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Is Winston Lum a criminal mastermind or a patsy? 

Wednesday, Aug 4 2010
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"The elephant in the room is, who's the person who lost the $2.2 million?" Newsom notes. "Somewhere down the line there is a legitimate, but very unhappy lender."

According to Ovanessian, the loan included instructions to prepay the first 13 months' installments, meaning the lender got stuck with only $1.7 million in outstanding debt.

Documents filed with the San Francisco recorder show that de Witte sold the note a month after the deal closed to Los Padres Bank in Solvang.

Kerry Steele, chief financial officer for the bank, did not return calls requesting comment. But records show that on April 23, the federal Office of Thrift Supervision notified Los Padres Bank that its finances were deteriorating so swiftly that "it was subject to prompt corrective action" to ensure it had sufficient capital to cover its deposits.

By Newsom's reckoning, the bank is in such a perilous financial condition that the Rincon Hill loan could create serious problems. The bank apparently remained unaware the note was fraudulent even after police had cracked the case.

And as of mid-June, de Witte had yet to make good on what had turned out to be a fraudulent note. "Pretty soon, it's not going to be a problem because [Los Padres Bank will] be paid in full," says de Witte, who says he has sufficient insurance coverage to repay. "When you pay off a bank, then the problem is gone for them, right? Isn't that the way it works with banks? If you pay them, there's no problem."


In a case of complex criminal fraud, it's normal for prosecutors to go after small players first, trying to get them to flip and give up bigger ones, all the way to the top. Key to this technique is a willingness to send noncooperative suspects to jail.

So the fact that detectives and prosecutors have not indicted additional suspects doesn't mean they won't in the future. And there's plenty to pin on Lum — even if it's true that Niroula duped him.

"Dumb or not dumb, he did receive $225,000 for his troubles, which he promptly spent," Ovanessian notes. "And it's kind of an unusual arrangement for someone in his kind of situation to come across, where money is raining down on you in droves."

Indeed, Lum had reason to believe something was amiss. The way Lum rationalizes it, Niroula, who had promised him a fancy job and place to live, owed him the money, and by spending it he was merely collecting a reneged debt.

Lum used this fragile logic to withdraw money for himself, checking into the fanciest downtown hotels, buying a $5,000 used Mercedes-Benz, eating at fine restaurants, and giving nice gifts to friends.

His love life began looking up, too. A woman he'd met at a bail bonds office near the San Bruno jail spent the night with him. She even said she'd marry him; she also suggested he give her one of the Rincon Hill condos.

It would seem that nobody could be so stupid as to give away a stolen condo for sex. But, it turns out, the San Francisco recorder shows that he indeed signed a quitclaim deed on one of them. Also on record are legal filings against the erstwhile girlfriend to get the property back.

In January 2009, Lum's comfortable new life got complicated when he began receiving property tax bills on the condos. He talked to his friend Kevin Nakagawa, a deputy sheriff.

"I said, could he explain what this was? He said, 'Dude. You own property,'" Lum recalls. "He asked me if Shirley Hwang was related to my ex-wife. ... I said, 'I'll give you the documents. Could you find out what's going on for me?'"

Could a man involved in a criminal scheme be so dense as to ask a law enforcement officer for help? I had my doubts, but then I read the San Francisco Police Department description of the investigation.

According to detectives, Nakagawa called a representative at the Rincon Hill Homeowners Office, who called Hwang. She sought the help of police, who then stumbled onto the latest chapter in the saga of Kaushal Niroula.

My hope is that prosecutors — or at least a jury — will see that Lum was, to a degree at least, the latest in Niroula's growing list of victims.

Gilbert Wong, a student at Notre Dame de Namur University in Belmont who took tennis lessons from Lum, described an epiphany that comes with meeting Lum. "I've hung around with Winston," Wong says, "and he does not seem that smart."

Lum is scheduled to appear at a pretrial hearing in San Francisco Superior Court on Aug. 9. He remains in custody; his bail was set at $7.5 million.

About The Author

Matt Smith

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