Law Enforcement

LOS ANGELES – Attorney General Edmund G. Brown Jr. has demanded that JP Morgan Chase prove immediately that it is complying with state law or, if it cannot, halt foreclosing on California homes.

“I’m taking this action to further protect California homeowners on the brink of foreclosure,” Brown said, “JP Morgan Chase, like GMAC/Ally Financial, has admitted that its review of key foreclosure documents was a ruse.”

“I’m directing Chase to prove it is following the law before it continues foreclosures in California,” Brown added.

California law prohibits lenders from recording notices of default on mortgages made between January 1, 2003 and December 31, 2007, unless, subject to limited exceptions, the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with California law.

JP Morgan Chase, the nation’s third largest loan servicer, has admitted that employees signed affidavits in 56,000 foreclosure cases nationwide without first personally reviewing the contents of the borrowers’ loan files. As a result, those borrowers lost their homes based on affidavits the bank never confirmed were accurate.

This practice strongly suggests that any purported verification by JP Morgan Chase that it complied with California law before beginning foreclosures here is also questionable.

JP Morgan has suspended foreclosures in 23 other states that, unlike California, require a court order for foreclosures.

On Sept. 24, Brown sent a similar letter to Ally Financial, Inc., formerly known as GMAC, directing it to prove it is complying with California law or cease foreclosures in California until it can. The Attorney General’s office is in contact with Ally.

Brown’s letter to JP Morgan Chase is attached.

LOS ANGELES — Attorney General Edmund G. Brown Jr. today announced a settlement with a charity that “betrayed the trust of its donors” by using deceptive fundraising tactics and diverting thousands of dollars from the care of burn victims to pay for meetings in resort communities.

“The trustees of this charity grossly abused their responsibilities as guardians of charitable assets,” Brown said. “They betrayed the trust of donors by squandering donations on such things as an expensive Caribbean cruise and trips to posh resorts.”

The Association for Firefighters and Paramedics, Inc., based in Santa Ana, misrepresented how and where donations would be spent, and mailed out invoices for pledges that had never been never made. Board members also diverted $33,000 from the charity for out-of-town board meetings in San Diego and Las Vegas, and a Caribbean cruise for board members and their families before a meeting in Florida.

The settlement, filed in the Orange County Superior Court, recovers $100,000 in funds diverted from the charity, plus attorney’s fees and investigative costs. For the next four years, the charity’s fundraising materials and program expenses will be closely monitored.

In May 2009, Brown’s office filed eight lawsuits against 12 charities and 17 fundraising groups that performed telemarketing on their behalf. The lawsuits were filed as part of a nationwide effort to crack down on fraudulent fundraising activities by or on behalf of charities with names that give the false impression that the charities are associated with public safety organizations.

Through its investigation, Brown’s office obtained a list of California residents who donated to the Association for Firefighters and Paramedics. Responses to a questionnaire sent to those California residents revealed that telemarketers calling on behalf of the charity told people their donation would be used to help pay for the care of burn victims in their area, along with supporting the fire department and paramedics in their town.

The charity’s website reiterated this claim, noting that the charity would seek out cases “within a reasonable radius of your area so that the impact of your donation can be felt close to home.”

In fact, the grants were only made to Southern California residents, even though funds were solicited nationwide, and none of the funds were used to support local fire departments or paramedics. Further, donors who asked were told that 80 to 100% of their donation would go to the charity when, in fact, the charity received less than 15 percent. Eighty to ninety percent of the donations received were used to pay for the charity’s fundraising expenses.

A copy of the settlement with the Association for Firefighters and Paramedics is attached.

SACRAMENTO -- Attorney General Edmund G. Brown Jr., along with Governor Schwarzenegger, today presented 10 California peace officers who “showed tremendous bravery in risking their lives for others” with the Public Safety Officer Medal of Valor at a Capitol ceremony.

“The 10 peace officers awarded the Medal of Valor today showed tremendous bravery in risking their lives for others,” Brown said. “Today, we have the opportunity to thank them for their extraordinary courage. It’s inspiring to read their stories.”

“Hollywood can’t dream up heroes as amazing as those we are honoring here today,” said Governor Schwarzenegger. “These public safety officers are our real-life action heroes who have shown extraordinary strength and character in the line of duty. On behalf of all Californians, I thank them for their service and dedication to the people of this great state.”

The Public Safety Officer Medal of Valor is the highest state award for valor awarded to a public safety officer. Under legislation signed into law in 2003, the Attorney General nominates individuals who demonstrate extraordinary valor above and beyond the call of duty, and the Governor hands the medals to the recipients.

In June, Brown nominated 10 officers for the Medal of Valor in a letter to Schwarzenegger. On Tuesday, Schwarzenegger and Brown presented the officers with their medals at a ceremony in the Governor's Council Room.

Brown's letter of nomination follows:

June 28, 2010

The Honorable Arnold Schwarzenegger
Governor of California
State Capitol Building
Sacramento, CA 95814

Re: 2009 Governor’s Public Safety Officer Medal of Valor

Dear Governor Schwarzenegger:

The Public Safety Officer Medal of Valor Act authorizes the Governor to award a Medal of Valor to public safety officers who are cited by the Attorney General for extraordinary valor above and beyond the call of duty. The Medal of Valor Review Board met on May 26, 2010, to review 62 nominations. The Board submitted ten selections for my consideration. I concur with the Board’s unanimous recommendations that the following public safety officers receive this award:

• Officers Rodney Richards and Jason Smith, California Highway Patrol.
On September 24, 2009, CHP Officers Richards and Smith responded to an accident of a tractor trailer rig that was engulfed in flames. The driver, entangled in the wreckage, was screaming that he was on fire. Officer Richards used his fire extinguisher to extinguish the flames, but the extinguisher went dry. Officer Smith soon arrived and, together with Officer Richards and passing motorists, tried desperately to open the crushed cab of the truck while battling the flames. Finally, using extraordinary strength, the officers were able to open the truck cab and free the driver. Officer Smith then used his bare hands to extinguish the driver’s burning clothing. The driver was flown to a hospital with third degree burns over 30 percent of his body. Officers Richards and Smith were both treated for severe smoke inhalation, and Officer Smith was also treated for minor burns on both of his hands.

• Sheriff Tom Allman, Mendocino County.
On August 11, 2009, rescue personnel were dispatched to a vehicle accident and fire on Highway 101 in Redwood Valley. The wrecked vehicle was in the center divider and fully engulfed in 20 foot flames. Rescue personnel observed Sheriff Allman, reaching into the burning vehicle to free the driver. He successfully removed the occupant, but as the flames and heat from the fire intensified, Sheriff Allman had to move the victim a second time. Sheriff Allman received second degree burns to his hands and arms. Unfortunately, the driver did not survive injuries sustained in the fire.

• Detective Eric Bradley, Lodi Police Department.
Detective Bradley was the lead investigator in the case of David Paradiso who brutally murdered his girlfriend by slashing her throat. On March 4, 2009, Paradiso was on the witness stand testifying when he made derogatory comments about the victim, which caused a commotion in the courtroom. As bailiffs attempted to restore order, Paradiso grabbed a shank that was concealed in his leg brace, and stabbed Judge Fox in her neck and arm. Detective Bradley, seated at the prosecution’s table, drew his sidearm and fired, striking Paradiso in the chest. Paradiso attempted to stab the judge again. Detective Bradley placed his hand on the back of the judge’s head to protect her from the line of fire as she lay on the bench, and fired once more, killing Paradiso. Judge Fox was transported to the hospital for treatment. The entire event took approximately six seconds.

• Deputy Ken Skogen, Placer County Sheriff’s Department.
On August 30, 2009, Placer County deputies responded to an uncontrolled fire at Rock Creek Road and Highway 49. While evacuating the neighborhood, Deputy Skogen was approached by a frantic bystander who reported that a woman was trapped in her fully engulfed house. Deputy Skogen looked into a bedroom window and saw an elderly woman, confused and in a state of shock, standing with her walker, staring back out at him. He then broke the window, but was unable to persuade the woman to go to the window so he could help her out of the burning house. Realizing that time was of the essence, Deputy Skogen ran to the rear door, and kicked it open. Risking his own safety, he entered the burning house and carried the woman out. The house completely burned to the ground moments later.

• Captain Kevin Raffaelli and Officers Rick Apecechea, Jeff Dellinges and Roberto Gonzalez, San Mateo Police Department.
On August 24, 2009, officers responded to reports of shots fired and a possible explosion at Hillsdale High School. When Officer Apecechea arrived on the scene, he rushed to the aid of school faculty who were holding a male juvenile on the ground. As he handcuffed the suspect, Officer Apecechea realized that the suspect was wearing a tactical vest over his clothing that contained numerous pipe bombs. Officer Apecechea immediately ordered school staff to move away for their safety. Despite a continuing struggle with the suspect, he was able to broadcast his location and report that the suspect was armed with bombs. He handcuffed the suspect just as Captain Raffaelli and officers Dellinges and Gonzalez arrived to assist. Captain Raffaelli held the suspect and instructed the three officers to move away from the suspect in case the bombs exploded. All three officers determined that they needed to continue to assist Captain Raffaelli, and did not leave his side. The Captain cut the tactical vest from the suspect’s body. Officers Apecechea, Dellinges and Gonzalez then lifted the suspect, removed the vest, and took him to a patrol car while Captain Raffaelli secured the tactical vest and the bombs. Subsequent investigation revealed that all ten bombs were live and capable of causing lethal injuries.

• Officer Kelley Merritt, Susanville Police Department.
Officer Merritt was part of a county-wide narcotics task force that included officers from multiple agencies. On June 16, 2010, during a reconnaissance operation on a suspected marijuana garden in a remote area of Lassen County, the officers discovered a large marijuana plot and three adult males in a makeshift camp near the garden. As the officers approached the campsite, gunfire erupted. Two suspects complied with the officers’ orders, but one individual inside a tent seven to ten feet away, began firing an AK-47 at the officers. During the gunfight, Lassen County Sheriff’s Sergeant Martin and Deputy Woginrich were struck. Woginrich received a flesh wound; Sergeant Martin received serious injuries to his right hand, forearm and shoulder. As the gunfight continued, Officer Merritt placed himself in peril while shielding Sergeant Martin from the gunfire while applying life saving first aid. Officer Merritt stopped the bleeding, bandaged the wounds and made a sling for Sergeant Martin’s arm. Sergeant Martin was then moved to a location that was suitable for an airlift.

As you will see from the enclosed nominations, these ten public safety officers placed their lives in jeopardy in the line of duty. The State of California, and particularly their communities, are proud of these individuals for their bravery, character, professionalism and willingness to serve with such uncommon valor.

I respectfully request that you award the Public Safety Officer Medal of Valor to the aforementioned public safety officers. The Department of Justice will prepare the awards and send notifications to the award recipients, their families and the Medal of Valor Review Board members.

Thank you for your consideration of this very worthy recognition of California’s top public safety officers.

Sincerely,

EDMUND G. BROWN JR.
Attorney General

LOS ANGELES – Attorney General Edmund G. Brown Jr. today directed Ally Financial, Inc., formerly known as GMAC, to prove immediately that it is complying with state law or, if it cannot, to cease and desist from foreclosing on California homes.

“I’m taking this action to protect California homeowners facing the tragedy of foreclosure,” Brown said. “They are clearly in jeopardy since an Ally Financial official admitted his review of thousands of critical foreclosure documents was really a sham.'

"Prior to resuming foreclosures here, the company must prove that it's following the letter of the law,” Brown added.

California law prohibits lenders from recording notices of default on mortgages made between January 1, 2003 and December 31, 2007, unless, subject to limited exceptions, the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with California law.

Recent reports indicated that the head of Ally Financial’s document processing team testified he routinely approved and signed foreclosure documents without confirming they were accurate and legally sufficient, as he was required to do. He approved foreclosure cases at such a rapid rate that he was known by consumer advocates as the “super robot signer.”

This admitted misconduct raises serious doubts about whether Ally Financial’s practices provide California borrowers facing foreclosure the protections guaranteed by law. Accordingly, Brown is demanding that Ally Financial, the fourth largest home loan institution in the country, demonstrate its compliance with California law or else halt all foreclosure operations in the state.

Ally Financial earlier this week suspended evictions of homeowners and foreclosure sales in 23 states that, unlike California, have a system that requires a court order for foreclosure. The company has, however, continued its foreclosure operations here and in other states.

In the first six months of 2010, Ally Financial originated $26 billion in home loans, with more than 24 percent of them made in California, and the company reported earnings of $769 million during that period from its large loan-servicing business. Ally Financial services loans on behalf of numerous other companies and investors.

Brown’s letter to Ally Financial is attached.

FRESNO -- Attorney General Edmund G. Brown Jr. announced the arrest today of bank manger Jeri Sell, who two years ago was named Tulare Woman of the Year, on felony charges of embezzling $679,000 from customers of the Tulare branch of Citizens Business Bank, some of whom were friends of hers. An investigation showed she had a serious gambling problem.

Sell, 55, was arrested at her home this morning by Tulare police. She was charged in a complaint filed by Brown’s attorneys with five felony counts of embezzlement.

“This inside job is a painful case of violated trust,” Brown said. “A person who was an honored and respected pillar of the community apparently took money for her own use that had been deposited, in full confidence that it would remain safe, by people she knew.”

The complaint alleged that Sell withdrew funds from several customers’ accounts from 2005 to 2009 and used her position as manager to conceal her thefts from both the customers and the bank.

One couple lost $203,110.27. In reviewing a long list of unauthorized withdrawals, the wife demonstrated that it was impossible she had made them. For example, a withdrawal for $4,000 on March 17, 2006, she could not have made because she was out of town at a pistachio convention. Another withdrawal was made at the same moment she was getting a body wrap treatment.

Another customer lost $298,000. A bank employee said Sell requested $50,000 in cash for the customer, then took the funds from the vault and placed the money in a zippered bag.

Sell was able to hide her theft from bank customers by placing mail holds on their accounts so they would not have access to their banks statements. When the unauthorized transactions were discovered, Sell claimed the cause was computer error and, in one case, alleged that a customer had been the victim of identity theft.

When the scheme was starting to unravel because of an internal bank audit, Sell left a voicemail for one customer who lost $84,575, saying, “I want to apologize, I’ve done some things on your account that I’m not proud of. I’m thinking of killing myself. Please call me back.”

Sell’s bank accounts showed unexplained deposits of more than $500,000, and the investigation revealed Sell had made ATM withdrawals at the Tachi Palace Resort and Casino in Lemoore of more than $379,000. Investigators concluded that Sell had a gambling issue and was losing money.

Sell had been a respected member of the Tulare community for more than three decades. Besides being named the Tulare Chamber of Commerce’s Woman of the Year in 2008, Sell was also a grand marshal of the Tulare County Fair Parade and was active in raising money for local bond drives.

Copies of the complaint and arrest warrant are attached.

SACRAMENTO — Attorney General Edmund G. Brown Jr. today announced jail terms for a former DMV employee and two associates for “jeopardizing the safety of thousands” by running a scam in which unlicensed drivers paid up to $500 to acquire a phony driver’s license without taking a DMV driving test.

“This trio of characters allowed wannabe drivers to acquire a California driver’s license without passing a single driving test,” Brown said, “thereby jeopardizing the safety of thousands of Californians by putting ill-prepared drivers on our roads and highways.”

Former DMV employee Rodney Wheatly, 46, of Fairfield and his two co-conspirators, Donald McGowan, 55, and Maricar Bazemore, 37, both of Vacaville, all entered no contest pleas to a single felony charge of unlawful access to a computer system (PC 502(c)).

Wheatly was sentenced to one year in Sacramento County Jail, and the other two defendants were sentenced to six months. Their prosecution was handled by Brown’s office following a DMV undercover investigation. Investigators believe the trio issued about 20 fraudulent driver’s licenses, but they were unable to confirm a precise number.

The investigation was initiated in late 2009 after a concerned citizen called DMV’s Office of Internal Affairs to report a scheme involving the illegal sale of California driver licenses at a Napa DMV field office.

DMV investigators set up an undercover operation in which one of the agents posed as an unlicensed driver with a record of failed driving test attempts. The agent made initial contact with Bazemore over the phone and claimed to be a friend of a friend with an interest in purchasing a license. Bazemore agreed to meet the agent at a Taco Bell in Vacaville, adjacent to the senior citizens’ home where she worked, and told the agent to bring $500 for the license.

At the Taco Bell, the agent and another undercover investigator posing as her boyfriend met with Bazemore and McGowan, who was introduced as the best friend of Wheatly, the DMV employee. Bazemore and McGowan instructed the undercover agents to drive to the Napa DMV field office where Wheatly would process the driver’s license.

Before entering the Napa DMV field office, the agent paid McGowan $300. Inside, Bazemore instructed the agent to complete an application for a driver’s license and directed her to Wheatly’s window where she was told her driver’s license would be mailed to her.

Upon leaving, the agent requested that Bazemore and McGowan provide her with a temporary driver’s license before she paid them the remaining $200. They agreed, and the exchange was made the following week at the same Taco Bell in Vacaville.

OAKLAND — Attorney General Edmund G. Brown Jr. announced today a major takedown of key members of the Nuestra Familia gang who commit murders and other violent crimes “orchestrated in prison” by gang leaders using cell phones.

As part of an operation code-named “Street Sweeper,” a joint task force of 250 state and local law enforcement agents led by Brown’s Bureau of Narcotic Enforcement concluded a year-long series of arrests attacking the hierarchy of prison gangs. Today in Visalia and surrounding areas, agents arrested 34 gang members, including four local gang leaders. Five other Nuestra Familia leaders were incarcerated in earlier operations.

“Operation Street Sweeper represents a big step forward in reducing vicious street crimes orchestrated in prison by the Nuestra Familia hierarchy,” Brown said. “Today’s operation has stripped the dangerous Nuestra Familia gang of key managers who carry out orders from its imprisoned leaders.”

Launched in Folsom Prison in 1968, Nuestra Familia is one of seven prison gangs in the state. Through top-down leadership, Nuestra Familia controls illegal activities inside several prisons, as well as most of the Nortenos gangs who operate in central California from Yuba City to Bakersfield and from Salinas to the Sierra foothills.

With a sombrero resting on a dagger as its symbol, Nuestra Familia is believed to have hundreds of members inside state prisons, tens of thousands in communities and many more associates, according to gang investigators.

Three gang leaders serving life sentences direct Nuestra Familia activities from inside Pelican Bay’s Security Housing Unit, also known as the “SHU,” which isolates prisoners 24 hours a day. While such confinement places some limits on the gang’s ability to communicate, gang leaders are still able to direct gang members on the streets through cell phones smuggled into the prison.

“In addition to arresting street gang leaders through efforts like Operation Street Sweeper,” Brown said, “we must cut imprisoned gang leaders’ ability to communicate with cell phones by blocking that communication through an electronic net over Pelican Bay.”

Sophisticated technology exists to jam cell phones, even selectively, within prisons, but federal law must be changed to allow that to happen. The “Safe Prisons Communications Act” has passed the Senate, and a companion bill by Rep. Kevin Brady of Texas is in committee in the House. Brown called on members of the House to approve this legislation, which is essential to cracking down on one of California’s most feared prison gangs.

Gang violence has recently spiked in Central Valley communities. So far this year, Visalia’s serious gang-related murders, assaults and drive-by shootings have doubled compared to the same period last year.

“History was made today in Visalia,” said Colleen Mestas, chief of the Visalia Police Department. She thanked the 300 officers from 20 law enforcement agencies that took part in the operation. “With their help, our police department has been able to make an impact on our local gang crime.”

Other law enforcement agencies that assisted with today’s operation are the Central Valley Regional SWAT team, Delano Police Department, U.S. Attorney for the Eastern District of California, federal Drug Enforcement Administration, Federal Bureau of Investigation, Fresno Methamphetamine Task Force, High Intensity Drug Trafficking Areas - Central Valley and Southern Tri County, Kings County Sheriff’s Department, Madera County Gang Enforcement Task Force, Madera County Narcotic Enforcement Team, Porterville Police Department, Salinas Police Department, Tulare Police Department, Tulare County Sheriff’s Department and Visalia Police Department.

SAN JOSE – Attorney General Edmund G. Brown Jr. today announced criminal charges against the owner and two managers of San Jose-based electronic waste recycler Tung Tai Group, after the company submitted $1 million in “fraudulent and fictitious” reimbursement claims for more than 2 million pounds of electronic waste that they never recycled.

“Tung Tai Group attempted to collect $1 million in fraudulent and fictitious state reimbursements for millions of pounds of electronic waste that didn’t exist,” Brown said. “This brazen scheme is a violation of state law and the public trust.”

Two managers, John Chen, 38, of Hillsborough, and Jason Huang, 65, of Foster City, were arrested last week and posted bail, set at $1 million each. The owner, Joseph Chen, 69, of Hillsborough, is in China and arrangements are being made for him to return to the U.S. to be arraigned on the charges.

Together, the men face 17 criminal counts for submitting false documents, attempting to defraud the state, forgery and hazardous waste storage and handling violations. If convicted, the men face a maximum of nine years in prison.

“These arrests show that this department is committed to keeping e-waste out of our landfills and to rooting out those who would defraud our system for private financial gain,” said Maziar Movassaghi, acting director of the Department of Toxic Substances Control.

Electronic waste recyclers break down televisions, computer monitors, laptop computers and other waste collected from California businesses and households. Recyclers break the waste into various recyclable parts and submit a claim for reimbursement to the Department of Resources Recycling and Recovery (CalRecycle). On average, CalRecycle pays 39 cents per pound of material recycled.

In late 2008, CalRecycle auditors contacted investigators at the Department of Toxic Substances Control after noticing discrepancies in the claims submitted by Tung Tai and the records kept by Golden State Records and Recycling, a company that collected and transferred materials to Tung Tai.

In July 2009, agents searched the Tung Tai facility and discovered two separate sets of records, which provided evidence that the company submitted claims to CalRecycle between January and September 2008 that grossly inflated the amount of pounds of recycled material eligible for reimbursement.

For example, one set of records showed that a collector delivered 62,000 pounds of material to Tung Tai, but forms submitted to CalRecycle for reimbursement listed nearly 555,000 pounds. This deception increased the amount Tung Tai sought from the state by more than $235,000.

In addition, Tung Tai submitted records to CalRecycle listing items that were never delivered to Tung Tai by any approved collector of electronic waste.

The state did not make payments on the falsified and inflated requests for reimbursement, which totaled $1 million.

These charges underscore Brown’s commitment to prosecuting fraud against state agencies. In May, Brown shut down three recycling fraud rings that smuggled cans and bottles worth more than $3.5 million in recycling fees into California.

John Chen and Huang are being arraigned at the San Jose Courthouse on September 9.

A copy of the complaint, which was filed in Santa Clara Superior Court, is attached.

LOS ANGELES – Attorney General Edmund G. Brown Jr. today announced that a Laguna Niguel movie producer has been charged with 89 felony counts for orchestrating a “cold and calculated” $9 million Ponzi scheme in which he promised investors up to 35% returns for making loans to his B-movie production company.

“This con artist sold securities under the guise of a loan to fool investors and try to avoid following the rules,” Brown said. “He ran a cold and calculated scam, making promises he never intended to keep and using the funds of new victims to pay off the earlier ones.”

Mahmoud Karkehabadi (aka Mike Karkeh), 53, owner of Alliance Group Entertainment, was arraigned late Tuesday on the 89 felony counts, including securities fraud and grand theft. Bail has been set at $11 million. If convicted of all charges, Karkehabadi faces more than 25 years in prison.

More than 150 individuals from across the country made “movie production loans” to Alliance Group Entertainment, which has produced four B-movie flops since 2005, including “Confessions of a Pit Fighter” (2005) starring rapper Flavor Flav and “Hotel California” (2008).

Karkehabadi and his agents told investors they would get their money back within a year, regardless of a project’s success, with returns of 18 to 35%. When the year was up, Karkehabadi convinced investors to roll their “loans” over into the latest movie project or agree to extensions on the date for repayment.

A review of Alliance Group Entertainment bank records showed the majority of funds deposited into the company’s accounts were from investors – and their money was the source of most of the principal and interest payments made to earlier investors. The accounts showed deposits of more than $11 million from investors – and just $535,000 in revenue from the movies produced by the company.

The Department of Corporations referred the case to Brown’s office in 2007 after receiving complaints from victims. Brown’s office launched an investigation in 2008, searching bank records and conducting interviews with investors across the country.

In 2003, the Attorney General’s office secured a $5 million judgment against Karkehabadi for deceptively marketing credit cards that could not be used in stores and violating the state’s false advertising and unfair business practices laws. Karkehabadi subsequently filed for bankruptcy. He did not disclose either of these facts to investors in Alliance Group Entertainment.

Two California-based agents who sold securities to victims of the Alliance Group Entertainment scheme are also being charged. Timothy Cho (aka Hin-Kong Cho), 54, of Newport Beach remains at-large, while Deanna Salazar, 53, of Yucca Valley, has agreed to surrender.

Brown’s Special Crimes Unit is prosecuting the case. Karkehabadi is seeking a reduced bail, and a bail hearing is set for September 3 in Orange County Superior Court.

A copy of the complaint, filed in the Orange County Superior Court, is attached.

LOS ANGELES — Attorney General Edmund G. Brown Jr. today announced a $1.1 million judgment against longtime Los Angeles attorney Mitchell Roth after he conned 2,000 desperate homeowners into paying him thousands of dollars to file “frivolous and phony” lawsuits that didn’t reduce a penny of mortgage debt for a single client.

“Roth promised foreclosure relief through aggressive litigation, but the frivolous and phony lawsuits he filed instead left 2,000 desperate homeowners in even greater debt,” Brown said. “This settlement forces Roth to pay $1.1 million and prohibits him from ever again preying on new victims.”

In 2008, Roth, a seasoned Los Angeles attorney, joined with Nevada-based United First, Inc. and the company’s owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages. Noe, who was previously convicted of wire fraud and the subject of a 2004 Department of Insurance Cease and Desist Order, operated the company and handled client solicitations, while Roth provided legal services.

Homeowners were told that if they worked with United First and hired Roth to pursue their cases in court, they could lower or eliminate their mortgage debt and save their homes.

United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner’s debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.

After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower’s loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it.

Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, Roth tried to extend the lawsuits as long as possible to collect additional monthly fees from clients.

This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.

Brown filed suit last July, alleging that Roth, Noe and United First engaged in unfair competition, made untrue and misleading statements and violated California’s credit counseling and foreclosure consultant laws.

The settlement announced today requires Roth to pay $1 million in restitution to defrauded homeowners plus $125,000 in penalties, and prohibits him from ever engaging in similar conduct in the future.

Roth was admitted to the California State Bar in 1977 and resigned in April 2009, after the State Bar ordered his law firm closed.

Brown’s office continues to litigate the case against Noe and United First.

Homeowners who were defrauded by Roth and United First, or victimized by any other foreclosure rescue scam, should contact Brown’s office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.

Homeowners can also file a complaint against a lawyer, a legal specialist or a company purporting to operate as a law firm with the State Bar by calling 1-800-843-9053 or visiting www.calbar.ca.gov.

United First customers who are eligible for a refund will be contacted by mail.

By law, all individuals and businesses offering mortgage-foreclosure consulting, loan modification and foreclosure-assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan modification consultants and businesses to charge up-front fees for their services.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

Brown has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan modification consultants.

For more information on Brown’s action against loan modification fraud visit: http://ag.ca.gov/loanmod.

Copies of Brown’s original complaint, filed in Los Angeles County Superior Court, and the settlement announced today are attached.