Law Enforcement

Sacramento -- Attorney General Edmund G. Brown Jr. announced today that prosecutors from his office have filed grand theft, embezzlement and burglary charges against Maria Elna Flora, 59, of Sacramento, after she “fleeced” retirees out of almost $350,000 to pay for a daily gambling habit.

Flora was arrested yesterday by Yolo County law enforcement officials and is being held in Sacramento County Jail. Bail has been set at $400,000. Flora is scheduled to be arraigned on June 22. If convicted on all charges, she could spend more than 30 years in prison.

The case is a product of an investigation by the California Department of Insurance, with assistance from the Yolo County District Attorney’s office.

“Maria Elna Flora fleeced retirees out of hundreds of thousands of dollars by getting them to shift their life savings into sham real estate investments,” Brown said. “Flora stole thousands from retirees and gambled it away playing the slots at the local casino.”

Flora, a licensed life insurance agent, sold annuities to retirees looking for financial security. After completing legitimate annuity sales, Flora would offer additional investment opportunities, promising returns ranging from 10 to 20 percent. The funds, she said, would be used to make real estate loans to investors willing to pay high interest rates. In reality, none of the funds Flora collected were invested as promised.

From January 2005 through August 2007, Flora convinced at least ten individuals living in Butte, El Dorado, Sacramento, Solano, Stanislaus and Yolo counties to invest between $5,000 and $88,000. Flora encouraged investors, who ranged in age from 67 to 92 years old, to shift savings from life insurance policies, certificates of deposit and savings accounts, to her short term, high return investment. In total, retirees invested almost $350,000 with Flora.

In most of these cases, Flora made a few interest payments to investors and then stopped. When victims asked about the returns, Flora promised to pay at a later date, but never did.

In 2007, the California Department of Insurance initiated an investigation after Flora’s former employer filed a complaint. Earlier this year, the case was turned over to the Yolo County District Attorney’s Office for prosecution. The Yolo County District Attorney’s Office continued the investigation and then referred the case to Brown’s office because there were victims in at least five other California counties.

The investigation found that Flora used investors’ money to fund an expensive gambling habit which included almost daily slot play from January 2005 through August 2007 at Thunder Valley Casino.

Flora’s victims included:
• A 78-year old Placerville resident who invested $88,000;
• A 76-year old retired bookkeeper in Elk Grove who invested $50,000;
• An 85-year old retired education professional in West Sacramento who invested $47,000;
• A 71-year old Modesto resident who invested $45,000;
• An 83-year old Chico resident who invested $42,600;
• A 72-year old Woodland resident who invested $32,000;
• A 92-year old Vacaville resident who invested $20,000;
• An 80-year old retired department store employee in Citrus Heights who invested $10,000;
• A 73-year old Sacramento resident who invested $10,000; and
• A 67-year old West Sacramento resident who invested $5,000.

Yesterday, Brown filed 92 criminal charges against Flora in Sacramento County Superior Court for:
• Grand theft in violation of Section 487 of California’s Penal Code;
• Embezzlement from an elder or dependent adult in violation of Section 368 of California’s Penal Code; and
• Burglary in violation of Section 459 of California’s Penal Code.

Brown is committed to protecting Californians from financial scams. Earlier this month, Brown announced that agents from his office, working with law enforcement in Tennessee and Nevada, arrested two individuals for stealing millions of dollars through phony stock sales and an illegal pyramid scheme. Last month, Brown filed 79 criminal charges against three men who swindled thousands of individuals, including many retirees who lost their life savings, in a $200 million Ponzi scheme.

Copies of the felony complaint and arrest warrant affidavit, filed in Sacramento County Superior Court, are attached.

Riverside – Attorney General Edmund G. Brown Jr. announced that agents from his office, working with law enforcement in Tennessee and Nevada, arrested two individuals earlier this week for stealing millions of dollars through “phony stock sales” and an illegal pyramid scheme.

The defendants -- James A. Sweeney, II, 62, of Afton, TN and Patrick M. Ryan, 34, of Canyon Lake, CA -- were arrested on June 3, 2009 in Afton, TN and Las Vegas, NV, respectively, and are being held until they are extradited to Riverside County. Both face 78 counts of grand theft and securities fraud. Bail has been set at $8.8 million each.

“These two con men stole $8.8 million dollars through phony stock sales and an illegal pyramid scheme,” Brown said. “They stole investors’ money and used it to pay for luxury homes, fancy cars and a $100,000 Las Vegas wedding.”

Brown’s complaint contends that Sweeney and Ryan, co-founders of Riverside-based Big Co-op, Inc., stole $8.8 million from more than 1,000 Californians through an illegal pyramid scheme and phony stock sales.

Big Co-op, also operating as Ez2Win.biz, purported to be an online shopping hub where consumers could go to purchase thousands of goods and services from big name retailers including, Sears, Target and Macy’s, at discounted prices.

Pyramid Scheme

Consumers were informed that if they purchased a Big Co-op membership, they could save money on their own purchases and also earn commissions and rewards by convincing others to shop on the site.

In reality, consumers never received rebates or rewards. Instead, profits were based on recruiting others to purchase memberships, and having those purchasers recruit others to purchase memberships (and so on).

Members earned $100 commissions for every six members recruited. Those recruited then paid Big Co-op from $19.95 to $99.95 in ongoing monthly membership fees.

According to the complaint, from 2005 to 2007, Big Co-op generated $1.3 million in revenues through this pyramid scheme.

Phony Stock Sale

In addition to the pyramid scheme, the two sold phony stock in Big Co-op as a stand-alone investment and as part of certain membership plans.

At seminars and meetings across California, Sweeney and Ryan pitched Big Co-op as the future of online commerce, compared it to Google and EBay, and falsely informed investors the company was already turning huge profits. Investors were also told that an initial public offering (IPO) was imminent, and that when the company went public, the shares could climb to well over $100 per share.

In reality, Big Co-op was never profitable, there was not an impending IPO, and the only significant revenue generated was a result of the sale of phony stock and membership fees for the pyramid scheme.

Shares in the company were sold for $0.50 to $5.00, with two-for-one deals offered to investors willing to pay cash. From 2005 to 2007, Big Co-op took in $7.5 million from this scheme.

With investor cash, Sweeney and Ryan bought luxury homes, country club memberships, five Mercedes, paid for a $100,000 Las Vegas wedding and ran up $30,000 to $50,000 in monthly credit card bills.

After receiving numerous complaints, the California Department of Corporations issued two “Desist and Refrain Orders” against Sweeney, Ryan and other associates: the first, on October 23, 2006, directed them to cease selling stock in the company and the second, on May 2, 2007, directed them to cease selling memberships in the company. Following the second order, the case was referred to Brown’s office for prosecution.

On May 29, 2009, Brown filed 78 criminal charges in Riverside County Superior Court against both Sweeney and Ryan for:
• Grand theft, in violation of California Penal Code section 487(a);
• Sale of unqualified securities in violation of California Corporations Code section 25110;
• Fraud in the offer of securities in violation of California Corporations Code sections 25540/25401;
• Operation of a fraudulent securities scheme in violation of California Corporations Code sections 25540/25541; and
• Operation of an endless chain scheme in violation of California Penal Code section 327.

If convicted on all charges, each could face more than 25 years in prison.

These arrests build on Brown’s commitment to protect Californians from the get-rich-quick schemes that proliferate in a down economy. In the past few months, Brown has entered into settlements enforcing tough restrictions on three companies – YTB International, Imergent, Inc. and Stores On Line - that falsely promised customers that they could earn full-time income by selling merchandise and travel over the Internet.

A copy of the felony complaint is attached.

Oakland -- Continuing his fight against scam artists who “prey on” vulnerable Californians, Attorney General Edmund G. Brown Jr. today issued a directive forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009.

Those who fail to do so will be in violation of state law, subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation.

“California is awash with con artists who prey on vulnerable families facing foreclosure,” Brown said. “By forcing foreclosure consultants to submit detailed information to my office and post a $100,000 bond, this registry will help bring long-overdue transparency to this shadowy world.”

Up and down the state, scam artists pose as legitimate foreclosure consultants, promising homeowners they will prevent foreclosure. In reality, these scam artists charge huge up-front costs, but don’t provide an ounce of help.

Earlier this month, Brown’s office prosecuted a scam artist who provided hundreds of homeowners with forged bank documents and directed them to send their mortgage payments to accounts she had created, instead of the homeowners’ lender.

Additionally, Brown’s office has seen a significant increase in the number of complaints from homeowners regarding foreclosure consultants.

The registry unveiled today will provide Californians with information about potential consultants and recourse in the event that a consultant violates the law.

All foreclosure consultants operating in California must post a $100,000 bond and register with Brown’s office by July 1, 2009 and submit the following information:

• Name, address, and telephone number;
• All names, addresses, telephone numbers, websites, and e-mail addresses used or proposed to be
used in connection with their business;
• Copies of all advertising;
• Copies of each different contract the consultant will use with consumers; and
• A copy of its $100,000 bond.

Foreclosure consultants who provide proper information will receive a Certificate of Registration. Brown’s office, however, may refuse to issue, or revoke, a Certificate of Registration if the foreclosure consultant has made any misstatement in its registration form, has been convicted of fraud or misrepresentation, has been convicted of a violation of the state’s foreclosure consultant laws, California’s false advertising, unfair or deceptive practices laws or other laws dealing with mortgages.

If the company violates the law, a court may order restitution to victims out of proceeds from the $100,000 bond.

In order to obtain a Certificate of Registration by July 1, 2009, foreclosure consultants should send in their registration application and materials as soon as possible so they can be reviewed prior to July 1.

The registry was established through legislation sponsored by Speaker of the Assembly Karen Bass, AB 180, which was signed into law last year.

A copy of the registration forms may be found at http://ag.ca.gov/register.php under the “Foreclosure Consultant Registry.”

After July 1, 2009, consumers can call the Attorney General’s office to determine whether the company they are considering dealing with has been issued a Certificate of Registration.

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.

Redding – Attorney General Edmund G. Brown Jr. last night filed 79 criminal charges against three men who “callously swindled” thousands of individuals, including many retirees who lost their life savings, in a $200 million Ponzi scheme.

The defendants -- James Stanley Koenig, 57, of Redding; Gary T. Armitage, 59, of Healdsburg; and Jeffery A. Guidi, 54, of Santa Rosa -- were arrested late last night and are now in custody. Bail has been set at $5 million each.

“These three men callously swindled thousands of individuals out of $200 million to bankroll their extravagant lifestyles,” Brown said. “They took investors money and used it to pay for an 80-acre castle estate, a Lear jet, luxury homes and fancy cars. The Ponzi scheme ultimately collapsed under its own weight, causing hardship to thousands, many of whom were retirees who lost their life savings.”

The charges, filed in Shasta County Superior Court, mark the culmination of a year-long investigation, which found that Koenig, Armitage and Guidi created a network of more than 55 business ventures over a period of 10 years to enrich themselves and keep their Ponzi scheme afloat.

Brown’s investigation revealed that in 1997, the three men began peddling construction and real estate projects across California. This included: “Quail Hollow,” a residential subdivision in Susanville; Lake College, a for-profit vocational school in Redding; Mountain House Golf Course near Tracy; a light industrial distribution center in Brentwood; and dozens of other so-called “investment opportunities.” Victims were promised that these were safe, secure, low risk investments with double digit returns, averaging 12 percent.

In recruiting their victims, Armitage organized “investment planning seminars,” many of which targeted retirees, in the Bay Area and throughout California. Based on advice from these seminars, Californians invested sums ranging from $50,000 to more than $1 million. Some turned over their entire retirement portfolios and savings accounts.

Many of the construction and real estate projects, however, were poorly managed and were not financially viable, resulting in huge losses. Some projects were left unfinished or ended up in foreclosure.

Rather than inform investors about the failures, Koenig, Armitage and Guidi sought to attract new investors, whose funds could be used to offset losses and pay returns to earlier investors. In doing so, the defendants withheld vital information that impacted investment decisions, including past business failures and Koenig’s 1986 federal fraud conviction.

With double-digit returns and no knowledge of the investment failures, most investors kept their money in place and many invested in new projects. This Ponzi scheme continued for more than 10 years.

Beginning in 2001, Koenig, Armitage and Guidi redirected investors’ millions into the purchase of more than 20 senior housing and residential care facilities. This included: Alterra Clare Ridge in Fresno; Sterling House in Bakersfield; Clare Bridge Cottage in Bakersfield; Seasons in Modesto, Northridge, and Vacaville; Oakdale Heights West in Redding; Oakdale Heights in Bakersfield, Fresno, San Leandro, Beverly Hills, Santa Clarita, Roseville, Laguna Beach, and La Mesa; Senior Oaks Senior Living in Redding; and other facilities in Pennsylvania, Oregon, Nevada, North Carolina, and Virginia.

Under this scheme, the defendants’ company would purchase an assisted living facility and sell it to one of their affiliate companies. The affiliate would then sell ownership shares in the property as an “investment opportunity” at an even higher price to new investors. Meanwhile, an additional affiliated company would manage the property to maximize revenue.

Revenues, however, were not reinvested into the facilities, but were pooled and used to pay interest to investors and keep investors at bay.

In April 2007, the Ponzi scheme began to collapse under a mountain of debt, and the defendants were unable to pay interest to investors. Nevertheless, they continued to solicit new investors in the vain hope that they could keep the operation alive, raising $23 million from 91 new investors.

The defendant’s businesses finally closed their doors in June 2008.

During the course of its investigation, Brown’s office identified more than 1,000 victims with losses totaling $200 million.

Over the 10 years, Koenig, Armitage and Guidi siphoned fees, revenues and profits from their business ventures for their personal benefit, using the funds to purchase an 80-acre castle estate, a Lear jet, luxury vehicles, lavish vacations and expensive wine and art.

Last night, the defendants were charged with selling securities by means of false statements or material omissions in violation of Corporations Code Section 25401/25540 and residential burglary in violation of Section 459 of the Penal Code:

• Koenig was charged with 40 counts of securities fraud and 37 counts of residential burglary.
• Armitage was charged with 42 counts of securities fraud and 37 counts of residential burglary.
• Guidi was charged with 39 counts of securities fraud and 33 counts of residential burglary.

If convicted on all counts, each could face more than 100 years in prison.

If you believe you have been a victim of this scheme, please contact the Attorney General’s office at 1-800-952-5225.

Copies of the arrest warrant and criminal complaint are available upon request.

Los Angeles – As part of a wide-ranging effort to rein-in Medi-Cal fraud, Attorney General Edmund G. Brown Jr. will today file criminal charges against two dozen in-home healthcare workers who “shamelessly bilked” the program by seeking payment for services to clients who were in fact dead, hospitalized or incarcerated.

“These individuals shamelessly bilked the Medi-Cal program by claiming payment for services never rendered,” Brown said. “In fact, their supposed clients were dead, hospitalized or incarcerated.”

Under Medi-Cal’s In-Home Supportive Services program, workers perform non-medical services for qualified Medi-Cal recipients. This includes housekeeping, grocery shopping and meal preparation. In-home healthcare workers are required to submit timesheets signed and certified by their clients to receive payment. In 2008, more than 400,000 Californians received in-home healthcare services, twice as many as in 1999. State costs for operating the program are approximately $2 billion per year.

After a 2008 audit revealed that hundreds of payment requests had been submitted for in-home services never performed, Brown’s office and the California Department of Health Care Services launched an investigation into the program, leading to the charges filed today and an ongoing investigation into physicians who facilitate this type of fraud.

Today’s charges are part of Brown’s larger effort to investigate and prosecute those who would defraud Medi-Cal, which receives approximately $20 billion in state funding every year. Over the past two years, Brown has filed legal action against 31 pharmaceutical companies, 7 medical laboratories and dozens of healthcare providers and workers, resulting in criminal charges against 204 individuals and the recovery of $225 million to the state.

Today’s Charges
The following defendants, 13 of whom have prior criminal records, will be charged with one count of grand theft and one count of presenting false Medi-Cal claims in Los Angeles County Superior Court today.

• • Larry Denman, 54, of Compton, who submitted false claims totaling $3,394 for services to his mother who, in fact, was hospitalized and later died.
• Louwanda Hurt, 40, of Los Angeles, who submitted false claims totaling $1,488 for services to her client who, in fact, had died.
• Shirley Byrd, 48, of Long Beach, who submitted false claims totaling $2,953 for services to her mother who, in fact, had died.
• Rufus Jackson, 34, of Los Angeles, who submitted false claims totaling $6,506 for services to his client who, in fact, had died.
• Christopher Thomas, 25, of Long Beach, who submitted false claims totaling $1,467 for services to her client who, in fact, had died.
• Gwendolyn Jackson, 51, of Los Angeles, who submitted false claims totaling $1,557 for services to her mother who, in fact, had died.
• Diane Trujillo, 45, of Los Angeles, who submitted false claims totaling $1,645 for services to her mother who, in fact, had died.
• Pamela Renee Nelson, 48, of Los Angeles, who submitted false claims totaling $1,935 for services to her mother who, in fact, had died.
• Nadia Hoppes, 47, of Long Beach, who submitted false claims totaling $1,634 for services to her client who, in fact, had died.
• Patches Lee Miller, 38, of Long Beach, who submitted false claims totaling $3,510 for services to her client who, in fact, had died.
• Adrianna Prude, 42, of Hawthorne, who submitted false claims totaling $4,000 for services to her client who, in fact, had died.
• Percy Sok, 25, of Long Beach, who submitted false claims totaling $1,921 for services provided to his father who, in fact, had died.
• Chris Dion Jones Sr., 42, of Lakewood, who submitted false claims totaling $4,670 for services provided to his mother who, in fact, had died.
• Brenda Denise Rochelle, 42, of Los Angeles, who submitted false claims totaling $3,386 for services to her son who, in fact, had died.
• Raymond Lee Allen, 50, of Los Angeles, who submitted false claims totaling $2,261 for services to his client who, in fact, had died.
• Melchizedek Colemen, 27, of Los Angeles, who submitted false claims totaling $4,360 for services to his client who, in fact, had died.
• Ana Bertha Pineda, 31, of Bellflower, who submitted false claims totaling $2,065 for services to her grandmother who, in fact, had died.
• Qwa'stosha Spruille, 40, of Torrance, who submitted false claims totaling $1,109 for services to her client who, in fact, had been incarcerated.
• Donna Kaye Tibbs, 52, of Los Angeles, who submitted false claims totaling $5,404 for services to her client who had been placed in a nursing home and later died.
• Roderick Edward Woods, 48, of San Pedro, who submitted false claims totaling $2,007 for services to his client who, in fact, had died.
• Gerald Robert Harris, 51, of Los Angeles, who submitted false claims totaling $6,083 for services to his mother who, in fact, had died.
• Lorraine Lee, 43, of Long Beach, who submitted false claims totaling $6,958 for care provided to her mother who, in fact, had died.
• Ernest James Rogers, Jr., 53, of Los Angeles, who submitted false claims totaling $5,010 for services to his client who, in fact, had died.
• Faith Shelmon, 57, of Los Angeles, who submitted false claims totaling $4,487 for services to her husband who, in fact, had died.

Brown also filed charges against Richard F. Villegas, 38, of Downey, who submitted false claims totaling $13,243. He forged the signature of his deceased father, who was his in-home healthcare worker. He is also facing one count of grand theft and one count of presenting false Medi-Cal claims.

Defendants will be sent a letter ordering them to surrender to the court in June. If they fail to appear, an arrest warrant will be issued. If convicted, the defendants could face one year in county jail to five years in state prison.

An example:
Larry Denman had been paid by In-Home Supportive Services to provide care for his mother, Lillie Denman. On March 4, 2007, she was admitted to St. Francis Medical Center. On March 23, she was transferred to a convalescent home and died the next day.

The investigation found that Denman billed In-Home Supportive Services for providing 385 hours of homecare to his mother while she was hospitalized and for nearly a month after her death. Denman forged his mother’s signature to obtain payment.

"The strong, appropriate actions taken in these IHSS fraud cases are a direct reflection of the team effort among DHCS and the Attorney General's Office to protect those being defrauded and prosecute the offenders to the fullest extent allowed by law,' said DHCS Director David Maxwell-Jolly.
DHCS works closely with the Attorney General's Office to prevent, detect and investigate Medi-Cal provider and beneficiary fraud.

The $40 billion Medi-Cal program receives 50 percent of its funding from the state and 50 percent from the federal government. One in 6 California residents is a Medi-Cal beneficiary.

As part of his effort to combat Medi-Cal fraud over the past few months, Brown has:

• Filed suit against seven private laboratories to recover hundreds of millions of dollars in illegal overcharges for blood tests and other laboratory procedures.

• Filed criminal charges against six individuals who paid healthy seniors to be admitted to a hospice for the terminally ill and then billed state and federal health care programs $9 million for procedures that were never performed.

• Arrested two individuals who filed false claims totaling $1.34 million to Medicare for medical services that were never performed.

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

Merced-- Attorney General Edmund G. Brown Jr. announced that agents from the Bureau of Narcotic Enforcement yesterday arrested 15 members of the “notorious and violent” Merced Gangster Crips on charges of conspiracy, drug-trafficking, and weapons sales.

“For too long, the notorious and violent Merced Gangster Crips have terrorized Merced with their extreme violence, street drugs and powerful weaponry,” Brown said. “A member of this gang brutally killed Merced police officer Stephan Gray in a spasm of violence five years ago. Today, we strike a blow against this vicious street gang and help reclaim the streets of Merced.”

In January, Brown’s office initiated a multi-agency investigation into the gang’s criminal activity. Posing as a drug dealer, an undercover officer with the San Pablo Police Department was able to gain the confidence of the gang members and was able to obtain nearly a pound of rock cocaine, over 400 ecstasy pills, half a pound of marijuana and three handguns.

The five-month investigation concluded with the Merced County grand jury returning a 31-count indictment against 15 members of the Merced Gangster Crips that charged conspiracy, sale of controlled substances -- primarily rock cocaine, ecstasy, and marijuana -- weapons sales, and criminal street gang enhancements.

During the investigation, agents seized 11 1/2 ounces of rock cocaine, seven ounces of marijuana, 448 ecstasy pills, and six loaded handguns.

Today, agents arrested;
• Randy Tyler, 23, of Merced, a suspected leader of the gang,
• Frederick Mays, 21, of Merced also a suspected leader of the gang,
• Lamont Lavell Andres, 35, of Merced;
• Michael Buddy Barret, Jr., 31, of Atwater;
• Eric Devon Beavers, 23, of Merced;
• Antoine Lee Briggs, 27, of Merced;
• Jaray Julius Jaso, 30, of Merced;
• Sudi Dumaka Johnson, 23, of Modesto;
• Jose Ascencio Magana, 24, of Merced
• Patrick McMurray, 22, of Merced
• Lutricia Marie Moore, 23, of Atwater
• Damien Ricardo Perry, 26, of Merced
• Denicio Taylor Ramos, 22, of Merced
• Mckinley Jabree Sims III, 32, of Merced
• Lester Archie Turner, 24, of Merced; and
• Alejandro Joseph Zavala, 28, of Turlock.

In April 2004, Merced Gangster Crips gang member Cuitliachuac (Toa) Rivera killed Merced Police Officer Stephan Gray during a routine traffic stop. Rivera was later convicted of the murder and received a death sentence.

“Having prosecuted the MGC gangster who murdered Merced Police Officer Stephan Gray, I know how dangerous this street gang can be. No one, not even members of law enforcement, is immune. This joint investigation has removed some very ruthless individuals from our streets,' said Merced County District Attorney Larry Morse.

Agencies involved in today’s arrests include: the Attorney General’s Office Bureau of Narcotic Enforcement Gang Suppression Enforcement Team, the Merced Police Department, Merced Multi-Agency Gang Task Force, Merced Multi-Agency Narcotics Task Force, Madera County Narcotics Enforcement Team, Madera Gang Enforcement Team, West Narcotics Enforcement Task Force, Drug Enforcement Administration, and agents from the High Intensity Drug Trafficking Area.

A copy of the indictments is attached.

“By taking steps to eliminate its so-called erotic services section, Craigslist has struck a blow against the exploitation of vulnerable teenagers.

But this action must be followed up with smart enforcement and the assurance that the site does not again become a cyber hub for teenage prostitution.”

Brown was part of a multi-state task force to ensure that Craigslist took action to stop exploitation on its site. His office will participate in monitoring Craigslist compliance with the terms announced today.

San Diego –Attorney General Edmund G. Brown Jr. and San Diego District Attorney Bonnie Dumanis have filed 347 felony charges 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.

After obtaining personal account information and PIN numbers from paid-off credit union members, Lincoln Park Street Gang members would deposit counterfeit checks into the cooperating credit union member’s bank accounts, and then withdraw thousands of dollars from a cash machine at the Barona Casino, east of San Diego.

The filing of these charges is the culmination of a months-long investigation by the Attorney General, San Diego District Attorney, United States Secret Service Regional Fraud Task Force, and the San Diego Police Department Gangs Unit. Charges were filed against 60 individuals.

“Street thugs, operating like white collar criminals, devised an ingenious scam to bilk the Navy Federal Credit Union out of $500,000,” Brown said. “They recruited and paid off willing credit union members and manipulated financial rules to feed their criminal enterprise.”

"The size, scope and sophistication of this operation show us that criminal street gangs in San Diego are expanding their criminal enterprise into white collar crime,' San Diego County District Attorney Bonnie M. Dumanis said. 'As gangs move from street corner drug dealing to complex fraud, it's more important than ever that law enforcement from all levels continue to work together.'

Tuesday morning in the pre-dawn hours, more than 100 law enforcement officers fanned out across San Diego to take the defendants into custody as part of a multi-agency operation called “Bank Gig.”

The operation included agents from the U.S. Secret Service, San Diego Police Department gang detectives, San Diego District Attorney Investigators, the Economic Crimes Task Force, U.S. Postal Inspection Service, Navy Criminal Investigative Service, and Navy Federal Credit Union. Additionally, the Barona Tribal Government fully cooperated with the investigation.

Charges include: conspiracy, grand theft, money laundering, recruiting to commit a felony for a gang, forgery, unlawful sale of access card information, burglary, and gang enhancements.

The defendants are scheduled to be arraigned in San Diego Superior Court Dept. 11 on May 14 at 10:30 a.m. and 2:30 p.m. (220 W. Broadway). Some of the defendants could face up to 13 years in prison if convicted of all charges.

The Scheme
In 2005, Navy Federal Credit Union noticed a significant increase in fraud reports from young members reporting that their bank information and their PINs had been stolen. Credit Union officials reported the emerging pattern to the U.S. Secret Service, which launched an investigation.

The investigation uncovered that young credit union members were approached by a street gang member or associate and asked if they would like to make easy money. The credit union members would hand over their account information and PIN numbers.

The gang members would then deposit thousands of dollars of forged and counterfeit checks into the credit union member’s account and then immediately withdraw funds through a point-of-sale machine (similar to an ATM machine, but without low withdrawal limits) at the Barona casino. The account holder would file a police report and affidavit with the credit union in the hope that they would not be held responsible for the loss on their account.

Los Angeles -- Attorney General Edmund G. Brown Jr. today obtained a court order preventing Los Angeles-based Total Call International, Inc. from charging “hidden and deceptive” fees for its pre-paid calling cards.

“Total Call International has raked in profits by advertising bargain basement prices then charging exorbitant fees when their cards were used.” Brown said. “Today’s agreement safeguards California’s consumers by forcing this company to fully disclose hidden and deceptive calling card fees.”

Total Call International advertised low per-minute base rates on its calling cards and then charged consumers steep, undisclosed add-on fees and surcharges when consumers used their cards, Brown said. This significantly reduced the amount of calling time available.

Brown and the California Public Utilities Commission launched an investigation and prepared a lawsuit contending that Total Call International violated a California law that specifically requires disclosure of pre-paid calling card fees, as well as California’s false advertising and unfair competition laws.

Brown and the utilities commission today filed a complaint and a stipulated judgment resolving the case. The stipulated judgment requires Total Call International to:

• Disclose all fees, add-ons, and surcharges in a clear and conspicuous manner and include those charges in the marketing of its per-minute rate.

• Maintain records and allow the Attorney General’s office to monitor its activities to determine if Total Call International is in compliance with the settlement and California Law.

• Pay civil penalties of $300,000.

During the course of the investigation, Total Call International agreed to stop charging a “real-time rate surcharges,” costing the company $1.5 million in profits. Total Call International did not admit any wrongdoing.

Calling cards, often sold at newsstands and grocery stores, are meant to be a convenient, affordable tool for users that make frequent international calls and may not have regular access to telephone service.

Calling card users should take the following steps to protect themselves:

1. Make sure you’re getting what you pay for- buy a card for a small denomination first to test out the service.
2. Check with family and friends to find out their experience with calling cards.
3. Ask the retailer if they stand behind the card if the telephone service is unsatisfactory. It’s important to remember that the store where the card is purchased from doesn’t control the quality of the service.
4. Remember that very low rates, particularly for international calls, may indicate poor customer service, or a sign that hidden fees and surcharges apply.
5. Always look for disclosures about surcharges, monthly fees, per-call access, in addition to advertised rate-per-minute.
6. Check the expiration date. Some cards expire after a certain amount of time.
7. Make sure the card comes in a sealed envelope or has a sticker covering the PIN. Otherwise, anyone who copies the PIN can use the phone time you’ve already paid for.

This is the second case that Brown has filed forcing the disclosure of fees. In 2007, Brown forced San Francisco-based Devine Communications, Inc. to disclose all hidden fees. Florida and New Jersey have also been actively prosecuting similar cases.

Today’s settlement, filed in San Francisco Superior Court is attached.

NEVADA COUNTY -Attorney General Edmund G. Brown Jr. announced that the man behind an “elaborate real estate scam,' Thomas Hastert, pled guilty today to 59 felony counts of embezzlement, securities fraud, and selling unregistered securities.

“For three years, Hastert pulled off an elaborate real-estate scam, squeezing millions out of investors,” Brown said. “Hastert’s days of swindling are at an end, and he will spend the next 5 years in prison.”

Brown filed criminal charges against Hastert in the Nevada County Superior Court in February 2009 for embezzlement, securities fraud, selling unregistered securities, and filing false documents.

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

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

In the criminal complaint, Hastert is alleged to have:

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

- The loans that Hastert brokered were required by law to be placed into a special trust account overseen by a third-party escrow firm to ensure the project was being built. Hastert never did. Hastert used the money to pay his office expenses and other development projects. There was no oversight.

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

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

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

Hastert will be formally sentenced on June 25 in Nevada County Superior Court. He is expected to receive 5 years in prison.