Law Enforcement

YUBA CITY— California Attorney General Edmund G. Brown Jr. announced today that officers from the Attorney General’s Office, Yuba County Sheriff’s Department and Sutter County Gang Task Force conducted “Operation Showdown” and arrested 25 people for gang activity, drug trafficking and illegal gun sales.

“Tragically, gang activity is deeply embedded in many communities and is spreading throughout rural California,” said Attorney General Brown. “Despite the state’s budget crisis, I intend to do everything I can to help local police and sheriffs curb the escalating gang violence plaguing our state.”

During Operation Showdown, undercover officers infiltrated drug-trafficking groups involved in the distribution of drugs and the illegal sale and transfer of firearms. During a three-month period, undercover officers made more than 50 drug buys and 5 gun buys from 42 people, including 8 gang members, 13 gang associates and 5 parolees. The undercover officers purchased more than 300 grams of methamphetamine and were also able to purchase heroin, marijuana and 8 guns, including 2 assault weapons. Three of the guns purchased in the operation were stolen in a burglary in Yuba County.

Operation Showdown led to the arrest of 25 suspects, including 6 gang members and 8 gang associates. Agents seized more than 3,500 grams (almost 6 pounds) of methamphetamine, 18,000 grams (42 pounds) of marijuana, 21 guns, heroin and more than $101,000 in cash. One of the search warrants yielded 186 gigantic marijuana plants capable of producing up to 8 pounds of marijuana buds per plant.

The Attorney General’s Office assists local law enforcement when severe gang problems cross jurisdictional boundaries. State narcotics agents have recently shut down a Norteño street gang and a violent Cambodian street gang in Stockton, a Sureño gang in Atwater and the Varrio Central Poros, a brutal criminal street gang that terrorized the City of Porterville for years. Brown’s special agents have also participated in recent crime crackdowns in East Palo Alto, Oakland, and Compton.

LOS ANGELES—California Attorney General Edmund G. Brown Jr. today announced the arrests of three members of a fraud ring who preyed on desperate Southern California homeowners by falsely promising to renegotiate their home loans, but instead “ripped them off for thousands of dollars” while their homes fell into foreclosure.

“It’s appalling how these scammers took advantage of desperate homeowners and ripped them off for thousands of dollars,” Attorney General Brown said. “Our campaign against mortgage scams masquerading as foreclosure assistance will continue and even intensify.”

California Department of Justice Special Agents of the Bureau of Investigation and Intelligence arrested Rosa Conrado of San Bernardino, Saul Amador of West Covina, and Jesus Flores of Baldwin Park, believed to be members of the fraud ring. Law enforcement officers have issued arrest warrants for Juan Perez of Grand Terrace, and David Giron of Ontario, who are also suspected to be involved in the scheme. The Attorney General’s Office filed a 39-count complaint that includes multiple grand theft, money laundering and conspiracy charges against these suspects.

The arrests came after an investigation into First Gov, also operating as Foreclosure Prevention Services, uncovered that the company was soliciting hundreds of homeowners with mail flyers offering to help them stop the foreclosure process on their homes. The scammers falsely told homeowners that they would renegotiate their mortgages, reduce monthly payments, and transfer any delinquent loan amounts to the renegotiated principle. The company demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program. The company also told the victims to stop any mortgage payments or communications with their lender, claiming they would interfere with the company’s effort to negotiate the loan modification.

When victims complained that they were still receiving delinquency or foreclosure notices from their lenders, fraud-ring members told the victims that the mortgage loans had been renegotiated, but the lenders needed a “good faith” payment to secure the new accounts. Homeowners made payments to accounts under business names such as “Reinstatement Department” or “Resolution Department” that made it appear as if the payment had been applied toward the loan. Bank records indicate that more than $700,000 was stolen from homeowners who fell victim to this scheme.

Typically, the scam initiated with a flyer sent to the homeowner. For example, Eleuteria and Arthur Washington of Redlands responded to a flyer she had received that falsely claimed to offer a way to renegotiate their home loan. On May 16, 2007, a representative of First Gov came to their residence. The Washingtons were asked for two cashier’s checks each for $2,023.58 (totaling $4,046.56), which equaled two times the combined total of the monthly payment on their first and second mortgage.

Although the checks were deposited that same day into the designated Bank of America account, Mrs. Washington continued to receive letters from her lenders that the house would be auctioned. Mrs. Washington’s numerous calls to First Gov went unanswered. Finally, she received a call from First Gov that her lenders had agreed to the loan modification.

The next day, Mrs. Washington received another call from First Gov that the new loan documents would be sent to her to sign. She was told the lender wanted an additional payment and was instructed to make a deposit to Washington Mutual for $2,023.58. After Mrs. Washington made the deposit, she never heard from First Gov again. She later learned from her lender that the loan was never renegotiated, and the lender had never heard of First Gov. As a result of the scam, the Washingtons were cheated out of more than $6,000.

California homeowners should be aware the fraud ring’s flyer is still being circulated. The flyer is printed on goldenrod-colored paper in a yellow envelope. Occasionally, the contact name and number that appear on the bottom are changed. A copy of the flyer and mailing envelope are attached.

“Loan-modification scams are becoming more and more prevalent across the country, particularly in California,” Attorney General Brown said. “California homeowners should be aware of the warning signs of foreclosure scams, so they don’t fall victim to these cynical schemes.”

Today’s arrests are part of the California Attorney General’s ongoing crackdown on predatory lending and mortgage-fraud schemes in the state. In March, the Attorney General’s Office arrested Eric Pony and other members of Lifetime Financial Corporation for leading a similar mortgage-renegotiating scam that stole hundreds of thousands of dollars from California homeowners. Pony led the company in a predatory bait-and-switch loan-modification scam that targeted elderly and non-English speaking homeowners. The case is still pending in Los Angeles Superior Court.

Earlier this month, the California Attorney General’s Office 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 that led many California families to lose their homes.

Homeowners considering paying for foreclosure-assistance services, such as loan modification, should beware of anyone who tells them not to contact their lender or charges an upfront fee. It’s unlawful for companies that promise to help consumers in foreclosure to collect any money from them before they've done what was promised. Also, consumers should remember that they may not transfer title on their property to avoid foreclosure without the consent of their lender.

Copies of the complaint and arrest warrants are attached.

Frequently Asked Questions regarding the foreclosure process and foreclosure scams are also attached.

FOR IMMEDIATE RELEASE
October 31, 2008
Contact: Michelle Gregory (916) 869-0413

SAN DIEGO–California Attorney General Edmund G. Brown, Jr. today announced the arrests of three key gang members from the V-Boys and Tiny Oriental Crip gangs, two violent Southeast Asian street gangs “terrorizing California’s cities and towns.”

“We can never let up in our relentless campaign to crack down on the street gangs that are terrorizing California’s cities and towns,” said Attorney General Brown. “With the takedown of these key members of the V-Boys and Tiny Oriental Crip gangs, we’ve made significant progress in our work to make our streets safer for everyone.”

Starting at 7:00 a.m. yesterday morning, California Department of Justice Gang Suppression and Enforcement Team (GSET) agents joined other state and local law enforcement agencies in serving search warrants in two counties and arresting three leaders of the “V-Boys” and “Tiny Oriental Crip” street gangs. Both gangs have a long history of violence in San Diego County, but several of the gang leaders have relocated and now live in the Temecula Valley area of Riverside County.

The investigation started in November 2006, when GSET agents learned that the San Diego-based street gangs were active in the southwest portion of Riverside County. Prior to yesterday’s takedown, police have already arrested 27 gang members and their associates for murder, robbery, burglary, identity theft and other crimes.

The California Department of Justice (DOJ) and the Riverside County District Attorney’s Office, with the assistance of the San Diego Police Department’s Street Gang Unit and Mid-City Division and the Murrieta Temecula Regional Gang Task Force, served 7 search warrants on the Southeast Asian street gangs. Agents made 3 arrests and seized weapons, including rifles, a sawed-off shotgun, semi-automatic handguns, and a cache of ammunition. Agents also seized a Tech-9 machine pistol with the serial number filed off and night-vision equipment. Agents plan to seek additional arrest warrants for several suspects who were not found during the operation.

The gang demonstrated its potential for violence during a surveillance operation in November 2007. While agents were conducting surveillance on a suspect, Tri Minh Vo, the suspect and his companion, Cao Lam, entered a home in City Heights, a community in San Diego. They shot six people in the home, killing one of them. When the surveillance team and members of the San Diego Police Department’s Gang Suppression Team confronted the suspects, Cao Lam fired at the officers and struck a DOJ agent. Tri Minh Vo was taken into custody at the scene. Cao Lam fled on foot while continuing to fire at the responding officers. During the pursuit, Cao Lam was shot by officers and died of his wounds. The wounded DOJ agent has since recovered from his gunshot wound.

The California Department of Justice GSET program assists local law enforcement with severe gang problems that bleed into neighboring jurisdictions. State agents have recently shut down a Nortenos street gang, a violent Cambodian street gang in Stockton, and a Sureño gang in Atwater. Attorney General Brown’s special agents have also participated in recent crime crackdowns in East Palo Alto, Compton and Oakland.

LOS ANGELES –Attorney General Edmund G. Brown Jr. today announced that California Department of Justice special agents, assisted by the FBI, brought down an illegal gambling ring on Wednesday which took bets on the winning numbers of the California Daily 3, paid out the cash and hoarded the profits.

“The California State Lottery helps to fund education for millions of children in California,” Attorney General Brown said. “It should not be exploited by criminals for their own personal gain. I want to thank the FBI for working with my office to put an end to this illicit scheme.”

The 18-month joint investigation found the organization sold lottery tickets in Los Angeles, Long Beach, San Gabriel, and the San Joaquin Valley. The gambling ring took bets on number combinations based on the “California Daily 3” and would pay all winning bets, and retain the remainder as profit. It is estimated that several thousand people placed bets daily on each game.

The ring is suspected of making a profit of around $500,000 to $1 million dollars per month. Prior law enforcement investigations have shown this type of scheme can generate over $800,000 in illegal profits per month.

Profits from the California State Lottery “California Daily 3” are used to fund education and other programs in the State of California. It is illegal for private groups to collect bets and money based on games from the California State Lottery.

On October 8, 2008, state agents and the FBI concluded the multi-jurisdictional investigation with the assistance of the California State Lottery, Modesto Police Department, and Stockton Police Department. The investigation culminated with the service of seven federal search warrants and four arrest warrants in the Modesto, Stockton, and Los Angeles areas.

Evidence seized from the search warrants included documents, interview statements, and proceeds of the illegal gambling business totaling approximately $65,000 in U.S. currency and $103,000 in cashiers checks.

The following people were arrested as a result of the investigation:

Somachy Ray Keo, 48, of Modesto, CA;

Pang Yean, 66, of Modesto, CA;

Kanary Khin, 55, of Long Beach, CA;

Saret Gul Nosar, 57, of Los Angeles, CA.

The suspects were arrested for violation of Title 18 United States Code 1955 for conducting an illegal gambling business in the eastern and central districts of California, and were turned over to the custody of the U. S. Marshall’s Office.

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today announced a crackdown on rampant prescription drug fraud in California, including the top fifty abusers who average more than 100 doctor and pharmacy visits to collect massive quantities of addictive drugs like Valium, Vicodin, and Oxycontin.

“These prescription drug addicts are abusing the system, draining time and money from hundreds of doctors and pharmacies who are there to help real sick people, not con artists,” said Attorney General Brown. “On my order, California Department of Justice special agents launched a statewide search for the most aggressive prescription drug addicts. We want to end these dangerous cycles of fraud and abuse.”

Launched in June this year, the new crackdown has already led to the arrest of dozens of suspects, including Frankie Greer, 53, who visited 183 doctors and 47 pharmacies to feed a prescription drug habit that included some of the most dangerous painkillers in lethal combinations. In a one-year period, Greer sought out multiple doctors at hospital emergency rooms to prescribe her over 4,830 hydrocodone tablets, 2,210 oxycodone tablets, 156 Oxycotin, along with a variety of additional addictive painkillers.

Greer is not alone. The National Survey on Drug Use and Health estimates that 20 to 30% of the state’s drug abusers primarily use prescription drugs. In addition, the National Institute on Drug Abuse has estimated that 48 million Americans have used prescription drugs for non-medical reasons. A 2005 survey by the Drug Abuse Warning Network estimates the non-medical use of pharmaceuticals accounted for more than 500,000 emergency room visits in California, an enormous drain on the state’s healthcare system.

In addition to costing the state millions each year, prescription drug abuse can have serious public safety consequences, as many of the top abusers hold down regular 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.

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

“Doctors and insurance companies should be on the alert,” added Attorney General Brown. “We are aggressively pursuing the top prescription drug abusers, and we’re also making it easier for doctors to verify health history information provided by new patients. We encourage insurance companies to develop a similar system for protecting themselves against prescription drug fraud.”

SAN FRANCISCO – California Attorney General Edmund G. Brown Jr. today filed a motion in federal court demanding public disclosure of Federal Receiver J. Clark Kelso’s $8 billion prison construction plan.

“If public money is being spent, the public has the right to know how it’s going to be spent,” said Attorney General Brown. “To date, the proposed $8 billion medical upgrade for California’s prisons has not been shared with the public. The people of California are entitled to see for themselves whether or not the plan meets constitutional minimums or instead goes way beyond what the Constitution requires under the Eighth Amendment, prohibiting cruel and unusual punishment.”

The Receiver’s plan for prison facility construction is a 917-page document containing information on the layout, design and amenities of the seven prison healthcare facilities the Receiver seeks to build. The Attorney General contends that only 23 pages of the 917-page document fall within the terms of the protective secrecy order granted by the court earlier in the proceedings.

The court’s protective order, by its terms, only protects confidential medical records or information that may threaten the safety or security of prison personnel. Specifically, the protective order covers “Department of Corrections’ records that identify any inmate or parolee or that are designated by defendants as threatening prison safety and/or security if disclosed without protective conditions, and which are produced by defendants in informal and/or formal discover in this action.”

The Receiver’s 917-page plan forms the basis for his request to seize $8 billion from the State Treasury to build prison facilities. Attorney General Brown’s motion honors the California Constitutional principle that government is accountable to the people. Article I, Section 3 (b) of the California Constitution declares “The people have the right of access to information concerning the conduct of the people’s business…” As the Supreme Court has recognized, “informed public opinion is the most potent of all restraints upon misgovernment,” which is why, as Justice Brandeis so famously said, “Sunlight is said to be the best of disinfectants.”

The Attorney General’s motion is attached.

LOS ANGELES—California Attorney General Edmund G. Brown Jr. today announced the takedown of a drug-trafficking organization believed to be responsible for stealing the identities of local doctors to write false prescriptions for more than 11,000 pills of highly addictive drugs like Oxycontin and Vicodin.

“Prescription drug fraud is becoming a street crime problem and is growing more and more prevalent in California,” Attorney General Brown said. “What we’re finding now is that it’s no longer individual addicts obtaining a few prescription drugs; there are dangerous criminals running these underground organizations.”

In August 2007, special agents with the California Department of Justice’s Bureau of Narcotic Enforcement (BNE) teamed up with the Simi Valley Police Department to investigate Ricky Washington, known to police for his violent history, gang-affiliation, and previous-drug trafficking arrests. The 12-month investigation revealed that Ricky Washington and associates had stolen the identities of eight doctors, which they used to illegally write prescriptions. The drug-trafficking group also stole the identities of dozens of innocent citizens, designating them as “patients” in order to fill the fraudulent prescriptions. The drug ring obtained thousands of Oxycontin pills, as well as other dangerously addictive prescription drugs like Vicodin.

Agents served multiple arrest warrants and two search warrants at residences in Palmdale. Members of the drug ring arrested today included Josalyn Morales, Beverly Carter, Richard West, Danesha Bentley, Natassha Diaz, Phylicia Mitchell and the group’s leader, Ricky Washington. Law enforcement officials seized evidence that the drug ring was planning to steal the identities of even more doctors and other individuals. The charges include:
• Transportation of a controlled substance
• Possession for sale of controlled substance
• Obtaining a controlled substance by fraud
• Conspiracy on all above listed charges.

As demand increases for prescription drugs, illegal prescription-drug markets are luring violent, organized crime members. California is at the forefront of developing technology that makes it more difficult for criminals, like Washington, to operate prescription-drug rings. The California Department of Justice, in coordination with the Bob and Alana Pack Foundation, has created a new, real-time, prescription drug database. The database tracks information about all prescription drugs dispensed in California and is a powerful tool for law enforcement to combat prescription-drug trafficking.

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.

SAN FRANCISCO– California Attorney General Edmund G. Brown Jr. today filed a motion in federal court to oppose Federal Receiver Clark Kelso’s motion to hold California Governor Arnold Schwarzenegger and Controller John Chiang in contempt for failing to release $8 billion in state funds for a massive prison healthcare facilities construction project.

“Last year, the Legislature approved $7.4 billion in prison construction funds. That money hasn’t even been spent yet, and the Receiver wants $8 billion more,” said Attorney General Brown. “We simply can’t afford to keep throwing billions of dollars of public money into our state correctional system under the veil of secrecy. Once we spend the billions already allocated to improving healthcare in our prisons, then we can determine if more is needed.”

In August, Federal Prison Receiver Clark Kelso filed a motion compelling Governor Arnold Schwarzenegger and Controller John Chiang to hand over an additional $8 billion from the California Treasury over the next 5 years, including $3 billion in this fiscal year, for prison healthcare facility construction. Attorney General Brown argues that the federal court does not have the legal power to mandate state prison construction and there is no evidence in the record justifying the massive sums sought by the Receiver.

The Prison Litigation Reform Act (PLRA), approved by Congress in 1996, makes clear that a court may not force a state to pay for prison construction without its consent. The Receiver’s $8 billion demand includes construction of new prison healthcare facilities containing 10,000 new beds for prisoners with acute and long-term health needs. While California has acknowledged the need to provide constitutionally adequate healthcare, the Receiver has not presented convincing evidence that his wide-ranging plan is “necessary and the least-intrusive” plan required by the U.S. Constitution.

The Receiver has refused to disclose his plan to the public, but according to the Receiver’s motion, “the Facility Improvement project will touch virtually every prison in the state” and “will result in the construction of 7 million square feet of new medical facilities—the equivalent of 70 Wal-Mart stores…”

The $8 billion demand is an enormous increase in state spending for prisons. California built 22 new prisons in 23 years, and prison spending topped almost $10 billion in the 2007-2008 state budget. Last year, the California Legislature authorized $7.4 billion for prison construction and has instituted numerous improvements and reforms to the prison healthcare system. The Attorney General’s motion argues that these improvements should be assessed before allocating more money.

The state has made progress on prison healthcare reform. One of the fundamental problems in fulfilling the state’s constitutional healthcare mandate was the lack of qualified medical staff to treat the inmates. The eighth quarterly report of the Receiver shows that 86% of nursing positions and 81% of physician positions have now been filled. This has significantly improved the level of care provided to prisoners. The state has also implemented upgrades and improvements to its appointment-tracking, medication delivery and laboratory services.

LOS ANGELES—California Attorney General Edmund G. Brown Jr. today announced a crackdown on trucking companies operating at the Ports of Long Beach and Los Angeles that abuse their workers by denying them protections under state workers’ compensation, disability and minimum wage laws. These companies engage in cost-cutting schemes that take advantage of their workers and avoid California taxes. They unlawfully classify their workers as “independent contractors,” circumventing state employment taxes and labor laws that guarantee workers compensation and disability benefit and the right to a minimum wage.

“We are cracking down on these two companies and investigating several others that are taking advantage of their workers and cheating the state out of payroll taxes,” Attorney General Brown said. “These are low-paid truck drivers working long hours under onerous conditions who are not getting the benefits they deserve.”

Beginning in February 2008, the Attorney General’s office authorized a task force to investigate trucking companies at Long Beach and Los Angeles Ports. The investigation uncovered numerous state labor law violations committed by several trucking companies operating at the ports. Two of the lawsuits were filed in Los Angeles Superior Court today and several more will be filed in the coming weeks.

The lawsuits allege that the trucking companies named in the suits have an unfair advantage over their competitors in violation of California Business and Professions Code 17200 by depriving employees of benefits and protections entitled to them under California law. These companies are also cheating the State of California out of thousands of dollars in state payroll taxes.

Jose Maria Lira, a fleet operator responsible for transporting cargo from the Ports of Los Angeles and Long Beach, controlled all aspects of his drivers’ work, yet classified his employees as independent contractors and made them sign documents stating that they were independent. Lira leased his trucks to drivers, requiring them to sign a lease agreement stating that the driver would pay Lira 50% of his gross earnings each month in return for use of the truck, plus an additional 10% for management fees.

In fact, Lira required them to claim independent contractor status contrary to their true status as employees. The drivers worked exclusively for Lira, working 60 hours or more per week, delivering cargo in Lira company trucks. Under these conditions, the drivers should have employee status with its legal protections and benefits under the law.

The second lawsuit filed today is against the Pac Anchor Transportation Inc. (“Pac Anchor”) and Alfredo Barajas. Brown asserted that Pac Anchor and Barajas engaged in a shell game in which Alfredo Barajas supplied Pac Anchor with 38 trucks and drivers. Pac Anchor directly paid Barajas’ truck drivers, providing them with 1099 tax forms at the end of the year. Barajas and Pac Anchor misclassified the drivers as independent contractors in order to keep operating costs down and to avoid paying the mandated taxes and benefits.

The investigation found that the drivers should be classified as employees because they do not own the trucks they drive, do not have a business independent of Pac Anchor or Barajas, have no real opportunity for “profit” other than compensation on a piecework basis delivering loads, and can be terminated at will.

The two complaints are attached.

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today announced his decision to seek permission from the court to file a legal brief on behalf of the California Public Employees Retirement System (CalPERS) to protect an Orange County deputy sheriffs’ pension plan currently being challenged by the Orange County Board of Supervisors.

“The deputy sheriffs put their lives on the line for us, and they deserve fair compensation for their hard work serving and protecting the people of Orange County,” Attorney General Brown said. “County Supervisors are not entitled to suddenly change their minds and decide to take away important pension benefits that the deputies bargained for in good faith. The hard-working men and women of the Orange County Deputy Sheriffs’ Department deserve far better treatment from the Board of Supervisors. Their families are counting on it.”

Brown intends to file his brief in opposition to an Orange County Board of Supervisors’ lawsuit that challenges a 2001 collective bargaining agreement between the Association of Orange County Deputy Sheriffs and the County. The agreement provides deputies with a pension known as “3% at 50,” a plan that has been adopted by virtually every public safety department in the State of California. Attorney General Brown is filing his amicus brief on behalf of CalPERS, the state employee pension plan.

The County claims that increasing the sheriffs’ retirement pension violates the California State Constitution’s debt limit and extra-compensation provisions. The Attorney General, however, has determined that the state routinely authorizes similar retirement plans in which employees obtain benefits from prior years of service.

“The County’s lawsuit poses a significant threat to all public employees in California, including local police and other law enforcement officers,” added Brown. “This case is about protecting public safety by providing law enforcement with a decent pension plan. If the County’s lawsuit is successful, it will discourage young men and women from choosing a career in law enforcement and will hurt the families who relied on the promises the Orange County Board of Supervisors.”

The case, County of Orange v. Board of Retirement of the Orange County Employees Retirement System, is currently being litigated in Los Angeles Superior Court.

A copy of the state’s amicus brief will be released when available.