Lawsuits & Settlements

Los Angeles – As part of a massive federal-state crackdown on loan modification scams, Attorney General Edmund G. Brown Jr. at a press conference today announced the filing of legal action against 21 individuals and 14 companies who ripped off thousands of homeowners desperately seeking mortgage relief.

Brown is demanding millions in civil penalties, restitution for victims and permanent injunctions to keep the companies and defendants from offering mortgage-relief services.

“The loan modification industry is teeming with confidence men and charlatans, who rip off desperate homeowners facing foreclosure,” Brown said. “Despite firm promises and money-back guarantees, these scam artists pocketed thousands of dollars from each victim and didn’t provide an ounce of relief.”

Brown filed five lawsuits as part of “Operation Loan Lies,” a nationwide sweep of sham loan modification consultants, which he conducted with the Federal Trade Commission, the U.S. Attorney’s office and 22 other federal and state agencies. In total, 189 suits and orders to stop doing business were filed across the country.

Following the housing collapse, hundreds of loan modification and foreclosure-prevention companies have cropped up, charging thousands of dollars in upfront fees and claiming that they can reduce mortgage payments. Yet, loan modifications are rarely, if ever, obtained. Less than 1 percent of homeowners nationwide have received principal reductions of any kind.

Brown has been leading the fight against fraudulent loan modification companies. He has sought court orders to shut down several companies including First Gov and Foreclosure Freedom and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants.

Brown’s office filed the following lawsuits in Orange County and U.S. District Court for the Central District (Los Angeles):

• U.S. Homeowners Assistance, based in Irvine;
• U.S. Foreclosure Relief Corp and its legal affiliate Adrian Pomery, based in the City of Orange;
• Home Relief Services, LLC, with offices in Irvine, Newport Beach and Anaheim, and its legal affiliate, the Diener Law Firm;
• RMR Group Loss Mitigation, LLC and its legal affiliates Shippey & Associates and Arthur Aldridge. RMR Group has offices in Newport Beach, City of Orange, Huntington Beach, Corona, and Fresno;
• and
• United First, Inc, and its lawyer affiliate Mitchell Roth, based in Los Angeles.

U.S. Homeowners Assistance
Brown on Monday sued U.S. Homeowners Assistance, and its executives -- Hakimullah “Sean” Sarpas and Zulmai Nazarzai -- for bilking dozens of homeowners out of thousands of dollars each.

U.S. Homeowners Assistance claimed to be a government agency with a 98 percent success rate in aiding homeowners. In reality, the company was not a government agency and was never certified as an approved housing counselor by the U.S. Department of Housing and Urban Development. None of U.S. Homeowners Assistance’s known victims received loan modifications despite paying upfront fees ranging from $1,200 to $3,500.

For example, in January 2008, one victim received a letter from her lender indicating that her monthly mortgage payment would increase from $2,300 to $3,500. Days later, she received an unsolicited phone call from U.S. Homeowners Assistance promising a 40 percent reduction in principal and a $2,000 reduction in her monthly payment. She paid $3500 upfront for U.S. Homeowners Assistance’s services.

At the end of April 2008, her lender informed her that her loan modification request had been denied and sent her the documents that U.S. Homeowners Assistance had filed on her behalf. After reviewing those documents, she discovered that U.S. Homeowners Assistance had forged her signature and falsified her financial information – including fabricating a lease agreement with a fictitious tenant.

When she confronted U.S. Homeowners Assistance, she was immediately disconnected and has not been able to reach the company.

Brown’s suit contends that U.S. Homeowners Assistance violated:
• California Business and Professions Code section 17500 by falsely stating they were a government agency and misleading homeowners by claiming a 98 percent success rate in obtaining loan modifications;

• California Business and Professions Code section 17200 by failing to perform services made in exchange for upfront fees;

• California Civil Code section 2945.4 for unlawfully collecting upfront fees for loan modification services;

• California Civil Code section 2945.45 for failing to register with the California Attorney General’s Office as foreclosure consultants; and

• California Penal Code section 487 for grand theft.

Brown is seeking $7.5 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

US Homeowners Assistance also did business as Statewide Financial Group, Inc., We Beat All Rates, and US Homeowners Preservation Center.

US Foreclosure Relief Corporation
Brown last week sued US Foreclosure Relief Corporation, H.E. Service Company, their executives -- George Escalante and Cesar Lopez -- as well as their legal affiliate Adrian Pomery for running a scam promising homeowners reductions in their principal and interest rates as low as 4 percent. Brown was joined in this suit by the Federal Trade Commission and the State of Missouri.

Using aggressive telemarketing tactics, the defendants solicited desperate homeowners and charged an upfront fee ranging from $1,800 to $2,800 for loan modification services. During one nine-month period alone, consumers paid defendants in excess of $4.4 million. Yet, in most instances, defendants failed to provide the mortgage-relief services. Once consumers paid the fee, the defendants avoided responding to consumers’ inquiries.

In response to a large number of consumer complaints, several government agencies directed the defendants to stop their illegal practices. Instead, they changed their business name and continued their operations – using six different business aliases in the past eight months alone.

Brown’s lawsuit alleges the companies and individuals violated:
• The National Do Not Call Registry, 16 C.F.R. section 310.4 and California Business and Professions Code section 17200 by telemarketing their services to persons on the registry;

• The National Do Not Call Registry, 16 C.F.R. section 310.8 and California Business and Professions Code section 17200 by telemarketing their services without paying the mandatory annual fee for access to telephone numbers within the area codes included in the registry;

• California Civil Code section 2945 et seq. and California Business and Professions Code section 17200 by demanding and collecting up-front fees prior to performing any services, failing to include statutory notices in their contracts, and failing to comply with other requirements imposed on mortgage foreclosure consultants;

• California Business and Professions Code sections 17200 and 17500 by representing that they would obtain home loan modifications for consumers but failing to do so in most instances; by representing that consumers must make further payments even though they had not performed any of the promised services; by representing that they have a high success rate and that they can obtain loan modification within no more than 60 days when in fact these representations were false; and by directing consumers to avoid contact with their lenders and to stop making loan payments causing some lenders to initiate foreclosure proceedings and causing damage to consumers’ credit records.

Victims of this scam include a father of four battling cancer, a small business owner, an elderly disabled couple, a sheriff whose income dropped due to city budget cuts and an Iraq-war veteran. None of these victims received the loan modification promised.

Brown is seeking unspecified civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

The defendants also did business under other names including Lighthouse Services and California Foreclosure Specialists.

Home Relief Services, LLC
Brown Monday sued Home Relief Services, LLC., its executives Terence Green Sr. and Stefano Marrero, the Diener Law Firm and its principal attorney Christopher L. Diener for bilking thousands of homeowners out of thousands of dollars each.

Home Relief Services charged homeowners over $4,000 in upfront fees, promised to lower interest rates to 4 percent, convert adjustable-rate mortgages to low fixed-rate loans and reduce principal up to 50 percent within 30 to 60 days. None of the known victims received a modification with the assistance of the defendants.

In some cases, these companies also sought to be the lenders’ agent in the short-sale of their clients’ homes. In doing so, the defendants attempted to use their customers’ personal financial information for their own benefit.

Home Relief Services and the Diener Law Firm directed homeowners to stop contacting their lender because the defendants would act as their sole agent and negotiator.

Brown’s lawsuit contends that the defendants violated:
• California Business and Professions Code section 17500 by claiming a 95 percent success rate and promising consumers significant reductions in the principal balance of their mortgages;

• California Business and Professions Code section 17200 by failing to perform on promises made in exchange for upfront fees;

• California Civil Code section 2945.4 for unlawfully collecting upfront fees for loan modification services;

• California Business and Professions Code section 2945.3 by failing to include cancellation notices in their contracts;

• California Civil Code section 2945.45 by not registering with the Attorney General’s office as foreclosure consultants; and

• California Penal Code section 487 for grand theft.

Brown is seeking $10 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

Two other companies with the same management were also involved in the effort to deceive homeowners: Payment Relief Services, Inc. and Golden State Funding, Inc.

RMR Group Loss Mitigation Group
Brown Monday sued RMR Group Loss Mitigation and its executives Michael Scott Armendariz of Huntington Beach, Ruben Curiel of Lancaster, and Ricardo Haag of Corona; Living Water Lending, Inc.; and attorney Arthur Steven Aldridge of Westlake Village as well as the law firm of Shippey & Associates and its principal attorney Karla C. Shippey of Yorba Linda — for bilking over 500 victims out of nearly $1 million.

The company solicited homeowners through telephone calls and in-person home visits. Employees claimed a 98 percent success rate and a money-back guarantee. None of the known victims received any refunds or modifications with the assistance of defendants.

For example, in July 2008, a 71-year old victim learned his monthly mortgage payments would increase from $2,470 to $3,295. He paid $2,995, yet received no loan modification and no refund.

Additionally, RMR insisted that homeowners refrain from contacting their lenders because the defendants would act as their agents.

Brown’s suit contends that the defendants violated:

• California Business and Professions Code section 17500 by claiming a 98 percent success rate and promising consumers significant reductions in the principal balance of their mortgages;

• California Business and Professions Code section 17200 by failing to perform on promises made in exchange for upfront fees;

• California Civil Code section 2945.4 for unlawfully collecting upfront fees for loan modification services;

• California Business and Professions Code section 2945.3 by failing to include cancellation notices in their contracts;

• California Civil Code section 2945.45 by not registering with the Attorney General’s office as foreclosure consultants; and

• California Penal Code section 487 for grand theft.

Brown is seeking $7.5 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

United First, Inc.
On July 6, 2009, Brown sued a foreclosure consultant and an attorney -- Paul Noe Jr. and Mitchell Roth - who conned 2,000 desperate homeowners into paying exorbitant fees for 'phony lawsuits' to forestall foreclosure proceedings.

These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home's value.

Noe convinced more than 2,000 homeowners to sign 'joint venture' agreements with his company, United First, and hire Roth to file suits claiming that the borrower's loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower's mortgage debt.

After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth's firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner's debt, the homeowner would be required to pay the company 80 percent of the value of the home.

Brown's lawsuit contends that Noe, Roth and United First:

• Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945

• Inserted unconscionable terms in contracts;

• Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating California Business and Professions Code 6150; and

• Violated 17500 of the California Business and Professions Code.

Brown's office is seeking $2 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

Tips for Homeowners
Brown’s office issued these tips for homeowners to avoid becoming a victim:

DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON'T transfer title or sell your house to a 'foreclosure rescuer.' Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called 'rescuers' use to evict homeowners and steal all or most of the home's equity.

DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the 'rescuer.'

DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.

If you believe you have been the victim of a mortgage-relief scam in California, please contact the Attorney General’s Public Inquiry Unit at http://ag.ca.gov/consumers/general.php.

Los Angeles – Attorney General Edmund G. Brown Jr. today sued a foreclosure consultant and an attorney -- Paul Noe Jr. and Mitchell Roth – who conned 2,000 desperate homeowners into paying exorbitant fees for “phony lawsuits” to forestall foreclosure proceedings.

These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home’s value.

“Noe and Roth ripped off homeowners desperate for help by charging unconscionable fees for phony lawsuits,” Brown said. “Instead of aggressively pursuing the lawsuits, Noe and Roth strung them along so they could continue to rake in fees.”

Beginning in mid-2008, Noe promised homeowners facing foreclosure or default he could help them lower or eliminate their mortgage debt.

He convinced more than 2,000 homeowners to sign “joint venture” agreements with his company, United First, and hire Roth to file suits claiming that the borrower’s loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower’s mortgage debt.

After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth’s firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

Under the terms of the agreement, United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner’s debt, the homeowner would be required to pay the company 80 percent of the value of the home.

Brown’s lawsuit contends that Noe, Roth and United First:
• Violated California’s credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
• Inserted unconscionable terms in contracts;
• Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating California Business and Professions Code 6150; and
• Violated 17500 of the California Business and Professions Code.

Brown’s office is seeking $2 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

Paul Noe Jr. was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004. Mitchell Roth resigned for the California State Bar in late May 2009, after the State Bar closed his law firm.

VICTIMS
P.J. -- After receiving default notices and conducting unsuccessful negotiations with his lender, P.J. of Panorama City contacted United First and was promised his home could be saved. In November 2008, P.J. signed a contract with United First and hired Roth’s law firm, paying nearly $5,000 in upfront and monthly fees. Even as P.J. was paying United First, Roth did nothing to advance his case, and his lender foreclosed on his home earlier this year.

A.S. -- In June 2008, A.S. from La Mesa, Calif. received notices that his mortgage payments were going to increase from $3,700 to over $5,000 per month. A.S. was referred to United First by a member of his church. Representatives of the company assured him that his mortgage debt could be eliminated. A.S. paid over $10,000 to retain Roth’s firm. Shortly after signing a contract, A.S. received foreclosure notices from his lender. He called United First about the notices but was told not to worry and that his case was moving along. In January 2009, A.S. received a notice to come to United First's office to pick up his file. Roth had abandoned his cases, and the State Bar had shut down the firm.

Tips for Homeowners

DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON'T transfer title or sell your house to a 'foreclosure rescuer.' Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called 'rescuers' use to evict homeowners and steal all or most of the home's equity.

DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the 'rescuer.'

DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.

Brown's Actions to Help Homeowners and Stop Loan Modification Fraud

Sued Countrywide For Predatory Lending And Secured $8.6 Billion Settlement. In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans, once the largest lender in the county, after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers' ability to afford loans.

Obtained Guilty Plea From Woman Who Operated Sophisticated Loan Scam. In May 2009, Brown obtained a guilty plea from Anna Santos, 22, who used forged documents to convince more than 100 desperate homeowners to hand over an average of $3,000 for non-existent loan modification services.

Shut Down 'Foreclosure Freedom' And Announced Arrest Of Two Loan Modification Scam Artists. In March 2009, Brown shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing loan modification services. The two scam artists were charged with 24 counts of grand theft and 25 counts of foreclosure consultant statute violations.

Broke Up 'First Gov' And Sent Five Members To Prison. In November 2008, Brown shut down First Gov, a company that demanded $1,500 to $5,000 in up-front fees to modify loans it never renegotiated. In March 2009, five members of the ring were sentenced to a total of 18 years in prison.

Ended 'Federal Land Grant' Foreclosure Rescue Scam. In May 2008, Brown ended a scam in which hundreds of homeowners were convinced to pay $10,000 to place their property in a land grant, a phony and worthless real estate document, and then convinced to sign over the deed to their home.

Shut Down Six Predatory Lending Companies. In March 2008, Brown shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions for promising homeowners unrealistically low mortgage payments and then switching them to loans that did not match the original agreement, many with hidden fees of up to $20,000. The three scam artists who operated the scheme have been sentenced to three years in prison.

A copy of the complaint is attached.

Oakland – Following more than two dozen undercover sting operations, Attorney General Edmund G. Brown Jr. today sued Maurice Irving Glad and his 22 California Midas auto shops to stop a “massive bait- and-switch scam” in which customers were offered cheap brake specials and then charged hundreds of dollars more for unnecessary repairs.

The undercover operations revealed that over four years Glad’s Midas shops regularly advertised $79 to $99 brake specials to draw customers in and then charged another $110 to $130 for unnecessary brake rotor resurfacing services – and hundreds of dollars more for repairs that were not needed or never performed.

The suit, filed in Alameda County Superior Court, seeks $222 million in civil penalties, costs and reimbursements to customers.

“These Midas shops were running a massive bait-and-switch scam, in which customers were lured in with the promise of cheap brake specials and then charged hundreds more for unnecessary repairs,” Brown said. “This investigation revealed a shady and deceptive operation that violated the trust of its customers.”

Brown’s lawsuit, filed jointly with Alameda County District Attorney Tom Orloff and Fresno County District Attorney Elizabeth A. Egan, involves 22 Midas shops in Campbell, Clovis, Concord, Dublin, Fremont, Fresno, Hayward, Manteca, Merced, Modesto, San Jose, San Leandro, Turlock and Walnut Creek.

The lawsuit follows a four-year California Bureau of Automotive Repair investigation into Glad and his Midas shops to monitor compliance with a 1989 Alameda County Superior Court injunction. The 1989 injunction prohibited Glad’s shops from performing unnecessary repairs, charging for services not performed, or using scare tactics to convince customers to purchase unnecessary parts and services.

Undercover agents, posing as customers, conducted approximately 30 sting operations at Midas shops owned by Glad. In total, there were more than 35 incidents in which shop managers, mechanics and employees made false or misleading statements to pressure customers to purchase unnecessary parts and services.

On average, the shops charged undercover agents almost $300 in unnecessary brake rotor resurfacings, brake drum repairs, brake adjustments, brake cleaning services and other services. For example:

• In May 2007, at a Dublin Midas shop, an undercover agent was informed that the car needed thicker, more expensive brake pads than what was advertised. This was despite the fact that the manufacturer listed the advertised brake pads as a direct replacement. The agent was also told that the car’s new rotors “could be saved” if they were resurfaced and was charged for the removal of all four wheels when only three wheels were removed for inspection. In total, the agent was charged almost $400.

• In June 2006, at a Clovis Midas shop, an undercover agent was informed that the front rotors needed to be resurfaced, a brake fluid flush was needed and the rear brakes required adjustment, when in fact, none of the repairs was necessary. The agent was charged over $275 for the unnecessary repairs, including the brake fluid flush that was never performed.

• In May 2006, at a Merced Midas shop, an undercover agent was informed that the rear brakes required replacement and adjustment when they did not, and that the rotors required resurfacing when they were new and not in need of any service. The agent was charged $320.

• In April 2006, at a Fresno Midas shop, an undercover agent was informed that the front rotors should be resurfaced because of “a safety issue” when the rotors were new and in good condition, had no scoring or hot spots, were within factory specifications and were not in need of resurfacing. The agent was charged over $230 for the unnecessary repairs.

• In October 2005, at another Modesto Midas shop, an undercover agent was informed that the struts were “completely blown” and “leaking a lot of oil,” that two of the rotors and brake pads needed to be replaced and that the other two rotors needed to be resurfaced at a cost of over $1,700. None of the repairs or services was necessary.

• In October 2005, at a Clovis Midas shop, an undercover agent was informed that the front rotors should be resurfaced and a transmission fluid flush should be performed when the rotors were new and within manufacturer’s specifications and the automatic transmission had just been flushed and refilled. The shop charged over $230 for the unnecessary repairs.

• In September 2005, at a Modesto Midas shop, an undercover agent was informed that the brakes needed to be adjusted and cleaned and a brake and cooling system flush was required, when in fact, none of the services was necessary. The agent was charged over $200 and the brake flush was never performed.

In July 2008, the California Bureau of Automotive Repair referred the case to Brown’s Office for prosecution. Alameda County District Attorney Orloff and Fresno County District Attorney Egan joined due to the large number of shops operating in their counties.

Brown, Orloff and Egan are suing Glad and his 22 Midas shops for:
• False and misleading advertising in violation of Business and Professions Code 17500;
• Unlawful, unfair and fraudulent business practices in violation of Business and Professions Code 17200; and
• Breaking the 1989 Alameda County Superior Court injunction in violation of Business and Professions Code 17535.5 and 17207.

If successful, the lawsuit would require these Midas shops to pay up to $222 million in penalties, costs and reimbursements to customers. This includes up to $1 million, or $2,500 per violation, for false and misleading advertising; up to $1 million, or $2,500 per violation, for unlawful, unfair and fraudulent business practices; and up to $220 million, or $12,000 per violation, for violating the 1989 injunction.

The lawsuit also seeks a permanent injunction prohibiting these shops from:
• Coercing its customers into buying unnecessary motor vehicle repairs or services;
• Making or authorizing false and misleading statements; and
• Obtaining payment for repairs or services that were not performed or for retail products that were not provided.

Consumers who believe they have been ripped off by an auto repair facility can file a complaint with the California Department of Consumer Affairs, Bureau of Automotive Repair online at: www.autorepair.ca.gov or by calling 1-800-952-5210.

The following Midas shops are named in today’s lawsuit:

• 1236 White Oaks Road, Campbell
• 704 Clovis Avenue, Clovis
• 2525 Monument Boulevard, Concord
• 6955 Village Parkway, Dublin
• 4045 Thornton Avenue, Fremont
• 3741 Washington Boulevard, Fremont
• 7340 N. Blackstone Avenue, Fresno
• 3937 N. Blackstone Avenue, Fresno
• 4304 W. Shaw Avenue, Fresno
• 1078 La Playa Drive, Hayward
• 24659 Mission Boulevard, Hayward
• 1412 W. Yosemite Avenue, Manteca
• 1420 V Street, Merced
• 338 McHenry Avenue, Modesto
• 3833 McHenry Avenue, Modesto
• 93 S. Capitol Avenue, San Jose
• 4224 Monterey Highway, San Jose
• 5287 Prospect Road, San Jose
• 2200 Stevens Creek Boulevard, San Jose
• 13745 E. 14th Street, San Leandro
• 2651 Geer Road, Turlock
• 2710 N. Main Street, Walnut Creek

Midas is one of the world’s largest providers of automotive services with more than 1,600 franchised and company-owned locations in the United States.

Today’s lawsuit, filed in Alameda County Superior Court, is attached.

Pleasanton, Calif. – Attorney General Edmund G. Brown Jr. today sued the City of Pleasanton to remove its “draconian and illegal” limit on new housing, a significant cause of traffic congestion, air pollution and urban sprawl in the East Bay and Tri-Valley area.

“Pleasanton’s draconian and illegal limit on new housing forces people to commute long distances, adding to the bumper-to-bumper traffic along 580 and 680 and increasing dangerous air pollution,” Brown said. “It’s time for Pleasanton to balance its housing and its jobs and take full advantage of its underutilized land and proximity to BART.”

Brown today filed a motion to intervene in Alameda County Superior Court that would force Pleasanton to lift its housing cap. The suit was initially filed by the nonprofit group Public Advocates on October 17, 2006.

In 1996, Pleasanton adopted Measure GG, which imposed a strict, permanent cap of 29,000 total housing units within the city. At the time, Pleasanton had 21,180 homes, apartments and condominiums. The cap, therefore, allowed fewer than 8,000 new housing units to be built within city limits, regardless of demand or state law requirements.

The City is now on the verge of adopting a General Plan update, which calls for the creation of 45,000 additional jobs by 2025, while retaining the 29,000 limit on housing. This, Brown contends, violates state law, which requires every California city to provide sufficient housing to accommodate its fair share of regional needs.
The State requires Pleasanton to provide 3,277 additional housing units between 2007 and 2014. The cap, however, allows for only 2,000 more to be built – and that does not account for additional housing which will likely be required after 2014.

In the past 10 years, job growth in Pleasanton has nearly doubled -- from 31,683 to more than 58,000. Yet, the number of new housing units has not kept pace with demand. This is despite the fact that there is ample land for development, including property adjacent to the Pleasanton BART station. Unless the city lifts its housing cap, this and other land near transit will most likely not be utilized for housing.

As a result of the cap, many workers have been unable to find affordable housing within Pleasanton. A 2005 Association of Bay Area Governments study found that 79 percent of Pleasanton’s 58,000 employees lived outside Pleasanton, and their commutes can take two hours per day or more.

Brown’s suit demands that Pleasanton’s housing cap be repealed – so that jobs and housing can increase in proportion with each other.

In his suit, Brown contends that:

• Pleasanton is violating state law by enforcing a housing cap that prevents the City from accommodating its fair share of the regional housing need, as required by state housing element law (Gov. Code §65583.).

• Pleasanton’s housing cap violates the state constitution, which prohibits cities from adopting ordinances that conflict with state law.

• Pleasanton’s general plan is internally inconsistent, in violation of California Government Code Section 65300.5. The City’s existing land use element contains the housing cap limit of 29,000 housing units, while its housing element recognizes that the cap must be addressed because it prevents the City from meeting its fair share of regional housing needs.

If Pleasanton continues to enforce its housing cap, the consequences for the region include:

• Increased traffic congestion and longer commute times. Interstate 580 has some of the longest commute times in the region, with evening eastbound commuters delayed 7,410 hours and morning westbound commuters delayed 5,120 hours in 2007.

• Urban sprawl. Communities outside of Pleasanton will continue to lose farmland and open space to accommodate Pleasanton’s workers. These communities will have to build more schools, fire and police stations to keep up with anticipated growth.

• Increased greenhouse gas emissions. More people will be commuting for longer periods and over greater distances. Pleasanton’s CO2 output was 1.388 million tons in 2008. When the City is projected to reach 105,000 jobs in 2025, it is estimated its CO2 output will increase to 1.940 million tons. The increase is the equivalent of adding 120,000 cars to the road every year.

• Increased dependence on foreign oil.

Transportation is the largest contributor to California’s greenhouse gas emissions. The California Air Resources Board estimates that transportation is currently responsible for 38 percent of the greenhouse gas emissions in the state. Transportation accounts for 50 percent of greenhouse gas emissions in the Bay Area.

Brown has reached several agreements and settlements with local governments and businesses across California to help them reduce their greenhouse gas emissions. Some of his actions include:

• A landmark settlement with San Bernardino County which established a greenhouse gas reduction plan that identifies sources of emissions and sets reduction targets.

• An agreement with Stockton requiring it to identify and reduce greenhouse gas emissions, permit construction of thousands of new residential units within its current city limits, develop a rapid transit bus system and require all new buildings to be energy efficient.

• An agreement with ConocoPhillips that offsets greenhouse gases attributable to an oil refinery expansion in Contra Costa County.

An agreement with the Port of Los Angeles that identifies and reduces greenhouse gas emissions generated from port operations.

Brown’s suit against the City of Pleasanton is attached.

San Francisco – Attorney General Edmund G. Brown Jr. won a lawsuit earlier this week that bars the nation’s third largest tax preparer -- Liberty Tax Service -- from deceptive advertising that “blurs the line” between tax refunds that are free and high-cost loans.

“Liberty Tax Service lured cash-strapped Californians into paying for high-cost loans, when they could obtain tax refunds free from the IRS just weeks later,” Brown said. “This ruling bars Liberty from deceptive advertising that blurs the line between IRS tax refunds and pricey loans.”

Liberty Tax Service’s print and television ads misled customers by promising 'Most Refunds in 24 Hours.” In reality, Liberty was selling refund anticipation loans, not a tax refund. Customers had to pay an upfront fee of about $30 plus interest, at a rate that could be as high as 395% annually. By contrast, tax refunds are available at no charge from the IRS and generally arrive anywhere from 8 days to 4 weeks after returns are filed.

In February 2007, Brown filed suit in San Francisco Superior Court against Liberty Tax Service as part of an effort to stop deceptive marketing associated with Refund Anticipation Loans. Brown reached settlements with Jackson Hewitt in 2007 and with H&R Block in 2009 over similar claims.

Monday’s ruling holds Liberty Tax Service responsible for its deceptive marketing, which also included print ads that failed to include disclaimers mandated by law and television ads that included those disclaimers, but so briefly and in such faint type that the Court said they were “plainly designed to be overlooked by consumers.”

According to the IRS, refund anticipation loans target low-income taxpayers, especially those who receive the Earned Income Tax Credit. Approximately 70% of Liberty Tax Service’s refund anticipation loan customers in 2006 and 2007 received this credit.

The ruling:

• Bars Liberty Tax Service from using false or misleading advertising to sell tax refund loans;
• Requires the company to review and monitor the ads run by its California franchisees;
• Requires the company to discipline franchisees that fail to receive approval of their ads from Liberty and report those franchisees to the Attorney General; and
• Requires the company to pay $1.16 million in civil penalties, $135,886 in restitution, and the Attorney General’s costs.

Two violations of the advertising provisions of the injunction by a single franchisee will result in a $15,000 fine; a third violation requires the termination of the franchisee.

The injunction also imposes limitations on Liberty’s ability to collect, on behalf of itself or others, money supposedly due from its customers for previous years’ tax refund loans.

The judgment requires Liberty Tax Service to inform these alleged debtors of supposed debts before the consumers takes any step that would commit them to having any amount of the alleged debt deducted or withheld even temporarily from their refund. This is a significant modification of Liberty Tax Service’s past collection practices.

Consumer advocates and policy makers, including the U.S. Taxpayer Advocate, have sharply criticized such practices for years.

Los Angeles -- Fighting to protect the rights of students who have been “indiscriminately terrorized” by gang violence, Attorney General Edmund G. Brown Jr. and Los Angeles City Attorney Rocky Delgadillo today announced that they have filed a lawsuit seeking an injunction that creates a 1.4 square-mile gang-free zone around Fremont High School in Los Angeles.

This injunction would be the first-of-its-kind and would impose a daytime curfew on members of four violent street gangs (the Swan Bloods, Florencia 13, the Main Street Crips, and the 7-Trey Hustlers/Gangster Crips) to prevent them from being on the streets while students walk to and from school, from assembling with other gang members, and from harassing and intimidating law-abiding citizens.

“These brutally violent street gangs have indiscriminately terrorized students who simply wanted to travel to and from school,” Brown said. “This first-of-its-kind injunction would create a gang-free zone around Fremont High School that shields students from violence, intimidation and drug trafficking.”

A complaint seeking this injunction was filed in Los Angeles County Superior Court on Friday, June 12. The injunction would create the “Fremont Free Passage Safety Zone” to prevent gang activity in the 1.4 square-mile neighborhood surrounding Fremont High School in Los Angeles.

This zone will be bound by Florence Avenue to the north, Central Avenue to the east, Manchester Avenue to the south and the 110 Freeway to the west and extends 100 yards beyond each of these boundaries.

Within the zone, police will enforce a strict curfew preventing gang members from being on the streets while students are walking to and from school, from 6:00 a.m. to 9:00 a.m. and from 2:00 p.m. to 6:00 p.m. Also, to protect all residents in the Fremont High School neighborhood, gang members must obey a night time curfew from 10:00 p.m. to 5:00 a.m. The injunction also prevents gang members from:

• Standing, sitting, walking, driving, gathering or appearing anywhere in public view, in a public place or in any place accessible to the public, with any other known gang member in the zone;

• Confronting, intimidating, annoying, harassing, threatening, challenging, provoking, assaulting, or battering any person who lives in, works in, visits or passes through the zone;

• Possessing any firearm, ammunition or weapon, whether or not concealed, in a public place or in any place accessible to the public within the zone;

• Selling, transporting, possessing or using, any controlled substance, drug or drug-related paraphernalia within the zone;

• Acting as a lookout by whistling, yelling, or signaling to warn another person engaged in unlawful or nuisance activity of the approach of law enforcement officers within the zone;

• Obstructing, impeding or blocking the free passage of any person or vehicle on any street, walkway, sidewalk, driveway, alley or parking lot within the zone;

• Drinking or possessing an open container of an alcoholic beverage in public within the safety zone;

• Damaging, defacing, marking, painting or otherwise applying graffiti to any public or private property or possessing any item to carry out such acts within the zone;

• Loitering in public for the purpose of tagging graffiti, drug-related activity or any other unlawful or nuisance activity within the zone; and

• Being present in or on the property of another person that is not open to the general public without the owner’s consent within the zone.

This injunction marks the culmination of a nine-month investigation into the gang activity of the Swan Bloods, Florencia 13, the Main Street Crips, and the 7-Trey Hustlers/Gangster Crips around Fremont High School. The 77th Division of the Los Angeles Police Department gathered and provided the evidence necessary to take action.

The investigation found that gang members frequently confronted, threatened, intimidated, assaulted, and robbed Fremont High School students traveling to and from school. These gangs also vandalized property, trespassed, loitered and sold and used drugs on sidewalks and streets near the school. For example:

• In April 2009, a young male was shot by a young female in broad daylight right next to Fremont High School on 79th Street and Avalon Boulevard.

• In March 2009, Swan Blood gang members attacked a young woman from behind in broad daylight and stole her necklace at a laundromat adjacent to Fremont High School on 78th Street and San Pedro Street.

• In February 2009, a Main Street Crip gang member armed with a handgun took a family hostage seven blocks from Fremont High School on 84th Street between Main Street and Wall Street after running from an LAPD officer.

• In November 2008, three Swan Blood gang members approached a 16-year-old student from behind, knocked him to the ground, punched and kicked him in the head and face, knocked him unconscious, and took his property. The crime occurred about four blocks from Fremont High School on McKinley Avenue at 80th Street.

• In October 2008, a 7-Trey Hustlers/Gangster Crips gang member shot into crowd of rival Swan Blood gang members with an assault rifle about one block from Fremont High School at 76th Street and San Pedro Street, killing an eight-year-old girl.

• In 2008, Florencia 13 gang members surrounded a Fremont High School student, asked him where he was from, yelled out, “This is Florencia!” proceeded to punch and kick him, and stole his money and electronics. The crime occurred less than one block from Fremont High School at 79th Street and Avalon Boulevard.

• In October 2007, a Florencia 13 gang member tried to stab a 15-year-old student walking home with a screw driver. Five to six gang members then punched and kicked the student, causing an eye abrasion, swelling to both sides of his face, bloody lips, a bump on his head and vomiting.

• In June 2007, a Swan Blood gang member murdered two young men in an alley about six blocks from Fremont High School, near 84th Street and San Pedro Street.

Many of the crimes around Fremont High School go unreported because victims and witnesses face the threat of retaliation and violence if they talk to police.

The complaint filed contends that this gang activity infringes on the constitutional right of students to obtain a public education on a safe, secure, and peaceful campus and to safely travel to and from school in violation of California’s Tom Bane Civil Rights Act. The Bane Act protects individuals from interference -- by use of threats, intimidation, or coercion -- with his or her peaceable exercise of their state and federal constitutional rights.

The complaint also contends that this gang activity constitutes a public nuisance pursuant to California Civil Code, sections 3479 and 3480.

To date, traditional law enforcement methods have not eliminated the immediate and continual risk to the lives and property of the people who live in, work, visit and pass through the neighborhood surrounding Fremont High School.

“Too often, street gangs thrive in and around our public schools. We intend to use the powers of the Bane Act to create meaningful safe passages to and from Fremont High School so that the students of that school can study and learn in peace, free from the menace of criminal street gangs,” Delgadillo said. “That is why I am proud to partner with the Attorney General and his office on this historic and creative effort to break the grips of gangs around our public schools.”

This action builds on Brown’s commitment to cracking down on violent street gangs. Last month, Brown announced the arrests of 15 members of the Merced Gangster Crips on charges of conspiracy, drug-trafficking, and weapons sales. Brown also filed 347 felony charges with San Diego District Attorney Bonnie Dumanis against dozens of members and associates of a San Diego street gang for stealing more than $500,000 from the Navy Federal Credit Union, using forged checks and an Indian Casino cash machine.

The complaint for injunctive relief, filed June 12, 2009 in Los Angeles County Superior Court, is attached.

Oakland -- Fighting to protect Californians from exposure to “toxic and corrosive” chemicals, Attorney General Edmund G. Brown Jr., 20 district attorneys and the Los Angeles City Attorney today filed legal action against Target Corporation to block the retailer from continuing to illegally dump hazardous waste in local landfills.

Separately, Brown and the Riverside, Ventura and San Joaquin County District Attorneys have forged a settlement with Kmart over similar claims, requiring the company to stop disposing toxic substances in landfills and pay more than $8.65 million in civil penalties, costs and funding for projects to improve environmental protection in California.

“Target has shown a willful disregard for California’s hazardous waste laws by dumping flammable liquids and toxic chemicals in local landfills over a period of eight years,” Brown said. “If successful, this lawsuit would force Target to comply with state laws governing the lawful handling and disposal of toxic and corrosive waste.”

“By contrast, Kmart has cooperated, agreed to live up to its obligations under the law and will train its employees to properly handle and dispose of hazardous waste.”

Target

Target currently operates more than 200 retail stores and seven distribution centers in California. The retailer carries and handles hundreds of items with hazardous properties, including: bleach, paints, pesticides, aerosol products, oven cleaners and automotive products.

Under California law, Target is responsible for properly handling and disposing of products that are damaged during shipping or stocking, returned to the store by customers or removed because they are past their expiration date.

Target is also required under law to employ a licensed hazardous waste hauler to pick up the waste and transport it to a hazardous waste disposal facility. This ensures that hazardous waste will not end up at local landfills where toxic chemicals can seep into California’s water supplies or emit dangerous gases.

Since 2001, however, local environmental health inspectors have served Target with more than 300 Notices of Violation (NOVs) for breaking California’s hazardous waste control laws.

In March 2006, the Attorney General’s Office launched an investigation into Target’s practices in conjunction with district attorneys throughout the state after local store inspections revealed ongoing violations. Violations include:

• In May 2009, an Alameda County Target store sent flammable aerosol canisters, propane canisters, light bulbs containing mercury, corrosive spray cleaners and medical waste to a local landfill not authorized to receive such waste.

• In March 2009, a San Bernardino County Target store sent a photo processing unit with toxic liquid and other hazardous materials to a local landfill not authorized to receive such waste.

• In December 2008, a Target employee in San Joaquin County informed county inspectors that hazardous waste, including pesticides, were routinely disposed of in the store’s trash compactor for transportation to a local landfill not authorized to receive such waste.

• In January 2008, investigators discovered that multiple Los Angeles County Target stores sent several tons of products that could not be sold, to the Los Angeles Regional Food Bank. The shipments contained over 5,000 pounds of damaged, leaking and unusable items with flammable, toxic and corrosive properties. A licensed hazardous waste hauler had to be dispatched to the food bank to properly handle the hazardous waste at a cost of over $5,000.

• In March 2002, a Sacramento County Target employee dumped leaking containers of liquid pool chlorine into the store’s trash compactor. The chlorine reacted with other chemicals in the compactor and toxic fumes were released into the air. This led to the store’s evacuation, an emergency response and several individuals were transported to local hospitals.

This joint investigation found that Target stores across California have illegally dumped thousands of pounds of hazardous waste in local landfills. Target was cited by local environmental health inspectors for violations of environmental laws as recently as last month.

Brown, the 20 district attorneys and the Los Angeles City Attorney are suing Target for:

• Intentional and negligent disposal of hazardous waste at a point not authorized in violation of California’s Health and Safety Code;

• Intentional and negligent unauthorized transportation of hazardous waste in violation of California’s Health and Safety Code;

• Intentional and negligent violations of Hazardous Waste Control Laws for Hazardous Waste Handling Training and Storage Requirements in violation of California’s Health and Safety Code;

• Knowing violations of Hazardous Materials Release Response Plans and Inventory Laws in violation of California’s Health and Safety Code; and

• Violations of Unfair Competition Laws.

This lawsuit would require Target to immediately comply with California law and start using a licensed hazardous waste hauler to pick up the waste and transport it to a hazardous waste disposal facility. Additionally, the lawsuit seeks $25,000 maximum penalties for each violation.

The 20 district attorneys who signed onto today’s lawsuit include: Alameda County D.A. Tom Orloff; Contra Costa County D.A. Robert J. Kochly; Fresno County D.A. Elizabeth A. Egan; Humboldt County D.A. Paul V. Gallegos; Kings County D.A. Ronald Calhoun; Los Angeles County D.A. Steve Cooley; Merced County D.A. Larry D. Morse II; Monterey County D.A. Dean D. Flippo; Orange County D.A. Tony Rackauckas; Riverside County D.A. Rod Pacheco; Sacramento County D.A. Jan Scully; San Bernardino County D.A. Michael A. Ramos; San Diego County D.A. Bonnie M. Dumanis; San Joaquin County D.A. James P. Willett; San Mateo County D.A. James P. Fox; Santa Clara D.A. Dolores A. Carr; Solano County D.A. David W. Paulson; Stanislaus County D.A. Birgit A. Fladager; Ventura Country D.A. Gregory D. Totten; and Yolo County D.A. Jeff W. Reisig. Los Angeles City Attorney Rocky Delgadillo also signed onto the lawsuit.

Today’s complaint against Target, filed in Alameda County Superior Court, is attached.

Kmart

Kmart currently operates 100 retail stores throughout California. The retailer carries and handles hundreds of items with hazardous properties, such as: latex and acrylic paints, pesticides, fertilizers, aerosols, pool chemicals, jewelry cleaners, auto batteries and waste oil.

In 2005, the Riverside County District Attorney’s Office initiated a formal investigation into Kmart’s hazardous waste handling practices. Subsequently, the Attorney General’s Office joined the investigation, which uncovered that Kmart had failed to account for most of the hazardous waste it generated between 2002 and 2007.

The investigation found that:

• In December 2006, a Kmart in Ventura County dumped liquid waste down drains.

• On two separate occasions in 2006, a San Joaquin County Kmart as well as a Ventura County Kmart sent waste oil generated at the stores to private oil change companies instead of disposing of the waste oil at an authorized disposal location.

• In 2005, a Kmart in Riverside sent 32 gallons of flammable latex paint, nine bottles of flammable STP Water Remover, 11 cans of flammable spray paint, and one can of flammable Armor All Tire Foam to a local landfill not authorized to receive such waste. Fortunately, the waste was intercepted at a transfer station.

Brown’s office contends the company violated California’s:

• Hazardous Waste Control Law by sending multiple flammable and hazardous waste for disposal at local landfills and failing to properly train its employees in handling hazardous waste;

• Hazardous Materials Release Response Plans and Inventory Act by failing to submit required reporting records from 2004-2007; and

• Unfair Competition Laws.

The settlement prohibits Kmart from sending hazardous and flammable materials to landfills, and requires it to properly train its employees to comply with California’s hazardous materials and hazardous waste laws. Additionally, Kmart must properly label, segregate and store its hazardous waste.

Under the settlement, Kmart must pay $8.65 million in civil penalties, costs and funding for projects to improve environmental protection in California.

A copy of the complaint and stipulated judgment, filed in Ventura County Superior Court, is attached.

San Diego - Attorney General Edmund G. Brown Jr. today forged a settlement with CVS Pharmacy requiring the company to make sure expired products are not sold in its stores and provide customers a $2 coupon if they identify products past their sell-by date.

The settlement also applies to Longs Drug Stores California, which CVS purchased in late 2008.

“CVS Pharmacy routinely sold expired baby formula, over-the-counter medication and dairy products long after the expiration date,” Brown said. “This agreement forces the company to give customers a $2 dollar coupon if they find expired products in CVS or Longs Drug Stores.”

In March 2008, Brown launched an investigation which revealed that CVS Stores in Los Angeles, Orange, and San Diego Counties had regularly sold expired baby food, baby formula, over-the-counter medications and dairy products to consumers. Expired products found include:

• Gerber’s Vanilla Custard, 11 months expired, at a Huntington Beach store.
• Bright Beginnings Ultra Baby Formula 31.7 oz., 3 months expired, at a Fullerton store.
• Bonine for Kids (children’s motion sickness medication), 5 months expired, at a Buena Park store.
• Gerber Baby Food Oatmeal with Applesauce and Bananas, 2 months expired, at an El Cajon store.

The investigation also confirmed that five CVS Pharmacies had improperly discarded more than 500 documents and prescription bottles containing confidential medical information in dumpsters outside of its stores. This discarded information included patient names, addresses, birthdates and prescription medications.

In June 2008, Brown called on CVS Pharmacy to immediately end the sale of expired products and mishandling of confidential customer information across all CVS Pharmacy stores.

Brown today filed a civil suit and a stipulated judgment in San Diego County Superior Court.

The suit contends that CVS Pharmacy violated Business and Professions Code 17200 and Civil Code 1798.81, by misleading customers about CVS’ standards to insure that products would not be sold after the expiration of the “sell buy” or “best by” date and by failing to preserve the confidentiality of customers’ personal medical records. In entering into the settlement, CVS denied any wrong-doing.

The stipulated judgment resolves the suit and forces CVS to:
• Stop the sale of expired products in CVS Pharmacy and Longs Drug stores in California;
• Implement a first-of-its-kind coupon program whereby consumers who find an expired item on store shelves are entitled to a coupon worth $2.00 which can be used in any future purchase at a CVS Store in California for any product;
• Revise existing policies regarding the sale of expired products and require employees to check at least twice a month that sell-by dates have not passed on infant formula, baby food, eggs, dairy products and over-the-counter medications;
• Revise existing policies regarding the disposal of confidential waste so that they include proper shredding policies and require written certification that all records containing personal information have been properly disposed of;
• Review and revise these updated policies annually and provide employees with written training in these new policies;
• Provide the Attorney General’s Office with sworn statements certifying that it has complied with all aspects of the Judgment;
• Perform random audits in its California stores twice a year to make certain that expired products aren’t being sold and that confidential medical information is safeguarded and disposed of properly: if CVS fails to meet these new conditions, audits will continue until these new requirements are met for two consecutive years; and
• Designate a toll-free number for employees and customers to report expired products and each store must submit reports to its corporate headquarters regarding these incidents at least twice a month.
CVS will pay $975,000 in civil penalties, attorney fees and costs.

A copy of the complaint and stipulated judgment are attached.

Los Angeles – As part of a nationwide crackdown on fraudulent charities, Attorney General Edmund G. Brown Jr. is filing today eight lawsuits against 53 individuals, 17 telemarketers and 12 charities that “shamelessly exploited” people’s generosity and squandered millions of dollars of donations intended to help police, firefighters and veterans.

Brown’s suits are intended to permanently stop the charities’ deceptive practices and require the repayment of all funds raised under false pretenses. Brown is seeking involuntary dissolution of eight of the charities.

“These individuals shamelessly exploited the goodwill of decent citizens trying to help police, firefighters and veterans,” Brown said. “In point of fact, a shockingly small portion of donations went to those in need, while millions went to pay for aggressive telemarketing and bloated overhead – and in one case – to purchase a 30-foot sailboat.”

Brown filed these suits in conjunction with the Federal Trade Commission and 48 other states as part of a nationwide sweep called “Operation False Charity.”

In California, just as in the other participating states, the so-called charities raised millions of dollars based on false claims that donors’ contributions would benefit police, firefighters and veterans organizations. But in reality, these charities rarely benefit public safety personnel. And, in most cases, 85 percent to 90 percent of donations are used to pay the fees of for-profit telemarketing firms.

Last year, Brown launched an investigation into 12 of the worst offenders, resulting in the eight cases filed today in Los Angeles, Orange, San Bernardino, and San Mateo counties. It is estimated that since 2005, hundreds of thousands of Californians have been deceived by the solicitation campaigns these charities and their fundraisers have conducted.

Brown is filing three suits against 5 charities and their fundraisers in Los Angeles County Superior Court:
• Law Enforcement Apprenticeship Program, based in Los Angeles.
• California Police Youth Charities, based in Sacramento.
• American Association of Police Officers, Police Protective Fund, Inc. and Junior Police Academy -- all of which are based in Los Angeles and are operated by the same directors.

Brown is filing three suits against 5 charities and their fundraisers in Orange County Superior Court:
• Association for Firefighters and Paramedics, based in Santa Ana.
• Association for Police and Sheriffs, Inc., based in Fullerton.
• Coalition of Police and Sheriffs, Disabled Firefighters Fund, and American Veterans Relief Foundation – all of which are based in Santa Ana and are operated by the same staff.

Brown is filing one suit against a charity and its fundraiser in San Mateo County Superior Court:
• Homeless and Disabled Veterans Corporation, based in Washington D.C.

Brown is filing one suit against a charity and its fundraisers in San Bernardino County Superior Court:
• California Organization of Police and Sheriffs, based in San Bernardino.

Los Angeles:
People v. Law Enforcement Apprenticeship Program, et al.
Brown today sued Los Angeles-based Law Enforcement Apprenticeship Program, its directors and its for-profit fundraiser, Rambret, Inc., for falsely promising contributors that their donations would be used to operate an apprenticeship program for at-risk youth. The program was never operated and no students were ever enrolled in it.

Instead, donations were used to pay for fundraising expenses, the personal expenses of the charity’s directors and the purchase of a 30-foot sailboat.

In 2003, Law Enforcement Apprenticeship Program raised $529,863, but only $31,501 – just 6 percent -- was spent on its program services. In 2004, the charity raised $372,623, but spent only $5,615 – 1.5 percent -- on program services.

Brown’s suit against the charity, its directors and its for-profit fundraiser, contends that they:
• Conspired to defraud donors.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Made illegal distributions in violation of Corporations Code section 5237.
• Knowingly filed false public documents in violation of Corporations Code section 6215.
• Failed to keep corporate books and records in violation of Corporations Code section 6320.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraiser from soliciting funds for a charity in California until it complies with state law.

Brown also seeks a court order requiring the charity to file a report of its receipts and expenses, to recover the funds misappropriated by the directors and civil penalties in excess of $150,000.

People v. California Police Youth Charities, et al.
Brown today sued Sacramento-based California Police Youth Charities, its executive director and its for-profit fundraisers -- National Consultants, Inc. and Public Appeals, Inc. -- for falsely promising contributors that 100 percent of donations would go to support the charity’s programs to help at-risk youth. In reality, less than 20 percent of the $9 million raised in 2006 and 2007 was spent on charitable programs.

The charity also filed false documents with the IRS and the Attorney General’s Office. In 2006, the charity reported that it made almost $1 million in grants, when it actually made grants totaling only $110,000.

Brown’s suit against the charity, its executive director and its for-profit fundraisers contends that they:
• Conspired to defraud donors.
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in reporting violations in violation of Government Code sections 12586 and 12599.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Knowingly filed false public documents in violation of Corporations Code section 6215.

Brown seeks a permanent injunction to end these deceptive solicitation practices. He also seeks to recover misappropriated charitable funds and civil penalties in excess of $100,000 from the charity and its for-profit fundraisers.

People v. American Association of Police Officers, Police Protective Fund, and Junior Police Academy, et al.
Brown today sued Los Angeles-based American Association of Police Officers, Police Protective Fund, and Junior Police Academy, their officers David Dierks and Philip LeConte, and their for-profit fundraisers for misleading donors into thinking that their solicitors were volunteer police officers and that contributions would benefit donors’ local police departments.

The for-profit fundraisers include: West Coast Advertising (known as Professional Communications Network) and Mark Christiansen (doing business as Charitable Fundraising Services).

Additionally, the charities violated both state and federal law when they filed reports with the IRS and the Attorney General’s Office that under-reported fundraising and administrative expenses and over-reported the amount spent on charitable programs.

In 2007, for example, Police Protective Fund raised $6.8 million and claimed in its tax returns that it spent $1.7 million on its charitable program. However, that $1.7 million improperly included fundraising expenses, a $350,000 judgment paid to the State of Missouri and other administrative expenses.

Likewise, in 2007, American Association of Police Officers reported in its tax returns that it spent $493,798 on its charitable program. However, out of that amount, $425,000 was paid to the charities’ officers and other administrative and fundraising personnel. David Dierks and Philip LeConte were each paid $168,000 in salary, and were also provided with vehicles such as a $45,000 Range Rover and a $25,000 Jeep Cherokee.

Brown’s suit against the charity, its directors and its for-profit fundraisers, filed in Los Angeles County Superior Court, contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Knowingly filed false public documents in violation of Corporations Code sections 6215 and 6812.
• Improperly compensated its directors and officers in violation of Corporations Code section 5227.

Brown seeks injunctive relief to prevent defendants from operating any charities in California and to stop future fraudulent solicitation and reporting practices. Brown also seeks to recover misappropriated funds and civil penalties in excess of $150,000.

Orange County:
Association for Firefighters and Paramedics
Brown filed suit today against Santa Ana-based Association for Firefighters and Paramedics, its president, Michael F. Gamboa and its for-profit fundraisers -- Public Awareness, L.L.C., Community Support, Inc., and Courtesy Call, Inc -- for falsely claiming that it used donations to assist local firefighters, paramedics, and burn victims.

Brown’s office discovered that from 2005-2008, only 3 percent of approximately $10 million dollars was spent on assistance to burn victims. No funds were ever used to assist firefighters and paramedics.

The remainder – some $9.7 million -- went to pay for the charity’s fundraising expenses and overhead.

In addition, the charity sent fraudulent invoices to people who had not made a pledge and sent letters to donors who had never given, asking them to mail in their “usual” annual donation.

Brown’s suit against the charity, its president and for-profit fundraisers contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Violated Federal regulations regarding deceptive and abusive telemarketing practices.

Brown is seeking to dissolve the charity. He also seeks a permanent injunction against the charity’s president to prohibit him from any future involvement with a California charity, and civil penalties in excess of $150,000.

People v. Association for Police and Sheriffs, Inc., et al.
Brown today sued Fullerton-based Association for Police and Sheriffs, Inc., its directors and its for-profit fundraisers -- Public Awareness, LLC, and Courtesy Call, Inc., for falsely claiming that the majority of donations would be used to help the victims of domestic violence.

Brown’s investigation revealed that of the $2.6 million raised in 2005 and 2006, 90 percent of the donations went to pay the for-profit fundraisers. Most of the remaining donations were used to pay salary and other personal benefits for its president, Lloyd Jones, and others.

In violation of federal law, the fundraisers blocked donors’ Caller ID. Once on the phone, the fundraisers engaged in aggressive and abusive conduct.

The investigation also found that the charity and its for-profit fundraisers sent pledge confirmation cards to people who never agreed to donate and that some of the charity’s fundraisers represented that they were police officers, when they were not.

Brown’s suit against the charity, its directors, and its for-profit fundraisers contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Committed registration and reporting violations in violation of Government Code sections 12599 and 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Breached their fiduciary duty to the charity in violation of Corporations Code section 5231 and 5233
• Violated federal regulations regarding deceptive and abusive telemarketing practices.
Brown seeks to dissolve the charity, recover improperly diverted funds, recover civil penalties in excess of $150,000, and to obtain a permanent injunction preventing all defendants from any involvement with a California charity until they comply with California law.

People v. Coalition of Police and Sheriffs, Disabled Firefighters Fund, American Veterans Relief Foundation, et al.
Brown today filed a lawsuit against Santa Ana-based Coalition of Police and Sheriffs, Disabled Firefighters Fund, and American Veterans Relief Foundation, their directors and for-profit fundraisers for falsely claiming that donations would be used for programs to help injured police and firefighters, and homeless veterans.

The for-profit fundraisers include Campaign Center, Inc., KWS Productions, Inc., Tel-Mar Productions, Inc, Community Publications, Inc., and Roman Promotions, Inc.
Through 2005, the charities raised $17 million, but only $351,000 – approximately 2 percent -- was spent on programs for cops, firefighters, and veterans. The vast majority of donations went to paid telemarketers.

The President, Jeffrey Duncan, used charitable funds for his personal expenses, including trips to Hawaii and to Las Vegas, and for meals, including one for $1,200 at Medieval Times.

Joseph Shambaugh, who founded all three of these charities, was indicted by federal authorities on charges of mail fraud and money laundering. He is currently at large.

Brown’s suit against the charities, their directors, and for-profit fundraisers contend that they:
• Conspired to defraud donors.
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Violated federal regulations regarding deceptive and abusive telemarketing practices.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity or being involved in charitable fundraising in the future, and to prevent the fundraisers from soliciting on behalf of a charity in California until they comply with state law.

He also seeks to recover misappropriated charitable funds and civil penalties in excess of $100,000 from the charities, their directors and for-profit fundraisers.

San Mateo:
People v. Homeless and Disabled Veterans, et al.
Brown today sued Washington, D.C.-based Homeless and Disabled Veterans, and its for- profit fundraiser, Atmost, Inc. for falsely representing to donors that their charitable contributions would be used to assist homeless and disabled veterans in California with food, shelter, and self-help programs. Yet no donations were used for these purposes.

Instead, the vast majority of the donations -- over 70 percent -- were used for fundraising expenses, and the rest went for administrative expenses at its headquarters in Washington, D.C.

Brown’s suit against the charity, its directors and its for-profit fundraiser contends that they:
• Engaged in deceptive and misleading solicitations in violation of Government Code section 12599.6.
• Engaged in solicitation activities in California in violation of the registration and reporting requirements set forth in Government Code sections 12599, 12599.5, and 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code section 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code section 17510.8.
• Breached their fiduciary duty to the charity in violation of Corporations Code sections 5231 and 5237.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraiser from soliciting on behalf of a charity in California until it complies with state law.

He also seeks to recover misappropriated charitable funds and civil penalties in excess of $150,000 from the charity, its directors and its for-profit fundraiser.

San Bernardino:
People v. California Organization of Police and Sheriffs, et al.
Brown today sued San Bernardino-based California Organization of Police and Sheriffs, its directors, officers and its for-profit fundraisers – Civic Development Group, LLC and Rambret, Inc. -- for falsely representing that donations would be used to benefit law enforcement officers and that 100 percent of each donation would be received by the charity.

Donors were told that their contributions would be used to purchase bullet-proof vests, make grants to families of officers killed or injured in the line of duty, provide veterinary treatment for service animals injured in the line of duty and mentoring of at-risk youths.

Out of the $30 million raised from 2005 to 2007, over $25 million was spent on fundraising.

No money was spent on bullet-proof vests, no grants were made to families of officers, $6,600 was spent on veterinary treatment for service animals, and $16,500 was spent on mentoring.

Brown’s suit against the charity, its officers, directors and for-profit fundraisers, contends that they:
• Conspired to defraud donors.
• Engaged in deceptive and misleading solicitation in violation of Government Code section 12599.6.
• Engaged in unfair business practices in violation of Business and Professions Code 17200.
• Used false or misleading statements when soliciting for contributions in violation of Business and Professions Code section 17500.
• Failed to use contributions for the purpose solicited in violation of Business and Professions Code 17510.8
• Violated federal regulations regarding deceptive and abusive telemarketing practices.
• Knowingly filed false public documents in violation of Corporations Code section 8215.
• Committed registration and reporting violations in violation of Government Code sections 12599 and 12599.6.

Brown seeks to dissolve the charity, to prevent the directors from operating a charity in California again, and to prevent the fundraisers from soliciting on behalf of a charity in California until they comply with state law.

He also seeks to recover misappropriated charitable funds and civil penalties in excess of $150,000 from the charity, its directors and its for-profit fundraisers.

States participating in “Operation False Charity” include:
Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, , Virginia, Washington, West Virginia, Wisconsin and Wyoming. The District of Columbia is also participating.

The Attorney General’s Office offers the following tips to potential donors to help them avoid being the victims of charity fraud:
• If you receive an unsolicited call asking for a donation, it is most likely from a paid telemarketer who may keep a substantial part of your donation as payment of fundraising fees.
• Recognize that the words 'veterans' or 'military families' in an organization's name don't necessarily mean that veterans or the families of active-duty personnel will benefit from your donation.
• Donate to charities with a track record and a history. Charities that spring up overnight may disappear just as quickly.
• If you have any doubt about whether you have made a pledge or a contribution, check your records. If you don=t remember making the donation or pledge, resist the pressure to give.
• Check out an organization before donating. Some phony charities use names, seals and logos that look or sound like those of respected, well-established organizations.
• Ask the soliciting charity or the paid fundraiser what percentage of your donation will go towards fundraising expenses and what percentage will go towards the charity’s charitable purpose.
• Do not send or give cash donations. For security and tax record purposes, it is best to pay by check made payable to the charity.
• Ask for a receipt showing the amount of your contribution.
• Be wary of promises of guaranteed sweepstakes winnings in exchange for a contribution. You never have to give a donation to be eligible to win a sweepstakes.

There are a number of resources to obtain information about a charity. The Attorney General’s website is a good place to start ( http://ag.ca.gov/charities.php ).

Use the search feature (http://justice.doj.ca.gov/cfr/cfr.asp) to find out if a charity and its fundraiser are registered. Review the Attorney General’s Guide to Charitable Giving for Donors (http://ag.ca.gov/charities/publications/CharitiesSolicitation.pdf ) for additional tips. Other sites that have valuable information include:

www.charitywatch.org - American Institute of Philanthropy
www.bbb.org - Better Business Bureau Wise Giving Alliance
www.charitynavigator.org - CharityNavigator
www.ftc.gov/charityfraud/ – Federal Trade Commission

Los Angeles – Bringing an end to an “elaborate pyramid scheme,” Attorney General Edmund G. Brown Jr. today completed an agreement forcing YTB International to stop the deceptive marketing of its largely unprofitable travel websites and prohibiting the company from charging consumers nearly $500 to recruit others into its endless chain scheme.

“YTB falsely promised customers they could get rich quick by selling travel online,” Brown said. “In reality, customers were reeled into an elaborate pyramid scheme and most never earned a dime. Today’s settlement ends YTB’s pyramid scheme by arming consumers with hard facts and eliminating the need to sign up for this largely unprofitable website.”

On August 7, 2008, Brown filed suit against YTB (also known as yourtravelbiz.com), its affiliates, and founders to end the pyramid scheme and stop YTB’s false and misleading marketing campaign. Today’s stipulated judgment, filed with the Los Angeles County Superior Court, accomplishes this by:

• Prohibiting false and deceptive marketing;
• Requiring that YTB provide consumers with information in a clear and conspicuous manner about how difficult it is to make money by selling travel through YTB;
• Prohibiting the company from charging nearly $500 to recruit others into the scheme and requiring that new member recruitment be done using a free online demonstration;
• Limiting income from “downstream sellers” (e.g., people who have been recruited and who have become recruiters themselves);
• Eliminating perks and other incentives for joining; and
• Making it easier to quit.

YTB lured consumers into its travel business with false promises of wealth and deceptive marketing. YTB charged customers $449.95 for the purchase of a website, and $49.95 a month to operate it. In total, consumers paid YTB over $1,000 in the first year of operation.

Many signed up to sell travel or to obtain travel discounts, but they quickly found it virtually impossible to make money selling travel. A plane ticket from Los Angeles to New York, for instance, would only yield $3 in profit. An international ticket from San Francisco to London would net only $6 in profit.

In 2007, the annual median income for those selling travel was $39.00, less than one month’s cost to operate the website. The majority of consumers who purchased YTB websites made no money through the sale of travel, and many lost money through continued website operations.

By contrast, recruiting others to purchase websites, and having those purchasers recruit others to purchase websites (and so on), was much more profitable. Members earned money based on how many websites they sold, as well as how many websites those they recruited sold. These multi-level sales, combined with the required purchase of the $449.95 website, formed the foundation of YTB’s pyramid scheme.

The stipulated judgment ends this pyramid scheme by:

• Prohibiting false and misleading marketing and requiring that consumers be provided with information about how difficult it is to make money through YTB. Until now, YTB has made wildly misleading claims about how much people can earn from selling travel. This included videos of YTB agents driving luxury cars and holding up $10,000 checks, and making misleading statements about millions of dollars earned in commissions. The stipulated judgment requires YTB to provide consumers with information in a clear and conspicuous manner about typical income earned by website purchasers, typical cost of operations, the number of people who quit, and the number of people who have not earned commissions. This allows consumers to see that most YTB travel sellers make no money, and in fact rack up high costs.

• Prohibiting YTB from charging consumers money in order to recruit others. Until now, the only way that consumers could demonstrate the website is if they had already purchased one for $449.95. The stipulated judgment requires YTB to establish a free demonstration website that must be used when recruiting others. This will reduce the incentives for people to purchase YTB websites, which are largely unprofitable when used to sell travel.

• Significantly limiting how much people can make from individuals they have recruited and who have become recruiters themselves. Sixty percent of recruiters’ sales must come from persons who are not themselves recruiters; otherwise, their income will be reduced.

• Prohibiting YTB from:
• Issuing travel credentials in California and advertising that travel discounts, perks and tax-write offs are available by purchasing a website.
• Stating or implying that their travel rates are comparable with those of travel booking sites such as Expedia or Orbitz.
• Providing any recruitment bonuses or compensation based on the recruiter’s purchase of a website.

• Requiring YTB to open up its operations to scrutiny by the Attorney General’s Office. The Attorney General’s Office will have access to all YTB marketing materials, events, meetings, gatherings and presentations to ensure the company is complying with the agreement and California law. YTB will also register as a franchise with the California Department of Corporations as required by law.

• Requiring YTB to make quitting easily available by fax, email, or telephone.

• Requiring YTB to pay $1 million in penalties, costs, and restitution to California victims who filed complaints against YTB.

In filings with the SEC since Brown’s 2008 lawsuit, YTB stated that there is “substantial doubt about the Company’s ability to continue as a going concern.” Also, it revealed that in 2008 and the first quarter of 2009, YTB has lost $5.9 million from its operations. The number of internet websites sold decreased 75% in first quarter 2009 compared to first quarter 2008, and the total number of website owners decreased 53% in first quarter 2009 compared to first quarter 2008.

Today's settlement builds on the Attorney General's ongoing commitment to protect Californians from the get-rich-quick schemes that proliferate in a down economy. In March, Brown entered into a settlement enforcing tough restrictions on two companies - Imergent, Inc. and Stores On Line - that falsely promised customers that they could earn full-time income by selling merchandise over the Internet.
Today’s settlement is attached.