Law Enforcement

ORANGE COUNTY— California Attorney General Edmund G. Brown Jr. today announced the arrest of an Orange County travel agent who sold more than $160,000 in “bogus travel packages” to senior citizens who wanted to visit Cuba for religious and cultural purposes.

“The suspect allegedly ripped off dozens of senior citizens who wanted to travel to Cuba for religious and cultural purposes,” Attorney General Brown said. “Peddling these bogus travel packages has earned Mr. Rendon a trip to court to face criminal charges,” Brown added.

The 78 felony charges, filed in Orange County Superior Court on April 8, allege that Ralph Adam Rendon, 31, of Santa Ana, stole hundreds of thousands of dollars from people who wanted to go on religious trips to Cuba. On Tuesday, Orange County Sheriff’s deputies arrested Rendon. Bail was set at $170,000.

Ostensibly, the trips were designed to connect Jewish and Greek Orthodox Americans with members of their faith in Cuba. In 2006, Rendon began advertising his travel agency, “USA to Cuba,” in religious magazines in an effort to target Jewish and Greek Orthodox people who wanted to travel to Cuba for religious purposes.

Rendon directed victims to pay $1,000 in upfront fees to his alleged business “USA/AAE Scholarship Foundation,” but put his private address on the return envelop. After victims paid this upfront fee, Rendon requested an additional $2,580 and then canceled the trip. Rendon told the travelers that the U.S. Treasury Department had blocked all religious trips to Cuba, which was false.

Investigators determined that Rendon sold fake trips to 34 elderly travelers from Los Angeles, San Francisco, Utah and New York. When victims attempted to obtain refunds after the trip was canceled, he ignored their demands. In June 2006, Rendon stopped selling trips.

Financial records show Rendon used customers’ money to pay his rent, lease a new Mercedes, and hire a divorce attorney. Brown charged Rendon with 78 felony counts, including grand theft, embezzlement, mishandling consumer funds and trust account violations.

Investigators with the California Department of Justice and the Santa Ana Police Department launched their probe in 2006 after receiving complaints from victims. With assistance from the Long Beach and Seal Beach police departments, investigators began to interview victims and audit Rendon’s bank records.

Rendon allegedly violated Sellers of Travel law which requires travel agents to register with the Attorney General’s Office. Rules also require travel agents to deliver services before extracting a fee; Rendon improperly collected his fees upfront. He also failed to place the victim’s money into a trust account, which state law requires. If an agent is unable to arrange a trip, they must refund all consumers’ money within three days.

By failing to disclose that he was not a registered seller of travel and that he did not have a license to arrange trips to Cuba, Rendon committed theft by false pretenses. Rendon allegedly embezzled the money he was given. Rendon allegedly committed numerous felony violations for failing to deposit the money he was given to arrange the trips into a trust account.

Agents that sell trips to Cuba must obtain a Travel Service Provider license from the U.S. Treasury Department. The Department does allow trips to Cuba for religious or humanitarian purposes. Rendon never obtained a license and the Treasury Department told him to stop selling travel packages to Cuba.

Rendon was arrested by Orange County Sheriff’s deputies on Tuesday. He posted bail, which was set at $170,000 dollars.

For a copy of the criminal complaint and declaration in support of the search warrant, please contact the Attorney General's Press Office.

SANTA BARBARA--California Attorney General Edmund G. Brown Jr. today announced a 74-count felony indictment against a former Santa Maria-Bonita School District official and three executives from TurnKey, a Temecula-based company, for misappropriating $3.6 million in public money for schools.

'TurnKey squandered public money that was designated for construction costs at sixteen schools in Santa Barbara County,' Attorney General Brown said. 'When TurnKey ran into financial problems, it began taking money from the school district--with knowledge by the assistant superintendent--in violation of state law.'

Between 2000 and 2002, TurnKey signed $62 million in construction management contracts with the Santa Maria-Bonita School District, promising to complete sixteen school projects. Financial records show that TurnKey executives instead used District money to pay for expensive cars, artwork, and to pay cash bonuses to themselves. TurnKey maintained very high overhead costs and began making late payments to its subcontractors.

As early as 2003, TurnKey fell behind in its payments to subcontractors who were building the schools. To service their rising debt, the company began submitting false invoices for services to the District funds, with knowledge from Assistant Superintendent Cynthia Lynn Clark. After the assistant superintendent took a leave of absence in 2004, the District discovered TurnKey's serious financial trouble and refused to continue advancing money to the company.

Only one TurnKey school project, Taylor Elementary, was completed by the time the company went bankrupt in February 2005.

A Santa Barbara grand jury returned the indictment on March 14, 2008 against former company executives Harold Leo Clark III, 46, Michael Patrick Bannan, 43, David Irwin, 39, and former Assistant Superintendent Cynthia Lynn Clark, 54, on 74 counts of Misappropriation of Public Monies, Embezzlement of Public Funds, Diversion of Construction Funds, and Grand Theft of over $3.6 million between June 2004 and September 2004.

The Santa Maria-Bonita School District applied for school construction funding for the state as a hardship district and depended upon funding from the California Office of Public School Construction to pay the costs of the school construction projects. The proposed school projects included: Taylor Elementary, Arellanes Elementary, Arellanes Jr. High, El Camino Jr. High, Fesler Jr. High, Liberty Elementary, Sanchez Elementary, Kunst Jr. High, Adam Elementary, Bruce Elementary, Oakley Elementary, Ontiveros Elementary and Rice Elementary.

The felony indictment, unsealed today, follows a three-year investigation into TurnKey by the Special Crimes Unit of the California Department of Justice with assistance from the Santa Barbara District Attorney's Office. The case will be prosecuted by Deputy Attorney General Patricia M. Fusco in the California Department of Justice Special Crimes Unit. Defendants could serve 38 years in prison if convicted on all counts.

Information about the individuals named in the indictment, unsealed today, includes the following:

• Harold Leo Clark III, former TurnKey Chief Executive Officer, age 46, of Temecula
• Michael Patrick Bannan, former TurnKey Chief Operating Officer, age 43, of Vista
• David Irwin, former TurnKey Vice President, age 39, of Temecula
• Cynthia Lynn Clark, former Assistant Superintendent for Business Services for the Santa Maria-Bonita School District, age 54, of Cape Canaveral, Florida

The 74-count indictment is attached. The grand jury testimony will be unsealed in 10 days in the Santa Barbara Superior Court. The arraignment is scheduled for May 19, 2008.

LOS ANGELES—California Attorney General Edmund G. Brown Jr. today shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions, accusing the predatory lending companies of pushing homeowners into “illegal and unconscionable loans.”

“As the mortgage crisis worsens, a growing number of fly-by-night companies are employing utterly brazen tactics to push homeowners into illegal and unconscionable loans,” Attorney General Brown said. “The illegal sales practices of these companies, run by Eric Pony and his family, included psychological pressure, forgery, and outright lies,” Brown added.

The companies ran a complex predatory lending scheme using bait and switch tactics to victimize thousands of consumers in California, many of whom have lost their homes.

Yesterday, the Los Angeles Superior Court, at the request of the attorney general, froze all the companies’ real estate and bank accounts and enjoined them from engaging in further predatory practices. The freeze order also included expensive cars and millions of dollars in private real estate owned by Eric Pony. Brown also seeks an estimated $20 million in penalties and restitution.

In the coming weeks, Brown intends to bring additional legal actions, both civil and criminal, against other mortgage lenders and foreclosure consultants who are taking advantage of homeowners across California.

San Bernardino District Attorney Michael A. Ramos also announced that several individuals affiliated with Lifetime Financial were arrested this morning on charges including conspiracy, grand theft, forgery and elder abuse. “These predatory lenders have taken advantage of people who placed their trust, as well as their homes, in the hands of these unscrupulous business people,” San Bernardino District Attorney Ramos said.

THE SCAM

Lifetime Financial, Nations Mortgage and Greenleaf Lending operate predatory lending schemes to cheat homeowners by promising unrealistically low mortgage payments and then switching them to loans that do not match the original agreement. Telemarketers lure consumers by telling them that they are preapproved for a fixed rate loan of 5% to 6% which could lower monthly payments by hundreds of dollars.

Although the exact number of victims is unknown at this time, Eric Pony, the President of Lifetime Financial, claims to have arranged thousands of loans. During the investigation that led to today’s lawsuit, the California Attorney General’s Office took declarations from more than twenty individuals who had been scammed by these companies.

Lifetime Financial arranged loans with hidden fees of up to $20,000. In addition to these fees, consumers end up with loans that have worse financial terms than their original mortgage.

In some cases, consumers were saddled with monthly payments that exceeded their entire monthly income. Many consumers have either lost their homes to foreclosure or are facing foreclosure as a result of engaging in these transactions.

Telemarketers initially request only a nominal payment for a home appraisal. Appraisers then inflate home values to qualify the homeowners for much higher loans than are appropriate. The companies never provide copies of theses appraisal reports to consumers.

Next, a salesperson shows up at the victim’s house, sometimes as late as 11:45 at night, with documents that are incomplete or contain terms that are vastly different from those originally promised. If consumers complain about the terms, the salespeople tell them that there is a mistake but they should just sign the paperwork to “keep this great deal.”

If a consumer refuses to sign the documents, company employees forge the customer’s signature. In some instances, the forgeries are so blatant that the victims’ names are misspelled.

As a result of these tactics, the final mortgage documents always contain extremely unfavorable terms that are substantially worse than originally promised by the telemarketers. Other fraudulent and unlawful practices include the following:

• Offering thousands of dollars in cash back without disclosing that the money would be used to cover high fees
• Falsely promising to reimburse prepayment penalties from the victim’s current lender
• Pressuring victims to sign inaccurate loan documents by promising to correct excessive fees
• Failing to provide copies of signed documents
• Forging victims names and signatures on loan documents
• Falsifying income information on loan applications and creating fake references
• Refusing to honor written demands to cancel loans

If a consumer tries to back out of the transaction, the companies promise to waive thousands of dollars in various processing, application, origination and underwriting fees. If the consumers agree, sales representatives provide a new statement but then resubmit the original forms, ultimately charging the same excessive fees.

THE SCAM ARTISTS

Lifetime Financial, Nations Mortgage, and Greenleaf Lending, all located in Los Angeles, operated complex real estate schemes involving, by Eric Pony’s own admission, thousands of transactions. Documents obtained during a recent search warrant confirmed that Lifetime Financial recently received more than $1.7 million from Olympic Escrow.

Some of the key players involved in companies’ conspiracy to rip off homeowners include the following individuals:

• Eric Pony, 25, a real estate sales person until he surrendered his license in September 2007 following an investigation by the California Department of Real Estate. Eric Pony is also known to use the alias “Oren” to conceal his unlawful practices.
• Paulette Pony, 23, Eric’s sister and a notary public for Lifetime Financial until her license was revoked in December 2007 by the California Secretary of State for felony conspiracy charges and failing to disclose a 2003 forgery conviction.
• Wilma Pony, 58, Eric’s mother, who also worked as a notary for Lifetime and is the President and Chief Executive Officer of Nations Mortgage, Inc. and Direct Credit Solutions, Inc., organizations which are also being sued today by the attorney general.

Lifetime Financial, and its web of affiliate organizations, has also operated out of Encino, Canoga Park, Glendale and North Hollywood.

The Pony family employed a team of telemarketers, notaries, brokers and escrow officers to peddle their fraudulent loan applications. These suspects, who solicited consumers in Spanish, English and Tagalog, knowingly broke the law in an effort to push consumers into loans they could not afford. The companies charged consumers with excessive hidden fees, as high as $20,000. Other suspects sued today include the following persons:

• Eli Hassine, 25, who was appointed a notary public in January 2005.
• John D H N Nielsen, a.k.a. Doo Hyun No, a licensed real estate broker for Nations Mortgage and Green Leaf Lending, Inc.
• Carol Pencille, 57, an escrow officer and the President and Chief Executive Officer of Olympic Escrow, a company involved in a kickback scheme with Lifetime whereby $2,700 in fees was taken from escrow proceeds through falsified amendments to loan documents.
• Sibpun Ampornpet, 31, an escrow officer, notary public, and principal of Olympic Escrow. A document shredder in Ampornpet’s office contained shredded signatures of consumers and other fraudulent paperwork.
• Dean Storm, a licensed real estate broker until a Department of Real Estate investigation led to the revocation of this license in September 2007.

At various times, Pencille and Ampornpet also worked for Virtual Escrow, Inc. and Olympic Escrow, companies that operated in Glendale, Encino and North Hollywood. The attorney general suspects that there are other people involved in these companies’ conspiracy to cheat homeowners and will amend the state’s lawsuit when these persons are identified.

THE VICTIMS

The following are two examples of the individuals who were manipulated by the company’s irresistible offers:

In 1996, Ron and Barbara Fitzgerald moved into their home in Lancaster, California. Ron is retired and his wife Barbara has been bedridden for several years due to a serious medical condition. In October 2006, Lifetime Financial offered the Fitzgeralds a 4.5% fixed rate with $800 monthly payments. The telemarketers offered to meet Ron at a nearby café to review paperwork.

During the meeting, Ron discovered that the paperwork did not conform to the terms that were discussed with the telemarketers. The sales agent told Ron that the paperwork was a “mere formality” and “everything would be taken care of.” Ron decided not to sign all the paperwork.

Later that month, the Fitzgeralds were stunned to find that their loan had been processed even though Barbara Fitzgerald did not, and could not have, signed any loan documents due to her medical condition. Investigators later determined that all the signatures and initials on the loan documents were forged.

The Fitzgerald’s mortgage went from $189,000 at an adjustable rate of 8.04% with monthly payments of $1,100, to now owing $244,000 at an adjustable rate of 8.5% with payments of $1,788.

Luis Garcia, a 75 year old disabled senior from Peru, has limited understanding of English. Lifetime Financial contacted Garcia in Spanish and promised to refinance his mortgage into a low, fixed rate. Garcia agreed to a 50 year loan with $1,000 monthly payments and was shocked when he received a letter from New Century Mortgage stating that his new loan rate was 7.95% and his initial monthly payment would be $2,254. All the paperwork provided to Garcia was written in English.

With help from translators and family, Garcia discovered that Lifetime Financial had falsified almost all of Garcia’s information including his monthly income and work history. Garcia was unable to afford the extremely high monthly payments and ultimately lost his home.

THE CHARGES

The attorney general is seeking civil penalties of $2,500 for each violation of law and full restitution as well as a permanent injunction against operation these businesses. Penalties and restitution are estimated to exceed $20 million. The following assets are subject of the seizure order:

• Bank accounts at Wells Fargo, Bank of America, Citibank, East West Bank, First Federal Bank and Washington Mutual
• 16 separate private and commercial properties, valued at more than $6 million, in Tarzana, Canoga Park, Studio City, Las Vegas, San Antonio, Sherman Oaks, North Hollywood and Los Angeles
• All personal property, especially luxury cars, including: 4 Mercedes Benzs, 2 Ferraris, 1 Land Rover, 1 BMW, 1 Audi and 1 Bentley

Other agencies which assisted with the investigation that led to today’s lawsuit include: Los Angeles Department of Consumer of Affairs, California Department of Real Estate, the California Department of Motor Vehicles and the San Bernardino District Attorney.

California’s lawsuit, filed yesterday afternoon under seal in Los Angeles Superior Court, is attached.

SANTA ROSA--California Attorney General Edmund G. Brown Jr. today announced that California Department of Justice agents yesterday arrested eight suspects in connection with a Santa Rosa drug distribution ring and methamphetamine laboratory in the town of Winton.

'Methamphetamine is a scourge destroying lives and disrupting families throughout many communities in Northern California,' Attorney General Brown said. 'These criminals set up a clandestine laboratory, in the small town of Winton, to manufacture this dangerous drug and ship it throughout the state.'

Yesterday's arrests mark the conclusion of a three month investigation, led by the California Department of Justice Bureau of Narcotic Enforcement, into a drug trafficking ring which originated in Santa Rosa. In January, investigators began tracking the Santa Rosa-based suspects, eventually linking their operation to a group in the town of Winton.

In Santa Rosa, Martin Villanueva-Jacobo, 43, Maria Lopez, 33, and Feliz Lopez-Nunez, 38, were all arrested. In the town of Winton, agents arrested Jose Marquez, 30, Luis Silva-Murillo, 27, Sonia Ceballos, 20, Hector Aguilar, 22, and Maria Quintero, 28. All the suspects will be charged with offenses including manufacturing and preparing methamphetamine and possession of methamphetamine, marijuana, cocaine and hash for sale. All suspects were booked in their respective County jails, awaiting arraignment.

When agents served drug-related search warrants in Winton yesterday, they shut down a clandestine laboratory, where powdered methamphetamine was being converted into ICE, a potent, smokeable form of methamphetamine.

Approximately forty state, local and federal law enforcement agencies, assisted the California Department of Justice in serving the search warrants and making the arrests.

Investigators also seized 26.9 pounds of ICE & methamphetamine, 69.8 pounds of marijuana, 73.4 grams of Hash, 53.8 grams of cocaine, 5 handguns, 4 rifles and $45,995.00 in U.S. currency. The street value of the seized drugs exceeds $500,000.

The California Bureau of Narcotic Enforcement conducted the investigation that led to yesterday's arrests, with assistance from the California Department of Justice's Bureau of Investigation and Intelligence, Napa Special Investigations Bureau, U.S. Bureau of Alcohol, Tobacco & Firearms, Santa Rosa, Cotati and Petaluma Police Department's, Sonoma County Sheriff's Department and the Merced County Narcotic Task Force.

Information on the suspects includes the following:

VILLANUEVA-JACOBO, Martin; DOB 11/6/1964; 1651 Kerry Lane, Santa Rosa, CA; Charges: Possession of Methamphetamine For Sale; Possession of Marijuana For Sale; Possession of Cocaine For Sale, Possession of a Controlled Substance and a Firearm

LOPEZ, Maria; DOB 4/7/1974; 1651 Kerry Lane, Santa Rosa, CA; Charges: Possession of Methamphetamine For Sale; Possession of Marijuana For Sale; Possession of Cocaine For Sale, Possession of a Controlled Substance and a Firearm

LOPEZ-NUNEZ, Feliz; DOB 2/17/1970 1651 Kerry Lane, Santa Rosa, CA; Charges: Possession of Methamphetamine For Sale; Possession of Marijuana For Sale; Possession of Cocaine For Sale, Possession of a Controlled Substance and a Firearm

MARQUEZ, Jose I.; DOB 9/21/1977; 6814 Arlene Drive, Winton, CA; Charges: Possession of Methamphetamine For Sale; Manufacturing or Preparing a Controlled Substance; Possession of a Controlled Substance and a Firearm; Endangering the Health of a Child

SILVA-MURILLO, Luis; DOB 3/15/1980; 6814 Arlene Drive, Winton, CA; Charges: Possession of Methamphetamine For Sale; Manufacturing or Preparing a Controlled Substance; Possession of a Controlled Substance and a Firearm; Endangering the Health of a Child

CEBALLOS, Sonia; DOB 6/30/1987; 6814 Arlene Drive, Winton, CA; Charges: Possession of Methamphetamine For Sale; Manufacturing or Preparing a Controlled Substance; Possession of a Controlled Substance and a Firearm; Endangering the Health of a Child

AGUILAR, Hector; DOB 8/15/1985; 6814 Arlene Drive, Winton, CA; Charges: Possession of Methamphetamine For Sale; Manufacturing or Preparing a Controlled Substance; Possession of a Controlled Substance and a Firearm; Endangering the Health of a Child

QUINTERO, Maria; DOB 7/9/1979; 6814 Arlene Drive, Winton, CA; Charges: Possession of Methamphetamine For Sale; Manufacturing or Preparing a Controlled Substance; Possession of a Controlled Substance and a Firearm; Endangering the Health of a Child

For additional information, on yesterday's arrest please contact John George, Special Agent in Charge, California Bureau of Narcotic Enforcement, San Francisco Regional Office, at 415-351-3374.

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today announced the arrest of two physicians, three clinic administrators, and eleven assistants for luring pregnant women to a fake health clinic that fraudulently billed the state’s Medi-Cal program for at least $2 million.

“The Medi-Cal program is a vital medical program for the most vulnerable Californians--I won’t tolerate rip offs from this program by doctors or anyone else,” Attorney General Brown said.

The suspects hired recruiters, known as cappers, to solicit pregnant women walking in the street outside the clinic. The cappers enticed women to visit the clinic by offering approximately $30 or free baby merchandise or the promise of certain medical services. Recruiters were paid $100, under the table, for every pregnant woman they could convince to visit the clinic.

The clinic targeted pregnant women so that it could enroll them in a special presumptive eligibility Medi-Cal program, designed for low income Californians who do not have health insurance for prenatal care. Clinic staff enrolled the women in this program, thereby allowing doctors to immediately bill the state at a higher rate for temporary prenatal health benefits.

Women who visited the clinic were instructed not to use their real names or dates of birth on the patient intake forms given to them by the clinic’s personnel.

During the clinic visits, patients received unnecessary services like pregnancy tests or unnecessary blood tests. Solicitors then told patients that if they wanted additional cash or gifts they could return to the clinic and re-enroll using a different name and date of birth. Under this scheme, the clinic maintained a steady source of people to generate false Medi-Cal claims.

The clinic billed Medi-Cal $400-$500 per pregnant patient for a wide array of prenatal services that were generally not provided. For example, the clinic would conduct unnecessary blood tests, a scam which ripped off an additional $100-$200 from the Medi-Cal program.

The defendants arrested today at the Downtown M Medical Clinic on Wilshire Boulevard and elsewhere include: the clinic’s owner Dr. Peter Shrier, the office manager Ella Rozenberg, Ella’s husband Arkady Rozenberg, Dr. Anna Gravich, a physician who helped falsify medical records, and Anna’s husband, Gersha Gravich, who helped run the clinic. The others arrested were sidewalk solicitors who recruited the patients. The activities at the clinic remain under investigation.

Shrier, the Rozenbergs and the Graviches are charged with violating Penal Code sections 487(a) & 12022.6(a)(3), theft of more than $1.3 million, and violating Welfare and Institutions Code section 14107, presenting false Medi-Cal claims. The solicitors are charged with violating Welfare and Institutions Code section 14107.2, paying for Medi-Cal referrals.

The Department of Justice launched an investigation into the clinic after a former employee tipped off the department after being fired for questioning suspicious billing practices. During the investigation, special agents interviewed witnesses and reviewed key Medi-Cal and bank records. The case will be prosecuted by the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse.

Other law enforcement personnel that assisted the Bureau of Medi-Cal Fraud and Elder Abuse during today’s arrest include the following: the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, Los Angeles Sheriff’s Major Crimes Bureau, Department of Homeland Security and the Internal Revenue Service.

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

Medi Cal is a government program that pays for essential medical services for California’s qualifying poor. It is funded by the state and federal governments and administered by the California Department of Health Care Services.

Suspect Information:

Peter Reuben Shrier
Recommended Bail: $500,000
DOB: 05/14/41
Sex: M Race: W Hair: Brn Eyes: Brn Ht: 5'10' Wt: 200
Residence: 4738 Tobias Ave. Sherman Oaks, CA 91403
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057

Arkady Rozenberg
Recommended Bail: $500,000
DOB: 05/30/50
Sex: M Race: W Hair: Brn Eyes: Brn Ht: 6'01' Wt: 215
Residence: 2309 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057

Ella Rozenberg
Recommended Bail: $500,000
DOB: 12/24/52
Sex: F Race: W Hair: Bln Eyes: Grn Ht: 5'06' Wt: 175
Residence: 2309 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057

Gersha Gravich
Recommended Bail: $500,000
DOB: 10/26/47
Sex: M Race: W Hair: Brn Eyes: Brn Ht: 5'10' Wt: 220
Residence: 2515 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057
Aliases: Gregory Gravich

Anna Gravich
Recommended Bail: $500,000
DOB: 01/08/48
Sex: F Race: W Hair: Bln Eyes: Grn Ht: 5'03' Wt: 170
Residence: 2515 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057
Aliases: Ana Gravich

The suspects are being held in Los Angeles County Jail, awaiting arraignment and bail review later this week. The case will be prosecuted by the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse.

The investigation into this case is ongoing.

The criminal complaint is attached.

CONTRA COSTA—California Attorney General Edmund G. Brown Jr. today announced a $42.2 million dollar settlement agreement with Hanson Building Materials, a multi-national mining corporation. This settlement resolves allegations that the company improperly mined over two million cubic yards of sand from Suisun Bay and defrauded the state out of million of dollars in royalty payments for sand mined in San Francisco and Suisun Bays.

Commenting on the settlement agreement, Attorney General Brown said, “This settlement sends a strong message to businesses—act responsibly and honestly in your transactions with the state.”

The California State Lands Commission had previously issued leases to Olin Jones Sand Company and Moe Sand Company which allowed the companies to dredge sand from various state-owned areas in San Francisco and Suisun Bays. Under the leases, the companies were required to pay the state royalties and were prohibited from dredging sand outside the lease boundaries.

In 1999 Hanson Building Materials America of San Ramon, a subsidiary of Hanson PLC which is one of the world’s largest construction material producers, purchased the two companies for $88 million and acquired their mining rights.

Sand is used primarily to produce concrete. This makes it a valuable commodity to construction firms, which use it to construct buildings and roads. The sand mined from San Francisco Bay is especially important for construction purposes in the San Francisco Bay Area.

The attorney general brought a lawsuit in 2003 against Hanson after a whistleblower reported that the company had defrauded the state out of millions of dollars in royalty payments by failing to fully report sand taken from the acquired mining sites. The companies mined over 2 million cubic yards of sand from Suisun Bay, despite not having any permission to do so by the state. The lawsuit further alleged that Hanson, Olin Jones, and Moe Sand Company violated the California False Claims Act by knowingly submitting false records to the state, Unfair Practices Act by avoiding payment on royalties to the state, and provisions of the California Public Resources Code, for unauthorized dredging of sand on state-owned lands.

The companies transferred sand they mined to affiliated companies for a discounted price, and the affiliates resold the sand at market rates to construction firms and other businesses, which used the sand to make concrete and for other construction purposes. Hanson sold the sand to various companies for an average of $12.50 per cubic yard but reported only an average sale price of $3.30 to the State Lands Commission. These actions increased the companies’ profit margins at the State’s expense resulting in the loss of millions of dollars in royalty payments. Olin Jones commented to an environmental agency official that had fined his company for over-dredging that they couldn’t fine him enough to stop him from over-dredging sand because mining for State sand was like “mining gold.”

Under the terms of the settlement agreement, the defendants will pay the state $42.2 million. This amount covers the sand that Hanson took from state-owned lands without permission. It also includes the amount in royalties that Hanson should have paid the state.

Hanson and the State Lands Commission have agreed to a fixed royalty per cubic yard of sand dredged. This will result in Hanson paying a higher royalty amount to the state than it paid prior to the litigation, which will generate millions of dollars in royalty payments every year. Hanson also made additional and increased royalty payments of more than $6 million before the settlement was announced.

To ensure that Hanson dredges for sand in areas of San Francisco and Suisun Bays for which it has permits, the State Lands Commission will monitor Hanson’s activities through the use of Global Positioning Satellite tracking systems.

The settlement agreement and original lawsuit are attached.

SAN DIEGO—California Attorney General Edmund G. Brown Jr. today announced that two Texan shoplifters will be arraigned today on commercial burglary charges for buying and returning $375,000 in stolen goods at retailers including Williams-Sonoma, Pottery Barn, Victoria’s Secret and Gap across 34 states.

Commenting on today’s arraignment, Attorney General Brown said, “This was not petty theft—-these sophisticated rip-off artists bought and returned items in 34 states and racked up tens of thousands of dollars on 27 debit cards.”

The suspects, Varee Hayes-Malone, 32, and Terrance Malone, 32, were arrested in San Diego last Thursday night after investigators tracked more than 2,000 fraudulent transactions during the past four years. The thieves defrauded retailers using a complicated refund and exchange process involving 27 different credit and debit cards. The suspects moved from store to store, returning more items than were originally purchased to exact profit. The suspects repeated this process—shifting goods and credit cards from store to store—ultimately bilking retailers out of more than $375,000.

Most of the thousands of returned items were physically-small and expensive items. At Williams-Sonoma stores, for example, the suspects purchased 19 salt and pepper mills and 8 wine openers at $139 each, but returned 387 mills and 89 wine openers. At $75 for the mills and $139 for the wine openers, the suspects bilked the store out of $38,859 during this one transaction alone.

Under the scheme, the suspects first returned items previously purchased while simultaneously buying new items with store credit during the same transaction. The suspects then returned the new items at different retail locations using the old receipt. The net result of the two transactions was a credit for more than was originally charged and an equivalent credit and debit for the first transaction.

The pair will be arraigned in San Diego Superior court, case CD210415, today at 1:30 p.m. in Department 12. Bail has been set at $350,000 for each defendant.

The 35 count felony complaint and the declaration in support of the arrest warrant are attached.

LOS ANGELES – California Attorney General Edmund G. Brown Jr. and Los Angeles Police Chief William Bratton today announced the seizure of 541 handguns, rifles and assault weapons during a “statewide crackdown” on 1,000 dangerous individuals barred from firearms possession because of violent felony convictions.

“During this statewide crackdown, Department of Justice agents investigated 1,000 of the most dangerous cases in the state’s firearms database,” Brown told a news conference at the attorney general’s Los Angeles headquarters. “The Department of Justice joined with local law enforcement to disarm hundreds of individuals—felons, domestic violence perpetrators, and people committed to mental health facilities—that should have relinquished their weapons.”

Department of Justice agents utilized a state database, known as the Armed and Prohibited Persons System, to identify persons who lawfully acquired firearms in the past but became barred from possession due to a subsequent felony conviction. The database, which currently has 9,000 cases, could eventually expand to include 60,000 individuals as new offender records are added to the system.

During the six-week operation, Department of Justice agents went door to door with local law enforcement to disarm the 1,000 most dangerous armed and violent felons identified in the state database. During the investigation agents seized 541 firearms, conducted 205 probation or parole searches and made 16 field arrests. During one investigation in Alameda County, agents seized over 100 rifles, handguns and assault weapons. In another case, agents confiscated three firearms and neo-Nazi propaganda including a swastika flag.

The goal of this investigation was to prevent violent crime in California by disarming individuals who were the most likely to use their unlawfully held guns to commit violent crimes. To identify the highest risk cases, analysts from the California Department of Justice created investigative case files on persons who legally acquired firearms in the past, but failed to relinquish the weapons after a violent felony conviction.

Department of Justice agents typically take action when firearm owners should have relinquished weapons after events such as:

• Felony convictions
• Violent or firearms-related misdemeanors
• Domestic violence incidents
• Protective orders, probation conditions, and other court orders
• Involuntary commitments under Welfare and Institutions Code section 5150 or 5250

The Attorney General’s Office will keep the seized guns in a state evidence vault until criminal proceedings are concluded or other arrangements are made by the owners to sell or relinquish the firearms. Eventually many of the weapons may be destroyed.

Dozens of law enforcement agencies worked with the California Department of Justice during the investigation including: Los Angeles Police Department (110 cases), Fresno Police Department (25 cases), Oakland Police Department (25 cases), Redding Police Department (15 cases), San Bernardino Police Department (10 cases), San Jose Police Department (10 cases) and Butte County Sheriff’s Office (10 cases). The California Police Chiefs Association and the California State Sheriffs’ Association also provided important assistance during the investigation.

Attorney General Brown called the investigation an important partnership with local law enforcement to disarm those who are likely to commit violent crimes. “There are thousands of people in California who acquired guns lawfully in the past, committed a crime, and should no longer have weapons,” Brown said. “The Department of Justice is committed to working with local law enforcement to confiscate these weapons and make the streets safer,” Brown added.

SB 950, which was signed into law in 2002, established the legal authority for the state to cross-reference criminal history information with firearms possession records. In July 2003, the Department of Justice received funding to build a database of this information—the Armed and Prohibited Persons System—which became operational in 2006 and made fully available to local law enforcement in 2007. In June, Attorney General Brown expanded the system so that law enforcement agencies can obtain information about offenders by jurisdiction rather than just through individual names searches.

California Department of Justice special agents have trained approximately 500 sworn local law enforcement officials in 196 police departments and 35 sheriffs departments on how to use the database during firearms investigations. The Department has also conducted 50 training sessions on how to use the vehicle-mounted California Law Enforcement Telecommunications System terminals to access the database.

The California Department of Justice Bureau of Firearms serves the people of California through regulation, enforcement and education regarding the manufacture, sales, ownership, safety training, and transfer of firearms. For more information about firearms law in California visit the California Department of Justice Bureau of Firearms Website: http://ag.ca.gov/firearms/

A photo of seized firearms from the operation is attached.

LOS ANGELES – California Attorney General Edmund G. Brown Jr. today announced the arrest of four suspects involved in a $1.5 million “fake healthcare clinic” scam. The suspects created a health clinic and recruited people to undergo unnecessary medical tests, with the sole purpose of filing false claims with Medi-Cal and Medicare.

Commenting on the arrests, Attorney General Brown said, “The suspects create a fake healthcare clinic to line their own pockets rather than help the sick and elderly. These arrests send a strong message that this kind of rip-off will not be tolerated.”

The 4 defendants, arrested yesterday morning at various locations in Los Angeles County, are: Richard Melkonyan, Akop Melkonian, Lilit Baghdasaryan, and Dr. Rito Castanon-Hill. Dr. Neil Hollander has agreed to surrender next week. David James Garrison remains at large.

The suspects operated Scott Medical Center in Burbank and hired two physicians, Dr. Hollander and Dr. Castanon-Hill, to create a front for a physician assistant who falsified records and billed for procedures not actually performed. The suspects recruited patients to undergo unnecessary exams and then the clinic operators and medical supply company billed Medi-Cal and Medicare.

Baghdasaryan supplied false information to the Franchise Tax Board to conceal stolen funds in 2003 and 2004. Garrison under-reported and failed to report to the Franchise Tax Board monies he was paid by Dr. Hollander, Dr. Rito Castanon-Hill, United Management Group, Inc., and S.M.C. Group, Inc., violations of Revenue and Taxation code Section 19706, Tax Evasion.

All of the defendants are charged with Penal Code Section 550, Submission of False Insurance claims; Penal Code Section 487, Grand Theft; Welfare & Institutions Code Section 14107, submission of False Medi-Cal Claims: and Penal Code Section 186.10 (a) (1), Money Laundering.

Agencies involved in the investigation include the California Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse, Los Angeles Health Authority Law Enforcement Task Force, United States Office of Inspector General Health and Human Services, the Department of Health Services and Glendale Police Department. During the investigation, agents executed search warrants in Tujunga, Chatsworth, Glendale and the LAX area, seized 4 guns, and approximately $150,000 in cash.

Medi-Cal is a state managed program that pays for essential medical services, medical equipment, and medication for qualifying disabled, indigent and elderly California residents. It is funded by the state and federal governments and administered by the California Department of Health Services.

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

During the 2005/2006 Fiscal Year, the Bureau of Medi-Cal Fraud and Elder Abuse recovered $267,854,037 in Medi-Cal fraud and $6,525,097 in criminal prosecutions.

Suspects charged include:

• Richard Melkonyan (DOB 12/11/1970) was arrested at his home in Glendale, California.
• Akop Melkonian (DOB 10/28/1972) was arrested at his home in Chatsworth, California.
• Lilit Baghdasaryan (DOB 06/12/1980) was arrested at her home in Tujunga, California.
• David James Garrison (DOB 06/16/1961) resides in Los Angeles, California, is currently at large.
• Neil Hollander, M.D. (DOB 07/28/1940) resides in Huntington Beach, California, has agreed to surrender to authorities next week.
• Rito Castanon-Hill, M.D. (DOB 08/19/1971) arrested at his home in Los Angeles, California.

Statement From California Attorney General Edmund G. Brown Jr. Regarding Search Warrants Executed Today In Connection With The Death Of Anna Nicole Smith:

“The California Department of Justice today served search warrants at various doctors’ offices, billing locations, and residences in both Los Angeles and Orange Counties, related to the death of Anna Nicole Smith. The locations searched today are related to doctors who provided medical treatment or prescribed drugs for Anna Nicole Smith or her associates.

On March 30, 2007, the California Department of Justice Bureau of Narcotic Enforcement commenced an investigation into circumstances surrounding the death of Anna Nicole Smith, including the prescribing and dispensing practices of several California licensed doctors and pharmacies. To date, agents have reviewed over 100,000 computer images and files, analyzed patient profiles and pharmacy logs and interviewed witnesses throughout the country and abroad.

The California Department of Justice is spearheading this investigation with regulatory agencies, medical professionals and law enforcement agencies, including: The California Department of Insurance, the California Medical Board, the U.S. Drug Enforcement Administration, the Seminole Tribal Police and the Royal Bahamian Police Force.

In view of the fact that the investigation is ongoing, we will not provide further details or report any findings at this time. The California Department of Justice will conduct a fair and thorough investigation and wishes to protect the identity of cooperating witnesses. When our investigation is complete, you will be provided as much information as possible about any suspects, arrests or criminal charges.

Beyond this statement, no one involved in this investigation will have further comment at this time. Thank you for your cooperation.”

Here is a YouTube link: http://www.youtube.com/watch?v=L7XIQDy0s5c