Law Enforcement

SACRAMENTO--Governor Arnold Schwarzenegger and Attorney General Edmund G. Brown Jr. today called upon California’s Internet service providers to follow the lead of Verizon, Time Warner Cable and Sprint by “removing child pornography from existing servers and blocking channels” that disseminate the illegal material.

“Protecting the safety of our children must be a top priority, not just for government, but also for businesses with the direct power to reduce the ability to conduct illegal activity,” Governor Arnold Schwarzenegger and Attorney General Edmund G. Brown Jr. said in a joint letter to the California Internet Service Provider Association, which represents more than 100 Internet service providers in California.

“We applaud three of the world’s largest Internet service providers—Verizon, Time Warner Cable, and Sprint—for taking steps to block access to child pornography. It is not enough, however, for only a few Internet service providers to join the fight against online predators. Child pornography is not protected by the First Amendment, and distributing this material is illegal.”

On June 10, 2008, New York Attorney General Andrew Cuomo announced agreements with Verizon, Time Warner Cable, and Sprint, to block access to child pornography by purging their servers of existing child pornography and eliminating access to child pornography newsgroups.

Governor Schwarzenegger and Attorney General Brown said other Internet service providers should follow these companies’ lead by ridding their own servers of child pornography and preventing access to illegal content through newsgroups.

“The California Internet Service Providers Association is the largest association of Internet providers in the country and we are asking your members to take their leadership role seriously. The association can begin by working with its more than 100 members to remove child pornography from existing servers and blocking channels, which include newsgroups, used for distributing this material,” Schwarzenegger and Brown said.

California is home to the Silicon Valley which has hundreds of Internet service providers, ranging from large companies to smaller, local providers. Some of the major providers include AT&T and AOL. According to the California ISP Association, the largest such association in the country, there are more than 100 Internet service providers in California.

The California Attorney General’s office has been working with other states to protect children from dangerous predators on the Internet. California recently joined 49 other states in reaching agreements with Myspace and Facebook so that those social networking sites take steps, including age and ID verification processes, to protect children from online sexual predators. The attorney general’s office also deploys special agents who conduct undercover investigations into online sexual predators. For more information about the apprehension teams, visit: www.ag.ca.gov/cbi

A copy of Governor Schwarzenegger and Attorney General Brown’s letter to the California Internet Service Providers Association, sent today, is attached.

PORTERVILLE--California Attorney General Edmund G. Brown Jr. today joined the Porterville Police Department in announcing a major takedown of the Varrio Central Poros, a brutal criminal street gang that has “terrorized” the City of Porterville for years.

“Gang activity has infested the streets of Porterville and terrorized the city,” Attorney General Brown said. “In response to the rising threat of violence, the California Department of Justice deployed Special Agents to work alongside the police department in cracking down on the Varrio Central Poros and bringing its members to justice. We have seized dozens of dangerous weapons and drugs, effectively draining this gang of its lifeblood.”

Today, the California Department of Justice and the Porterville Police Department, with the assistance of other law enforcement agencies, served 23 search warrants and 21 arrest warrants on the criminal hierarchy of the Varrio Central Poros. They made 17 arrests. Agents seized cocaine, meth, and marijuana during today’s takedown. They also seized weapons and ammunition for an AK47.

During the investigation which led to today’s arrests, agents conducted 94 surveillances, arrested 31 suspects and conducted 266 field interviews regarding the gang’s criminal activities. Approximately 18 search warrants were issued and 16 court orders were served. Gang members were also arrested for cocaine possession, carrying loaded firearms, and false imprisonment.

Agents seized 24 grams of meth, 56 grams of marijuana, 34 grams of cocaine, and 62 grams of heroin during the course of the investigation.

The Varrio Central Poros were involved in narcotics trafficking and distribution throughout Tulare County. Investigators found that they used proceeds from drug sales to post bail for fellow gang members and purchase dangerous weapons including rifles, shotguns and several handguns.

The Varrio Central Poros investigation began in October 2007 following a spate of gang-related homicides and violent crimes in Porterville, a town with a population of 51,000. From May 2006 to October 2007, the police department reported 17 homicides in the city, 13 of them gang-related and an increase in drive-by shootings. The violence reached a peak in October 2007 when the city reported 12 shootings within a 5-week period. The gang targeted rivals in the town and often their own members for execution if they were thought to be disloyal.

At the request of Porterville Police Chief Chuck McMillan, California Attorney General Brown dispatched 75 agents of the Department of Justice’s Gang Suppression Enforcement Team to Porterville in November 2007 to crack down on the gang. The State Department of Justice joined with the Porterville Police Department, the Tulare County Sheriff’s Department, the Lindsay Police Department, and other law enforcement agencies throughout the central San Joaquin Valley.

“This is the finest example of law enforcement agencies pooling their resources to combat the common problem of gang activity,” said Porterville Police Chief Chuck McMillan.

The California Department of Justice assists local law enforcement when gang problems have become so severe that the crime is bleeding into neighboring jurisdictions. State agents have recently shut down a Nortenos street gang and a violent Cambodian street gang in Stockton, and a Sureño gang in Atwater. Brown’s special agents have also participated in recent crime crackdowns in East Palo Alto and Oakland.

The Varrio Central Poros organized themselves in the early 1990’s, originally known as Porterville’s Most Dangerous. The gang is affiliated with the notorious northern California prison gang Nuestra Familia and the Northern Structure prison gang. Nuestra Familia, a rival of the Mexican Mafia, was organized in Folsom State Prison in 1968 and operates primarily in the northern parts of California. There are approximately 120 Varrio Central Poros gang members in Porterville, ranging in age from 12 to 40 years.

The Tulare County District Attorney’s Office will prosecute the gang members arrested today. The suspects face various felony charges including murder, narcotics trafficking, carjacking, conspiracy to commit murder and assault with a deadly weapon.

The Porterville Police Department will use every lawfully available tactic to extract information from arrestees about recent gang related homicides, shootings and other criminal activities.

SACRAMENTO--The California Department of Justice has completed its criminal investigation of former Superintendent of Glenn County Office of Education, Joni Samples, and concludes that there is insufficient evidence to prove that she committed a criminal offense beyond a reasonable doubt.

The department’s investigation focused on a number of public corruption allegations against Samples, including unauthorized use of Glenn County Office of Education’s resources for private business, unauthorized use of Glenn County Office of Education's resources for political campaigning, unauthorized use of Glenn County Office of Education's funds to pay for her personal vehicle, including repairs and equipment for the vehicle, unauthorized use of Glenn County Office of Education's funds to pay for personal travel, and unauthorized use of Glenn County Office of Education's funds to reimburse the office for money embezzled by an employee.

The investigation into this matter included reviewing more than 4,000 documents and interviewing more than 30 witnesses. Based on the documents reviewed as well as the people interviewed, the California Department of Justice has concluded that there is insufficient evidence to prove that Samples has committed a criminal offense beyond a reasonable doubt.

Government Code section 6254, expressly exempts investigatory and security files of the attorney general, including complaints about unlawful practices, from public disclosure. As such, additional details about the state's investigation will not be disclosed.

OAKLAND--California Attorney General Edmund G. Brown Jr. today joined the Oakland Police Department in announcing the results of “Operation Nutcracker,” a major takedown of the violent Acorn gang that has terrorized the East Bay with homicides, drug trafficking and carjacking.

“The Oakland Police Department should be commended for fighting back against the violent gangs that have terrorized the good citizens of Oakland,” Attorney General Brown told a news conference at the City of Oakland Emergency Operations Center. “California Department of Justice special agents are proud to join with Oakland Police Department during the investigation and arrest of the violent Acorn gang’s key leadership.”

During today’s slew of early morning raids, the culmination of a three month investigation, approximately 250 officers from 17 state and local law enforcement agencies arrested at least 40 suspected gang members and associates, seized 8 guns, including 1 assault weapon, and confiscated drugs including marijuana, cocaine and ecstasy.

Today’s announcement marks the culmination of an extensive investigation into the Acorn gang, one of West Oakland’s most violent criminal street gangs. This morning, agents served approximately 30 search warrants in the Oakland and Northern East Bay area. The City of Oakland Emergency Operations Center at 1605 Martin Luther King Jr. in downtown Oakland was the command post for the operation.

The Acorn gang is a turf oriented criminal street gang that began its operation in the 1980s as a street level supplier of marijuana and cocaine in Oakland. During the past year, the Acorn gang had increased its violent activity against rival gang members and Oakland citizens, prompting the Oakland Police Department to concentrate investigative resources on the gang’s key leadership.

During today’s takedown, officers arrested Mark Candler, 33, one of the gang’s key leaders. Candler, also known as “MAC,” became the self-proclaimed leader of the Acorn gang at age 14. He has been a prolific drug trafficker in Oakland and Detroit, been shot several times and is suspected to be responsible for homicide and a number of shootings. He was arrested this morning in connection with an ongoing attempted murder investigation.

Last month, the California Department of Justice sent 10 special agents to provide investigative support to the Oakland Police Department during the investigation and the Acorn gang takedown. The state has facilitated surveillance of primary and secondary targets and provided additional investigative and intelligence support.

During the Oakland Police Department’s three month investigation, officers seized 31 firearms, captured 3 murder suspects and numerous robbery and assault suspects including the perpetrators of the Milano’s & Red Boy Pizza robberies. An Oakland Police Department analysis of West Oakland crime statistics indicates a 66 percent decrease in shootings and a 28 percent decrease in robberies since officers began targeting the Acorn gang with aggressive enforcement.

Law enforcement agencies which assisted the Oakland Police Department during the investigation and today’s takedown include the California Department of Justice and Federal Bureau of Investigations.

Special agents in the California Department of Justice often temporarily assist local law enforcement when gang problems have become so severe that the crime is bleeding into neighboring jurisdictions. State agents have recently led operations to shut down a Norteno street gang in Stockton, a Crip gang in Atwater and a violent Cambodian Street gang in Stockton. Brown’s special agents also participated in an East Palo Alto crime crackdown, Operation Safe Neighborhood, last year. Approximately 27 percent of all California homicides between 1996 and 2005 were gang related.

For more information about state crime crackdowns and the role of special agents in the California Department of Justice visit: http://www.ag.ca.gov/monthly_feature/index.php. For additional information on today’s operation please contact the Oakland Police Department at (510) 238-7230.

RIVERSIDE--California Attorney General Edmund G. Brown Jr. and Riverside District Attorney Rod Pacheco today announced a 37-count indictment against Mark Anthony Leggio, James Lloyd Deremiah, and father-son team Nicola Cacucciolo, and Nick Vito Cacucciolo, for exceeding $3,300 Senate and Assembly campaign contribution limits by laundering money through various friends and associates.

“Leggio contributed $50,000 in excess of campaign contribution limits to six candidates for Senate, Assembly and Board of Equalization by filtering money through friends and associates,” Attorney General Brown said. “Today’s charges send a strong message that the state will crack down on those who try to exceed California’s campaign finance limits.”

In November 2006, the Riverside County District Attorney’s Office launched an investigation into possible campaign money laundering, in violation of Government Code Section 84301, in a Riverside County State Assembly race for the 65th District. The timing and pattern of campaign contributions suggested that various individuals were being reimbursed for contributing to Leggio’s candidate of choice, in violation of the Political Reform Act.

“Democracy is the foundation of our society. The process by which we citizens elect our leaders and representatives must be honest and free from all corruption. Money laundering in elections hides a candidate’s true support. When it is of this significant magnitude a fraud is perpetrated on the public,” Riverside District Attorney Rod Pachecho said.

Investigators found that Leggio funneled money through various friends and employees of the Mark Christopher Auto Center in Ontario and Mountain View Chevrolet in Upland. Nicola Cacucciolo and his son Nick Vito Cacucciolo assisted with the illegal campaign donation scheme, as did James Llloyd Deremiah.

The alleged fraud involved contributions to six state campaigns for Senate, Assembly and Board of Equalization in Riverside and San Bernardino Counties. The prosecutor from the Riverside District Attorney’s Office, who launched the original investigation, was granted the status of Deputy Attorney General which allows him to prosecute violations in other counties.

The accusations in today’s indictment include: 11 felony counts of perjury, filing false statements, conspiracy, and 26 misdemeanor violations of campaign contribution limit and reporting laws. The indictment was unsealed in San Bernardino Superior Court and the arraignment is scheduled for July 11, 2008. If convicted of the most serious charges, Leggio faces up to 6 years in state prison and the other defendants face up to 3 years.

The indictment, which was filed under seal on June 11, 2008 and made public today, is attached.

In 20 days, a full California State Grand Jury transcript including all other findings in this case will be made public. Until that transcript is unsealed, no additional details of this case can be released.

For more information, please contact Michael Jeandron at the Riverside County District Attorney’s Office: (916) 955-9215

SAN DIEGO--The California Attorney General today charged Rachel Silva, 27, with felony child endangerment and five misdemeanors including driving under the influence of alcohol, driving with a suspended license and driving while in possession of marijuana.

In a declaration in support of Silva’s arrest warrant, Special Agent Stephen Duncan said, “I believe that Rachel Silva’s driving and actions on March 15, 2008, willfully put her son, Johnny Silva, under circumstances likely to produce great bodily injury or death…”

The state’s charges follow an investigation into Rachel Silva’s driving and the automobile collision with off-duty police officer Frank White that she caused at approximately 9:15 p.m. on March 15, 2008 in Oceanside, California. During that incident, Silva was driving in an erratic and aggressive manner with her eight-year old son in the car, while under the influence of alcohol, with a suspended driver’s license, and in possession of marijuana.

After nearly causing a collision with another car, Silva pursued off-duty police officer Frank White in his car and struck his vehicle with her vehicle. During the incident, Officer White fired five rounds into Silva’s vehicle, striking her twice in the arm and her son twice in the leg.

The incident was thoroughly investigated by the Oceanside Police Department. After an extensive briefing about the incident by the Oceanside Police Department, the California Attorney General’s Office and the San Diego County District Attorney’s Office agreed that it was appropriate for the Attorney General’s Office to analyze and make any criminal filing decision as to Rachel Silva and for the San Diego District Attorney’s Office to retain the investigation of Officer Frank White.

During the investigation, California Department of Justice agents reviewed 2,500 pages of documents, including an accident reconstruction report. The circumstances surrounding Rachel Silva’s car striking Officer Frank White’s car were insufficient for the filing of a charge of assault with a deadly weapon or any other assault charge against Rachel Silva.

The state’s complaint was filed today and an arrest warrant was obtained. Silva has agreed to formally surrender at her arraignment at 1:30 p.m. on July 9, 2008, in Department 12 of the Superior Court in downtown San Diego.

The state’s criminal complaint and declaration in support of the arrest warrant are attached.

SAN DIEGO--California Attorney General Edmund G. Brown Jr. today announced that Theodore Swain, 60, was sentenced this morning to 24 years in state prison for running a $7 million Ponzi scheme that ripped off 100 investors in Southern California.

“This is the fourth time Swain has been caught ripping people off with his worthless investment schemes,” Attorney General Brown said. “Most recently, he convinced 99 consumers, including a doctor, lawyer and aerospace engineer, to invest tens of thousands of dollars in property which does not exist.'

Today, the Honorable Judge Charles Gill sentenced Theodore Swain to 24 years in state prison and ordered him to pay $6.7 million in victim restitution.

Swain used professional looking mass-mailings, directed at tens of thousands of people in southern California, to entice investors into conducting business with First Fidelity Assurance Corporation, based in San Diego.

Swain successfully tricked 99 consumers, between 2003 and 2006, into investing between $1,000 and $100,000 in mortgage certificates for properties which did not exist. Swain produced an elaborate and flashy looking investment prospectus, which promised 10% returns on real-estate projects requiring quick financing during the housing boom.

“This was a very convincing Ponzi scheme,” said Deputy Attorney General Tawnya Boulan who prosecuted the case jointly with the California Department of Corporations. “Swain was very persuasive and ripped off sophisticated investors by maintaining an appearance of success.”

Swain used cash from new investors to pay dividends to old investors, thereby perpetrating his fraud for several years. Swain never disclosed to investors that he had been convicted of grand theft three times and had previously filed for bankruptcy. Under California law, individuals selling investments must disclose any information which might factor into a consumer's decision on whether or not to invest.

Swain’s only source of revenue for the scheme was new investment capital from new investors. He strung people along for nearly three years, ripping off a total of $7 million. About $300,000 was occasionally returned to some investors as a way to convince them to stay involved in the fraudulent scheme and lend an air of legitimacy to the operation.

In 2006, Swain was arrested in New Mexico following an investigation by the California Department of Corporations. During the investigation, the attorney general obtained a court order to freeze $2 million in Swain’s assets and property, money which will be used as restitution for victims of the fraud.

In 2008, after a five-week trial, a San Diego jury found Swain guilty of 15 counts of fraud, 6 counts of grand theft, 3 counts of grand theft of an elder, and 6 counts of running a fraudulent securities scheme. The jury also imposed an excessive taking and white collar crime enhancements of $2.5 million.

“It is devastating when the financial well-being of California citizens falls into the hands of a con man that uses trickery and deceit,” said Sean Rooney, Senior Trial Counsel for the California Department of Corporations. “Today’s sentencing sends a message that swindlers like Theodore Swain will be thoroughly investigated and prosecuted under California law.”

The trial was jointly prosecuted by Deputy Attorney General Tawnya Boulan and Sean Rooney, Department of Corporations Counsel.

For more information on today’s sentencing please contact the California Department of Corporations at (916) 322-7180.

STOCKTON--California Department of Justice special agents, in partnership with the Stockton Police Department, today arrested members of the violent Norteno street gang, which terrorized Stockton with drive-by shootings and crystal methamphetamine trafficking at the direction of the Nuestra Familia prison mafia.

“The Norteno street gang increased its drug trafficking and violent criminal activity in Stockton after our gang suppression team shut down one of its competitors, the Loc Town Crips, last year,” said Attorney General Brown. “Today’s crackdown demonstrates the importance of keeping relentless pressure on gangs that sell crystal meth and terrorize the public. The Stockton Police Department should be commended for its efforts to drive this street gang out of the city.”

The California Department of Justice Gang Suppression Enforcement Team, known as GSET, joined the Stockton Police Department in October 2007 to crack down on a violent Norteno gang which had recently increased its activity in Stockton. Last year, state agents shut down a violent Cambodian street gang in Stockton, the Loc Town Crips. The elimination of the Crips gang increased the opportunity for Nortenos to traffic crystal methamphetamine and commit assaults and drive by shootings.

“In the fight against gang violence in California it is important to follow-up after a crime sweep to prevent gang activity from returning,” said Bureau of Narcotic Enforcement Assistant Chief Jerry Hunter “This crackdown demonstrates that the attorney general’s gang enforcement team is committed to running meth traffickers out of town.”

Norteno gang members in San Joaquin and Stanislaus Counties have committed an increasing number of gang-related shootings, stabbings, carjackings and residential robberies according to Stockton Police Department Detective James Ridenour. Today the Norteno street gang, which was first identified in the City of Stockton in 1990, has approximately 1,180 members and associates in Stockton.

This morning state agents and local police arrested 8 validated gang members and 6 affiliates, served 9 search warrants, conducted 4 parole searches and 2 probation searches. Agents seized 15 guns including 1 nine millimeter semi-automatic handgun, 2 rifles, 1 shotgun and various other handguns and ammunition. Agents also seized cocaine, methamphetamine, $42,000, and are a continuing to serve search warrants in Tracy, Lodi and Stockton.

All gang members arrested could face from three years up to 25 years to life in prison depending upon the charges which include possession of crystal meth for sales, weapons violations, conspiracies and participation in criminal street gangs and street terrorism including Penal Code Section 186.22.

The Nortenos arrested today were involved in street level drug trafficking, conspiracies to commit assault and multiple weapons violations. During the investigation which led to today’s arrests, agents arrested 14 suspected gang members in Tracy, Lodi and Stockton.

Nortenos are a Hispanic street gang controlled by Nuestra Familia, a rival of the Mexican Mafia, which was organized in Folsom State Prison in 1968 are operates primarily in the northern parts of California. The two prison mafias divide California into northern and southern territories through a line that runs between Delano to Salinas. Norteno gang members advertise their gang affiliation with symbols including the number 14, “209”, and “XIV” in graffiti, on clothing, and on tattoos. The gang members often claim the color red.

Agencies involved in today’s crackdown include the California Department of Justice Gang Suppression Enforcement Team, Stockton Police Department, Lodi Police Department, Tracy Police Department, Manteca Police, San Joaquin County Sheriff’s Office, The Central Valley Gang Impact Team, Alcohol Tobacco and Firearms, California Highway Patrol, San Joaquin County Probation, State Parole, and the San Joaquin County District Attorney’s Office.

The California Department of Justice launched the Gang Suppression Enforcement Team in 2006 in response to rising levels of street gang and violent criminal activity in California. There are gang suppression teams Los Angeles, Riverside, San Francisco and Fresno which disrupt the organizational flow of gangs to fight for a terror-free environment in California by:

• Identifying key gang leaders and ultimately dismantling the organization’s hierarchy
• Seizing street gang assets
• Gathering intelligence and sharing analysis with law enforcement agencies

State investigators often assist local law enforcement when the gang problem has become so severe that the crime is bleeding into neighboring jurisdictions. Approximately 27 percent of all California homicides between 1996 and 2005 were gang related.

For more information on the role of special agents in the California Department of Justice visit: http://www.ag.ca.gov/monthly_feature/index.php

For additional information on today’s arrests please contact the Stockton Police Department at (209) 937-8209.

SAN DIEGO--California Attorney General Edmund G. Brown Jr. today released the results of a California Department of Justice investigation into allegations of “a corrupt course of action” that San Diego City Attorney Mike Aguirre leveled against San Diego Mayor Jerry Sanders. The department concludes that the record does not support the allegations made by the city attorney against the mayor.

On June 20, 2007, Mayor Jerry Sanders requested that the attorney general conduct an inquiry and evaluation of allegations of corruption made against the mayor by the city attorney in a letter to the editor published in the San Diego Union-Tribune.

In August 2006, the Federal Aviation Administration had determined that the Sunroad Centrum 12 building was an air navigation hazard due to its height and proximity to Montgomery Field Airport, which is owned and operated by the City of San Diego. Sunroad’s principal and the owner of Centrum 12, Aaron Feldman, is a campaign contributor of the mayor’s.

City Attorney Aguirre’s letter to the editor charged that Mayor Sanders “engaged in an embarrassing and corrupt course of action,” by allowing Sunroad Centrum 12’s construction by Feldman “in defiance of FAA safety standards and California state law.” Aguirre also charged the mayor with employing mayoral staff and a San Diego Regional Airport Authority executive to “lobby the FAA for changes to the routing of airplanes at Montgomery Field so that the illegal building could remain.”

California Department of Justice Investigators examined the mayor’s handling of the Sunroad Centrum 12 building project after the hazard determination and the motivation for the actions by the mayor, his closest advisors and other city executives, directors and managers. The department also inquired into contacts that the mayor and his advisors and managers had with Sunroad’s representatives and with the FAA, CalTrans, the City Attorney’s Office, the Airport Authority, the press and the public.

The report, released today to the Mayor, City Attorney, City Ethics Commission, District Attorney, U.S. Attorney, San Diego City Council and San Diego Airport Authority, is attached.

SAN DIEGO--California Attorney General Brown today shut down a team of scam artists that acquired deeds to hundreds of homes in foreclosure by convincing desperate consumers to place their property in a “land grant,” a phony and worthless real estate document.

Federal Land Grant Company—a San Diego-based business run by Bill Hutchings, his wife Xiaoke Li and former wife Shawna Landis—tricked desperate homeowners into believing that they could protect their homes from foreclosure by deeding their property to “federal land grants.” Land grant transfers, used hundreds of years ago when the United States was still acquiring land from other countries, are no longer recognized by any court or county assessor.

“There hasn’t been a legitimate use of the land grant since the conclusion of the Mexican-American war,” Attorney General Brown said. “If some fast talking scam artist offers a quick escape from foreclosure using archaic documents, be extremely suspicious.”

Federal Land Grant required homeowners to pay up to $10,000 to put their property in a so-called land grant which the company claimed would prevent foreclosure. Federal Land Grant also tricked homeowners into signing over the deed to their home and paying the company rent.

To make the meaningless grants appear legitimate, the company attached a land survey from when property was transferred to the United States by a foreign entity hundreds of years ago. In San Diego, for example, the company attached a survey from the Spanish Land Grant of 1872 and said that the deed reinstated the land grant and would protect homes from foreclosure.

State investigators confirmed from realty specialists in the Bureau of Land Management that a “federal land grant” transfer is meaningless and there is no mechanism in California for establishing a land grant on privately held land. Homeowners who are conned by the land grant scam are typically evicted from their property at the completion of foreclosure proceedings and retain no legally recognizable title to their property.

At least two Riverside County Superior Court judges, when faced with foreclosure sales involving so-called land grants, did not give any consideration to the deeds and issued eviction orders sought by the lender.

Federal Land Grant often perpetrated their scam by inviting homeowners to attend weekly seminars on the fraudulent land grant program. During these seminars, which had up to 50 participants, the company convinced homeowners to enter a lease back scheme in which the homeowners transfer their property to Federal Land Grant and then make monthly payments, purportedly for rent.

Investigators in the California Attorney General’s Office have discovered more than 280 properties in San Diego and Riverside counties that have been transferred to Federal Land Grant or one of its affiliated companies. An additional 65 properties have been transferred in counties including Los Angeles, Orange and San Bernardino. At least 60 homeowners have had their homes sold through foreclosures.

Attorney General Brown today filed a complaint for an injunction and penalties against Federal Land Grant. In addition to filing a complaint, the attorney general obtained a restraining order to halt the defendants’ illegal activities and an asset freeze so that the company’s money can be used to refund consumers. A hearing for the preliminary injunction is set for June 5, 2008.

As a result of its business practices, Federal Land Grant allegedly violated California’s foreclosure consultant and equity purchaser laws and California’s laws prohibiting deceptive and unfair business practices including:

• Unlawfully acquiring title to property by falsely representing that it is necessary to put property into a “land grant” to stop foreclosure
• Making false statements regarding the existence of a mechanism to transfer property from private ownership to a “federal land grant”
• Making untrue statements that consumers’ private property has been transferred to a “land grant” when this is a legal impossibility.
• Telling homeowners that transferring title to the company will prevent homeowners from having to pay their mortgage when the transfer merely strips homeowners of collateral for their mortgage and does not relieve the debt itself.

A copy of the complaint and application for the restraining order are attached.

Yesterday, investigators from the San Diego District Attorney’s Office and FBI agents served arrest warrants and three search warrants during one of the land grant seminars in San Diego. Arrested were the ringleader William Hutchings, 62, Xiaoke Li, 43, both of Scripps Ranch in San Diego, Edgar Martinez, 30, and Diego Gil, 38, on charges of conspiracy, grand theft, and deceitful practices as foreclosure consultants. An arrest warrant for Shawna Landis, 29, of Sorrento Valley, has been issued. The San Diego District Attorney will prosecute the criminal case.

“The defendants preyed on mostly non-English speaking, Hispanic homeowners who were in foreclosure, claiming to offer assistance in preventing the victims from losing their home,” San Diego District Attorney Dumanis said. “These transactions were illegal and left the victims even worse off than they were before. Some of the victims have been evicted from their own homes when this scheme failed.”

The district attorney and FBI are asking all victims who signed properties over to defendants or the companies to report the incident by calling the following hotline: (619) 531-4475