Desert Hot Springs, CA – The con-man behind the scheme that ended up costing the city more than $1 million, that also bilked investors out of another $20 million, finally plead guilty in federal court. Michael Krzanzaniak AKA Michael Crosby faces an 11-year sentence, sending him back to prison for the second time after committing fraud. Crosby’s connections with local city officials run deep.
Current Mayor Yvonne Parks was then a council member in 2006 when she first began promoting Palmwood and using it as an endorsement in her campaign for city council. Parks worked in concert with Krzanzaniak and in alliance with former council members Hank Hohenstein and Mary Stephens forming a council majority championing the ill-conceived 1,766 acre Palmwood development.
The campaign for Palmwood was marked by a slick public relations campaign – all now obviously part of a scam by Krzanzaniak whose past and credentials nobody bothered to check out. He had served time in jail before for fraud.
What was seen as a boon to the city was nothing more than an expensive con according to federal prosecutors who accepted Crosby’s guilty plea in Minneapolis court last week. Investors, some in the Coachella Valley, lost over $20 million.
That con was to be a housing and retail development off North Indian Avenue and Highway 62 that advertised retail shops, a luxury hotel, thousands of homes and two 18 hole golf courses designed by golf pro Phil Mickelson.
Crosby used investor’s money to support his lavish lifestyle which included chartering private jets, expensive homes and cars (a $130,000 Mercedes) and a wallet open to politicians. Crosby’s lifestyle soared in the clouds – rubbing elbows with celebrities and courting local civic leaders lobbying their support.
It was no accident. Just as Crosby used Parks to add legitimacy to his con, Parks used Crosby to win the election. Without having done a background check on Crosby, Parks, Hohenstein and Stephens failed to know it was all a con.
Parks, Hohenstein and Stephens carried out their part well. For Palmwood to succeed, the three needed to vote against a comprehensive habitat conservation plan. That vote heatedly pitted the city against the all the rest of the Coachella Valley cities, the county, plus state and federal agencies. For the small city just exiting bankruptcy it was a strategy doomed to failure. After Palmwood was exposed as nothing but a swindle, it cost the city over $1 million in city funds to rejoin the plan.
Crosby’s scam did not slip past everyone. The Building Industry Association opposed Palmwood saying it could never be built. Experts such as Bill Effinger, former mayor of Buena Park and an experienced commercial developer, openly said Crosby was a crook and that his plans were a sham. Parks, Hohenstein, and Stephens would not listen and instead voted for Palmwood and against the Valley-wide plan.
While Crosby was away from Desert Hot Springs he was promoting other schemes for a NASCAR racetrack in Elco, Minnesota, alternative energy projects in Colorado and other pie in the sky tricks.
Mayor Yvonne Parks is running for re-election this November.