 other California cities.

Belinda Exon, 56, who now lives in Phoenix, Arizona, was sentenced this morning by United States District Judge Otis D. Wright II. In addition to the prison term, which will begin on June 3, Judge Wright ordered Exon to pay $3,885,247 in restitution to two dozen municipalities.

When she pleaded guilty last May, Exon admitted that she embezzled $3.9 million that was being held in escrow by her former company, Rehab Financial Services, Inc. Exon used much of the embezzled funds to finance the purchase of residential properties and vacant land in Arizona cities of Phoenix, Maricopa, Kingman, Chandler and Glendale. She also used about a half million dollars to fund start-up landscaping and pool service businesses. Exon took the money during a six-year period that ended in 2008.

Rehab Financial was an escrow and loan servicing agent that administered grants and loans for California municipalities. The money entrusted to Rehab Financial included funds awarded by the United States Department of Housing and Urban Development to local governments for rehabilitation programs designed to fix health and safety hazards in low-income housing, and to pay for upgrades necessary to bring low-income housing into compliance with building codes. The funds entrusted to Rehab Financial included HUD funds awarded to local governments for Community Development Block Grant, Community Program Development and rehabilitation Loan (HOME) programs.

According to court papers, the City and County of San Francisco, which suffered the largest losses as a result of Exon’s embezzlement, had to tap other city funds, which “prevented the city from undertaking several new multi-unit projects to abate the presence of lead and to rectify other health and safety hazards.” According to San Francisco’s Lead and Housing Rehabilitation Programs Manager of the Mayor’s Office: “[A]s a direct of Ms. Exon’s embezzlement, many low-income residents continue to be forced to live in substandard conditions that threaten their health, most notably children under the age of six who are most susceptible to the effects of lead paint exposure.”

Judge Wright said at today’s hearing that Exon’s conduct “had a real and tangible effect on a population that we, as a society, are attempting to reach out to and help. People will be living in less habitable dwellings – even dangerous dwellings” as a result of Exon’s embezzlement.

Judge Wright determined that the 24 victim municipalities suffered the following losses as a result of Exons criminal conduct:

San Francisco – $1,106,035

Pomona – $751,000

Seal Beach – $478,500

Huntington Park – $478,000

Westminster – $223,392

Buena Park – $162,563

Rosemead – $128,328

Montebello – $125,000

Apple Valley - $95,452

Camarillo – $91,975

Fullerton – $66,453

Perris – $66,000

Bellflower – $59,140

Calimesa - $45,000

Santa Cruz - $34,784

Encinitas – $29,524

Santa Monica – $26,029

Hollister – $22,195

West Covina – $10,000

Rialto – $8,791

South Gate – $7,603

Hemet – $3,000

San Juan Capistrano – $2,055

The Housing Authority of the County of Marin – $5,259

Exon pleaded guilty to one count of embezzling money from organizations that receive federal funds. When she pleaded guilty, Exon agreed to forfeit the properties she purchased with the embezzled funds and to make full restitution to the victim municipalities.

The case against Exon was investigated by HUD’s Office of the Inspector General.

#####