In the early morning hours of August 16, 2001, an explosion and fire erupted in the Palomar Hotel, a residential hotel on Santa Monica Boulevard in Los Angeles, California. Two people were killed: Norma Galindo, a 38-year-old resident who fell to her death after dropping her two young children to firefighters, and 47-year-old Arturo Ortiz, the resident manager and brother of the hotel owner, Juan Ortiz.
Investigators quickly determined the blaze was caused by arson after Arturo Ortiz was found dead on the second floor of the four-story building amidst several cans of gasoline.
Police found $10,000 in cash in the trunk of Arturo’s car along with a painting of the Last Supper, which had previously been on the wall of Arturo’s room in the hotel. One investigator said the fire was one of the most obvious arsons he had ever seen.
Although Juan Ortiz owned the hotel, his stepfather, 67-year-old Joseph Lewellen, handled much of the paperwork because Juan, who spoke primarily Spanish, had difficulty reading and understanding English. Prior to the time of the fire, the hotel had been cited for electrical violations, missing smoke detectors and shoddy wiring. The hotel was insured for $900,000 and $50,000 for its contents. Lewellen filled out a loss claim for the insurance listing the value of lost contents at more than $200,000. The claim for the building, including demolition and removal, was more than $750,000.
However, insurance investigators discovered that some of the items listed on the claim form were not in the hotel at all and that there were no receipts for others, such as 60 new box springs and mattresses. The insurance company denied the claim, citing a clause that any misrepresentation or concealment voided the policy.
On November 6, 2001, the day after the claim was denied, a federal agent and a Los Angeles police detective interviewed Lewellen. During the videotaped interrogation, Lewellen, who was angry and hostile, admitted there may have been some mistaken information on the insurance forms, but he denied accusations from the officers that he had conspired with Juan to pay Arturo to set the fire to collect the insurance.
The agents concluded that Lewellen had been lying.
Lewellen and Juan Ortiz were arrested on November 21, 2001 on charges of murder, arson and insurance fraud. Following a preliminary hearing, the charges against Lewellen were dismissed.
Ortiz went on trial in Los Angeles County Superior Court in the summer of 2005. He was charged with the murder of Galindo, conspiracy to commit arson, four counts of arson causing bodily injury to four firefighters hurt battling the blaze and insurance fraud. The prosecution presented evidence that Arturo had set the fire, arguing that the hotel was in debt and saddled with violations that would cost tens of thousands of dollars to repair, and that the claims for loss had been inflated. Over the objection of Ortiz’s defense attorney, the prosecution showed the jury the videotape of Lewellen’s interrogation and argued that Lewellen’s demeanor and responses were evidence that a conspiracy had been hatched between the Ortiz brothers and Lewellen.
Ortiz’s defense attorney contended that Arturo set the fire alone. He argued that Arturo was angry because Juan had ordered him out of his hotel living quarters because his unit had code violations and because Arturo had been skimming from rent money collected from tenants.
Family members testified that Arturo was a habitual drunk, possessed a hair-trigger violent temper and was angry with his brother. Ortiz testified that he didn’t want to sell the hotel and didn’t want to burn it down—that he wanted to repair it and make it succeed. He conceded that he signed the proof of loss, but said that no one read it to him. He said he did not see the inventory presented to the insurance company.
The jury began deliberating on September 22 and on October 11, 2005 Ortiz was found guilty of two counts of insurance fraud. A mistrial was declared on another charge of insurance fraud and the murder and arson charges because the jury could not reach a unanimous decision.
Ortiz went on trial a second time in March 2006 on the arson and murder charges and the remaining insurance fraud claim. After 45 days of deliberation, the jury convicted Ortiz of the insurance fraud claim and again deadlocked on the arson and murder charges.
Ortiz was released on bond on July 7, 2006 after being in custody for four years and eight months.
A third jury trial began in September 2006. The most significant difference from the previous trials was that instead of playing the videotape of Lewellen’s interrogation, the prosecution granted Lewellen immunity from prosecution and put him on the witness stand to testify.
During cross-examination, Lewellen was less defensive, sarcastic and hostile than he was in the interrogation and he provided plausible explanations for his attitude during the interview. He took the blame for errors in the proof of loss, admitted that he had prepared the inventory and told the jury that he had to persuade Ortiz to sign the proof loss because Ortiz was so emotionally upset that he seemed to have no interest in submitting an insurance claim at all. Lewellen said Ortiz’s participation in the preparation of the inventory was “nothing.”
On March 23, 2007—after about six months of trial—the jury acquitted Ortiz of the murder and arson charges. His defense attorneys then filed a motion for a new trial on the insurance fraud convictions, arguing that Lewellen’s courtroom testimony was newly discovered evidence. The motion was denied and Ortiz was sentenced to five years in prison, but with his credit for time served he remained free.
In January 2010, the California Court of Appeals set aside the insurance fraud convictions, ruling that the videotape of Lewellen’s interrogation was improper hearsay and should not have been presented to the juries in the first two trials. The court found that Ortiz’s acquittal on all counts remaining in the third trial “helps to contradict (the prosecution’s) claim that the results of the first two trials would not have been different had Lewellen's hearsay statements been excluded.”
The Los Angeles District Attorney’s Office then dismissed the insurance fraud charges.
– Maurice Possley