Law Enforcement

Los Angeles – Attorney General Edmund G. Brown Jr. today discussed charges filed Thursday evening against three individuals -- Howard K. Stern, Doctor Khristine Eroshevich, and Doctor Sandeep Kapoor – who “engaged in a criminal conspiracy to illegally furnish” controlled substances to Anna Nicole Smith.

“There is ample evidence that Howard K. Stern and these two physicians engaged in a criminal conspiracy to illegally furnish unwarranted amounts and combinations of highly addictive medications to Anna Nicole Smith,” Attorney General Brown said.

Over a period of three years, Doctor Khristine Eroshevich, Doctor Sandeep Kapoor, and Howard K. Stern furnished thousands of prescription pills to Ms. Smith, including opiates, benzodiazapines, and other controlled and non-controlled substances.

Doctor Eroshevich and Doctor Kapoor falsified prescriptions and furnished thousands of prescription pills to Anna Nicole Smith, often for no legitimate medical purpose. Howard K. Stern funneled those medications to Anna Nicole Smith.

The investigation, launched in March 2007, was a cooperative effort between Attorney General Brown’s Office, the Medical Board of California, the U.S. Drug Enforcement Administration, and the California Department of Insurance, Fraud Division.

Agents from these organizations worked in conjunction with the Los Angeles County District Attorney’s Office executing multiple search warrants, reviewing over 100,000 computer images and text, analyzing patient profiles and pharmacy logs, and have interviewed dozens of witnesses throughout the country and abroad.

Eleven felony counts were filed Thursday by the Los Angeles County District Attorney’s Office.

Counts 1-3: Each defendant was charged with conspiracy counts for prescribing, administering, and dispensing controlled substances to an addict; obtaining a controlled substances by fraud, deceit, or misrepresentation; obtaining a controlled substance by false name or address; issuing a prescription that is false or fictitious; and repeatedly and excessively prescribing, furnishing, dispensing, or administering drugs.

Count 4: Howard K. Stern and Doctor Kapoor were charged with unlawfully prescribing a controlled substance.

Count 5: Howard K. Stern and Doctor Eroshevich were charged with unlawfully prescribing a controlled substance.

Count 6: Doctor Kapoor was charged with obtaining a prescription for opiates by fraud, deceit, or misrepresentation.

Count 7: Doctor Eroshevich was charged with obtaining a prescription for opiates by fraud, deceit, or misrepresentation.

Count 8: Doctor Kapoor was charged with obtaining a prescription for opiates by giving a false name or address.

Count 9: Doctor Eroshevich was charged with obtaining a prescription for opiates by giving a false name or address.

Count 10: Howard K. Stern and Doctor Kapoor were charged with prescribing, administering, or dispensing a controlled substance to an addict.

Count 11: Doctor Eroshevich was charged with prescribing, administering, or dispensing controlled substances to an addict.

Bail was set for $20,000 for each defendant. Arraignment dates have been set for May 2009.

Doctor Kapoor and Mr. Stern turned themselves in to California Department of Justice agents at the Whittier Police Department Thursday night, and subsequently posted $20,000 bond. Doctor Eroshevich is expected to turn herself in and be taken into custody early next week.

Prescription drug abuse is not isolated to this case. Attorney General Brown’s office has investigated and filed charges in more than 200 cases -- both against physicians who have abused their trust and patients who go from doctor to doctor in search of drugs.

Attorney General Brown has also made it a priority to improve California’s prescription monitoring program, known as CURES, which is a critical tool in assisting law enforcement in investigating these types of crimes.

Los Angeles – Attorney General Edmund G. Brown Jr. announced that three individuals -- Howard K. Stern, Doctor Khristine Eroshevich, and Doctor Sandeep Kapoor – have been charged with conspiring to “repeatedly and excessively” furnish controlled substances to Anna Nicole Smith.

Attorney General Brown will discuss the charges and the arrests Friday, March 13 at 10:00 a.m.

“These individuals repeatedly and excessively furnished thousands of prescription pills to Anna Nicole Smith, often for no legitimate medical purpose,” Attorney General Brown said. “There is ample evidence that Doctor Eroshevich and Doctor Kapoor violated their ethical obligations as physicians, while Mr. Stern funneled highly addictive drugs to Ms. Smith.”

Over a period of three years, Doctor Khristine Eroshevich, Doctor Sandeep Kapoor, and Howard K. Stern furnished thousands of prescription pills to Ms. Smith, including opiates, benzodiazapines, and other controlled and non-controlled substances.

Doctor Eroshevich and Doctor Kapoor falsified prescriptions and prescribed unwarranted amounts and combinations of highly addictive medications. Howard K. Stern, Ms. Smith’s attorney and confidant, served as a vital link in obtaining, delivering, and administering these prescription drugs to Anna Nicole Smith.

What: Brown to Discuss Charges and Arrests in Anna Nicole Smith Investigation

Date: Friday, March 13, 2009

Time: 10:00 a.m.

Location: Los Angeles Office of the Attorney General
First Floor
300 South Spring Street
Los Angeles, CA 90013-1230

The investigation, launched in March 2007, is a cooperative effort between the California Attorney General’s Office, the Medical Board of California, the U.S. Drug Enforcement Administration, and the California Department of Insurance, Fraud Division.

Agents from these organizations worked in conjunction with the Los Angeles County District Attorney’s Office executing multiple search warrants, reviewing over 100,000 computer images and text, analyzing patient profiles and pharmacy logs, and have interviewed dozens of witnesses throughout the country and abroad.

Eleven counts were filed today. Arraignment dates for the defendants have not yet been scheduled. Bail was recommended at $20,000 for each defendant.

San Diego -- Attorney General Edmund G. Brown Jr. today forced Lobel Financial, a sub-prime auto lender, to stop its “illegal campaign of harassment and intimidation” against borrowers behind in their bills.

“This company charged its customers exorbitant interest rates for car loans and then waged an illegal campaign of harassment and intimidation when they couldn’t pay up,” Attorney General Brown said. “Now Lobel must stop its abusive tactics and comply with the law.”

Lobel Financial is headquartered in Anaheim, Calif. but makes loans to customers in Los Angeles, San Diego, Sacramento, the Bay Area, the Central Valley, and other areas of the state.

Lobel provides financing to people with poor credit who purchase vehicles through used-car dealerships. The typical interest rate of their loans is between 21-23 percent. Lobel performed its own debt collection efforts when consumers failed to make the required payments.

In 2007, the California Attorney General’s Office initiated an investigation into Lobel’s debt collection practices. The investigation found that Lobel frequently violated California’s Fair Debt Collection Act by:

• Calling its customers repeatedly and allowing the phone to ring continuously;
• Calling a customer’s employer and family members; and
• Using a false name when calling.

Additionally, the company used more sophisticated “pre-texting” tactics to obtain confidential information of their customers.

For instance, Lobel deceived ATT Wireless into providing confidential telecommunications records of at least 190 California ATT customers.

Lobel also used a calling card scam to con consumers into providing their calling information. Lobel had a third-party vendor send the customer a “free” phone card; the company would then obtain information about the calls made by the customer using the calling card.

Hundreds of California consumers across the State were victimized by Lobel’s constant harassment and illegal debt collection activities.

Lobel Financial will pay $150,000 in civil penalties and $100,000 to the State for attorneys’ fees and costs.

A copy of the complaint and the judgment submitted to the court are attached.

SAN BERNARDINO -- Attorney General Edmund G. Brown Jr. announced that three individuals have pled guilty to loan modification fraud against hundreds of 'desperate California homeowners' and were sentenced to as much as 6 years of prison.

“While doing nothing to help and pocketing all the money, these individuals ripped off desperate California homeowners who paid thousands of dollars to stop the foreclosure of their homes,” Attorney General Brown said.

The defendants sentenced were part of a foreclosure scam engineered by the First Gov company, which was based in San Bernardino, Calif.

• Rosa Conrado, 51, of San Bernardino, was sentenced today to six years, four months of prison for 6 counts of grand theft.

• Alejandrina Maldonado, 33, of St. Lucie, Fla., was sentenced on February 26, 2009, to a three year prison term for one count of grand theft.

• Martin Jesus Flores, 33, of Baldwin Park, was given three years of probation today based on his limited participation in the scheme.

• David Giron, 44, of Ontario, and Saul Amador, 23, of West Covina are scheduled for a preliminary hearing on March 19, 2009, for theft, money laundering, and conspiracy.

• Three other members of the ring -- Juan Jose Perez, 48, of Grand Terrace, Isuara Hernandez, 33, of La Habra, and Antonia Gonzalez, 66, of San Bernardino – are believed to have fled the jurisdiction and may be out of the country.

In November 2008, Attorney General Brown announced the break up of the First Gov scam ring. First Gov, -- which also operated under such misleading names such as Foreclosure Prevention Services; Resolution Department; Reinstatement Department; and Reinstatement Processing -- solicited hundreds of homeowners, offering to help them stop the foreclosure of their homes.

Ring members promised victims they would renegotiate their mortgages and reduce monthly payments. They demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program.

Victims were told to stop making mortgage payments and communicating with their lender because this would interfere with the loan modification process. After collecting their fee, ring members pocketed the money and did nothing to help victims.

The action today is part of Attorney General Brown's campaign to fight predatory lending and loan modification scams.

• In March 2008, the Attorney General’s office arrested members of Lifetime Financial Corporation for perpetrating a similar mortgage-modification scam that cheated hundreds of California homeowners out of hundreds of thousands of dollars.

• In October 2008, the Attorney General secured $8.6 billion in loan relief for eligible homeowners in a landmark settlement with Countrywide Financial Corporation for engaging in deceptive and predatory lending practices.

The Attorney General has also issued a Consumer Alert regarding foreclosure scam rings and tax reassessment scams. Homeowners should be on high alert when approached by companies offering ways to save your home or lower your property taxes.

The press release announcing the First Gov arrests in November can be found at: http://ag.ca.gov/newsalerts/release.php?id=1627

FOR IMMEDIATE RELEASE
February 27, 2009
Contact: Christine Gasparac (916) 324-5500

Brown Announces Arrest of Fugitive who Masterminded $20 Million Real Estate Fraud Scheme

NEVADA COUNTY —Attorney General Edmund G. Brown Jr. and the Nevada County District Attorney announced that the man behind a $20 million “fraudulent real estate scheme,” Thomas Hastert, was taken into custody and arrested Thursday in Santa Cruz.

“Thomas Hastert’s days of swindling millions from investors and borrowers are at an end,” Attorney General Brown said. “Now the case moves to the courtroom, and Mr. Hastert can be held accountable for his fraudulent real estate scheme.”

A warrant was issued for Hastert’s arrest last Friday. Santa Cruz investigators, working with the Nevada County District Attorney’s Office, arrested him yesterday morning at his daughter’s house. Bail was set at $540,000.

Seventy-three criminal counts were filed against Thomas Hastert in the Nevada County Superior Court last Friday for embezzlement, securities fraud, and filing false documents.

Hastert brokered over 270 hard-money loans in Nevada, Sacramento, Sutter, Butte, Placer, and Yolo Counties between September 2004 and September 2007 for real estate development projects. Hard-money loans typically provide high returns for private investors and are secured through collateral such as real estate.

In this case, Hastert secured $20 million from several investors, using the funds to broker hard-money loans to borrowers seeking to develop homes on real estate.

In the criminal complaint, Hastert is alleged to have:

Misled investors. Hastert told investors that borrowers had excellent credit scores and were capable of repaying the loans. This proved to be untrue. Many borrowers had poor credit scores, did not make regular payments on the loans, and held properties that were in foreclosure.

o The loans that Hastert brokered were required by law to be placed into a special trust account overseen by a third-party escrow firm. The firm had to verify whether funds being withdrawn by borrowers were being used for construction projects. Despite telling investors he had established such a trust account, Hastert never did, and the money was regularly withdrawn and misused by borrowers with no oversight.

o Hastert told investors he would personally oversee the development of the land. In one instance, he was asked by investors to drive them to a particular property that was supposedly under development. Hastert could not locate the property.

• Set up fake investors, known as “straw men,” to keep concerned investors at bay. Hastert filed documents with a county recorder’s office saying that his secretary owned a majority interest in the investment, despite the fact that she had never invested a single dollar. If a legitimate investor tried to initiate foreclosure proceedings, Hastert would contend that the supposed majority owner opposed the action.

• Embezzled fees. Hastert was entitled to collect a 3% fee on loans he brokered. However, he took all his fees up-front as if the loan were fully funded. In fact, some loans never fully funded, and others took more than a year to fully fund.

If convicted, Hastert could face up to 11 years and 4 months in prison. Bail was set at $540,000. A warrant was issued for his arrest today.

To view the press release about his charges, please follow this link:

http://ag.ca.gov/newsalerts/release.php?id=1683

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FOR IMMEDIATE RELEASE
February 20, 2009
Contact: Christine Gasparac (916) 324-5500

Brown Files Criminal Charges Against Broker who Masterminded Elaborate Real Estate Scheme

NEVADA COUNTY – Attorney General Edmund G. Brown Jr. and Nevada County District Attorney Cliff Newell today announced that criminal charges were filed against a hard-money real estate broker who “brazenly deceived” investors and borrowers, embezzled fees, and filed false paperwork.

“This man brazenly deceived investors and borrowers, promising high returns and easy loans, ripping off his customers for his own personal enrichment,” Attorney General Brown said. “Ultimately, this criminal scheme collapsed when many of these loans failed, costing hundreds of people more than $20 million.”

Seventy-three criminal counts were filed against Thomas Hastert in the Nevada County Superior Court this morning for embezzlement, securities fraud, and filing false documents.

Hastert brokered over 270 hard-money loans in Nevada, Sacramento, Sutter, Butte, Placer, and Yolo Counties between September 2004 and September 2007 for real estate development projects. Hard-money loans typically provide high returns for private investors and are secured through collateral such as real estate.

In this case, Hastert secured $20 million from several investors, using the funds to broker hard-money loans to borrowers seeking to develop homes on real estate.

In the criminal complaint, Hastert is alleged to have:

• Misled investors. Hastert told investors that borrowers had excellent credit scores and were capable of repaying the loans. This proved to be untrue. Many borrowers had poor credit scores, did not make regular payments on the loans, and held properties that were in foreclosure.

o The loans that Hastert brokered were required by law to be placed into a special trust account overseen by a third-party escrow firm. The firm had to verify whether funds being withdrawn by borrowers were being used for construction projects. Despite telling investors he had established such a trust account, Hastert never did, and the money was regularly withdrawn and misused by borrowers with no oversight.

o Hastert told investors he would personally oversee the development of the land. In one instance, he was asked by investors to drive them to a particular property that was supposedly under development. Hastert could not locate the property.

• Set up fake investors, known as “straw men,” to keep concerned investors at bay. Hastert filed documents with a county recorder’s office saying that his secretary owned a majority interest in the investment, despite the fact that she had never invested a single dollar. If a legitimate investor tried to initiate foreclosure proceedings, Hastert would contend that the supposed majority owner opposed the action.

• Embezzled fees. Hastert was entitled to collect a 3% fee on loans he brokered. However, he took all his fees up-front as if the loan were fully funded. In fact, some loans never fully funded, and others took more than a year to fully fund.

If convicted, he could face up to 11 years and 4 months in prison. Bail was set at $540,000. A warrant was issued for his arrest today.

The complaint and declaration are attached.

FOR IMMEDIATE RELEASE
February 18, 2009
Contact: Christine Gasparac (916) 324-5500

Brown Announces Arrests of Nursing Home Employees Who Drugged Patients for Staff’s Convenience

BAKERSFIELD –Attorney General Edmund G. Brown Jr. today announced the arrests of a nurse, physician, and a pharmacist of a nursing home for “forcibly administering” psychotropic medications for their own convenience, rather than for their patients’ therapeutic interests, actions that are alleged to have resulted in the deaths of three residents.

“These people maliciously violated the trust of their patients, by holding them down and forcibly administering psychotropic medications if they dared to question their care,” Attorney General Brown said. “This is appalling behavior, which amounts to assault with a deadly weapon.”

Earlier today, California Department of Justice special agents arrested three individuals:

• Gwen Hughes, the former Director of Nursing at the skilled nursing facility of the Kern Valley Healthcare District in Lake Isabella, Kern County on charges of elder abuse and assault with a deadly weapon.

• Debbi Hayes, the former pharmacist at the Valley Healthcare District, on charges of elder abuse and assault with a deadly weapon.

• Dr. Hoshang Pormir, a staff physician at Kern Valley Healthcare District, who was serving as the medical director of the skilled nursing facility, on charges of elder abuse.

Upon taking over as Director of Nursing in September 2006, Gwen Hughes ordered that Alzheimer’s and other dementia patients be given high doses of psychotropic medications to make them more tranquil and easy to control. She ordered the administration of these medications to patients who argued with her, were noisy, or who were otherwise disruptive. Two patients who resisted were held down and forcibly given injections.

Ms. Hughes is also alleged to have directed Debbi Hayes, the hospital pharmacist, to fill prescriptions for these psychotropic medications. Hayes wrote and filled these prescriptions without first obtaining a doctor’s approval.

Dr. Hoshang Pormir approved these psychotropic medications only some time after they had been administered and without examining the patients first and determining whether these psychotropic medications were medically necessary.

Several of these patients are alleged to have had medical complications as a result of being given these psychotropic medications, including lethargy and the inability to eat or drink properly. It is believed that that three patients died and one patient suffered great bodily injury as a result.

The investigation

Kern Valley Healthcare District operates a small community hospital and skilled nursing facility in Lake Isabella. The case came to the attention of authorities in January 2007, when an ombudsman reported to the Bakersfield office of the California Department of Public Health that a patient in the skilled nursing facility had been held down and given an injection of psychotropic medication by force.

The Department of Public Health immediately sent an investigative team with a doctor, a nurse, and a doctor of pharmacology. They determined that 22 patients, including some who were suffering from Alzheimer’s at the skilled nursing facility, were being given high doses of psychotropic medication not for therapeutic reasons, but to simply control and quiet them for the convenience of the staff.

The Department of Public Health issued a Certificate of Immediate Jeopardy which resulted in the immediate dismissal of the Ms. Hughes. The matter was then turned over to the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse.

Special Agents from the Bureau of Medi-Cal Fraud and Elder Abuse began a year-long investigation, with the co-operation and assistance of the Department of Public Health and the administration of the Kern Valley Healthcare District.

A search warrant was served on the facility in August 2008, resulting in the seizure of numerous medical files and records.

Criminal charges were filed in Kern County Superior Court. The defendants are being held in Kern County Jail in Bakersfield. They will be arraigned on Friday. If convicted, the defendants could face up to 11 years in prison.

The case is being prosecuted by the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse, with the co-operation and assistance of the Kern County District Attorney’s Office.

To report elder abuse or Medi-Cal fraud, call the Bureau of Medi-Cal Fraud and Elder Abuse’s hotline at (800) 722-0432.

The complaints are attached.

Attorney General Brown Announces Two Arrests in $1.34 Million Medicare Fraud Case

SAN DIEGO —Attorney General Edmund G. Brown Jr. today announced the arrests of two individuals who “hatched a scheme” to file false claims under Medicare for medical services that were never performed.

“The defendants hatched a scheme to bilk Medicare out of more than a million dollars,” Attorney General Brown said. “They stole the identities of people on Medicare and made claims for procedures that were never performed.”

The two defendants -- a husband and wife -- owned and operated Balboa Therapy Center in San Diego. From July 2005 to June 2006, they, along with an accomplice, paid unsuspecting seniors at retirement homes $100 to obtain their insurance information and sign their names on blank medical forms.

The couple then paired the seniors’ signatures and Medicare insurance numbers with provider ID numbers from licensed physicians to submit fake claims. None of the claimed procedures were performed, and the physicians listed on the claims had no idea their names were being used to perpetrate the scheme.

Balboa Therapy Center functioned primarily as a front. Some of the staff at Balboa reported going days without seeing a single patient. The defendants hired licensed physicians as “directors” at the clinic to gain access to their Medicare provider ID number in order to submit the false claims to Medicare. The physicians were unaware that their provider ID numbers were being used to file the claims.

When some senior citizens began to receive receipts and other forms from Medicare indicating that they had been treated at Balboa Therapy Center, they contacted the California Department of Justice (DOJ). The DOJ’s Bureau of Medi-Cal Fraud and Elder Abuse began an investigation that led to criminal charges against the following defendants in San Diego Superior Court:

• Sanjay Patel, 41. Patel and his wife, Leena Patel, owned Balboa Therapy Center. They were arrested in Connecticut just before they attempted to flee the country for India.
• Leena Patel, 36.

The defendants, who are being held at Hartford County Jail in Connecticut, are being charged with thirteen criminal counts including grand theft, identity theft, health benefits fraud, receiving stolen property and money laundering. If convicted, they could face over twelve years in prison.

The Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse investigates and prosecutes those who file fraudulent claims for medical services, medical equipment and drugs.

In the 2007/2008 fiscal year, Attorney General Brown was able to recover over $161 million in government funds that had been lost due to fraud and obtained 70 convictions.

To report fraud or abuse, call the Bureau of Medi-Cal Fraud and Elder Abuse’s hotline at (800) 722-0432.

The complaint and affidavit are available upon request.

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This order, the latest intrusion by the federal judiciary into California’s prison system, is a blunt instrument that does not recognize the imperatives of public safety, nor the challenges of incarcerating criminals, many of whom are deeply disturbed.

There is no doubt that there is room for improvement. But significant progress has been made and is continuing to be made at a cost of billions.

The court’s tentative ruling is not constitutionally justified. Therefore, the state will appeal directly to the U.S. Supreme Court when the final order is issued.

RANCHO CUCUMONGA— Attorney General Edmund G. Brown Jr. today announced that charges were filed against Dr. Lisa Barden of Rancho Cucumonga, who broke the law and “wrecked havoc” on the lives of patients whose identities she stole to obtain highly addictive pain killers.

“This physician wrecked havoc on the lives of dozens of patients, violating her oath and abusing her position as a doctor,” Attorney General Brown said.

In November 2007, the California Department of Justice’s Bureau of Narcotic Enforcement began an investigation of Dr. Barden, who illegally obtained prescription drugs on 131 separate occasions from more than 43 different pharmacies. Barden obtained more than 30,000 tablets of prescription painkillers, including hydrocodone (Vicodin) and oxycodone (Oxycotin). Dr. Barden was arrested on Thursday, January 29.

The Riverside District Attorney’s Office filed 276 felony counts including: commercial burglary, forgery, obtaining a controlled substance by fraud, possession of a controlled substance, insurance fraud and identity theft. Agents recovered from her home multiple prescription pads for 12 different doctors, as well as the personal information of 93 people who are alleged victims of identity theft.

The investigation was led by the Riverside Regional Pharmaceutical Narcotic Enforcement Team, which is a cooperative effort with the California Department of Insurance, Fraud Division and the U.S. Drug Enforcement Administration.

This initiative is part of the Attorney General’s plan to address prescription drug abuse in the state and make it easier for doctors to keep track of prescription drug records.

Prescription drug abuse can have serious public safety consequences, as many abusers hold down critical jobs including truck drivers, transit operators and medical practitioners. The Attorney General has been working in cooperation with the Troy and Alana Pack Foundation, founded by Bob Pack, whose 7 and 10-year old children were killed by a driver who was under the influence of prescription drugs obtained from multiple doctors, to make tracking prescription drug records easier.

Last year, Attorney General Brown unveiled a plan to provide doctors and pharmacies with real-time Internet access to patient prescription drug histories. Under Brown’s proposal, health professionals will have computer access to the drug histories of patients, replacing the current outdated system that required mailing or faxing written requests for information. Each year, more than 60,000 such requests are made to the California Department of Justice.

The state’s database, known as the Controlled Substance Utilization Review and Evaluation System (CURES), contains 86 million entries for prescription drugs dispensed in California, giving healthcare professionals the technology they need to fight the prescription drug abuse currently burdening California’s healthcare system.

According to the latest Department of Justice “Drug Trends” report, Valium, Vicodin, and Oxycontin are the most prevalent pharmaceutical drugs obtained fraudulently. Vicodin and Oxycontin are the two most abused pharmaceutical drugs in the United States.