Law Enforcement

OAKLAND – Attorney General Edmund G. Brown Jr. on Monday filed seven criminal charges against Sharon Elyce Pearl, who embezzled $675,000 from the State Bar of California to pay for “spa treatments, designer clothes, lavish meals, and fancy hotel rooms.”

“The defendant embezzled hundreds of thousands of dollars from the State Bar of California over a period of eight years,” Attorney General Brown said. “She was responsible for collecting rent for the State Bar, but instead used the money to pay for spa treatments, designer clothes, lavish meals, and fancy hotel rooms.”

On Monday, April 6, 2009, Attorney General Brown filed seven criminal charges in Alameda County Superior Court against Ms. Pearl, 51, of Oakland. The charges include:

• One criminal count of embezzlement for violating section 504 of the state Penal Code.

• Six counts of filing false tax returns for violating section 19706 of the state Revenue and Taxation Code.

The State Bar of California admits attorneys for practice in the state, provides continuing education classes, and conducts disciplinary hearings.

In 1999, the State Bar purchased an office building at 180 Howard Street, San Francisco, for use as its headquarters. The State Bar inherited tenants who leased retail space within the building. As the Director of Real Property, Ms. Pearl handled building management and was responsible for collecting tenant’s rent.

As early as 2002, Ms. Pearl began to embezzle a portion of the rental funds she collected. Here’s how the scheme worked:
• Ms. Pearl directed some tenants to make their rent checks payable to “PLOT-The State Bar of California.” Unknown to the renters, “PLOT” stood for the Piedmont Light Opera Theatre.

• Ms. Pearl deposited some of the checks into accounts held by the Piedmont Light Opera Theatre (PLOT).

• Ms. Pearl, who was a signatory on the theater’s accounts, would then transfer funds from the theater accounts to her personal bank account.

• She would then use the embezzled funds to pay for spa treatments, designer clothes, lavish meals, and fancy hotel rooms.

Ms. Pearl was able to continue the scheme for years because the State Bar did not keep track of the rent payments it was owed.

The State Bar finally uncovered Ms. Pearl’s scheme in 2008 when she requested a check that she claimed was for a tenant’s security deposit refund. Because there were no records that the tenant in question had ever paid a security deposit, the State Bar launched an internal investigation into the financial discrepancies.

The State Bar ultimately discovered that Ms. Pearl was maintaining two sets of books, and the investigation was referred to the Attorney General’s Special Crimes Unit for prosecution.

Ms. Pearl has agreed to surrender herself to authorities next Monday. She could face up to nine years in state prison if convicted on all charges.

Copies of the complaint and arrest warrant declaration are attached.

Anaheim, Calif. – Attorney General Edmund G. Brown Jr. today announced that agents from the Bureau of Narcotic Enforcement on Saturday arrested a Mexican national, Gerardo Medina Hernandez, and seized 95 pounds of black tar heroin from his sports utility vehicle.

“The suspect stashed 95 pounds of black tar heroin in the wheel well of his SUV,” Attorney General Brown said. “It is estimated that this heroin would sell for more than $10 million on the street, making it the largest seizure in Bureau history.”

Bureau of Narcotic Enforcement agents were assisted in this investigation by the Los Angeles Intra-agency Metropolitan Police Apprehension Crime Task Force (L.A. IMPACT) and the Inglewood Police Department.

Hernandez, 25, is a native of Mexico, but has a green card and lives in Anaheim. He has no known prior criminal record in California.

As part the investigation, agents obtained a search warrant for Hernandez’s vehicle and residence, which is located in the 1700 block of W. Lincoln Ave. in Anaheim.

During the search, agents found Hernandez unloading the heroin from two compartments built into the front wheel wells of the vehicle (a 2005 Volkswagen SUV) and putting it into a cooler in his garage.

The Bureau of Narcotic Enforcement determined the wholesale value of the heroin to be $1.3 million. The established street value of the heroin is in excess of $10 million.

Hernandez was arrested and booked into the Los Angeles County Jail for possession of heroin for sale. Bail was set at $2 million.

Located in the Attorney General’s office, the Bureau of Narcotic Enforcement is the oldest narcotic enforcement bureau in the United States.

Questions regarding this investigation can be directed to Senior Special Agent in Charge Orlando Lopez at (909) 208-9062. Photographs of the seizure are attached.

LOS ANGELES -- Attorney General Edmund G. Brown Jr. announced that special agents from the California Department of Justice today arrested Abel Moses Somilleda, the owner of a vacation travel agency, who “ripped off” $55,000 from high school and college students whose 2006 trip to Cancun, Mexico was cancelled.

“Dozens of high school and college students paid hundreds of dollars for a spring break trip to Cancun, but instead of a week of vacation, these students were ripped off by the owner of Big Bad Student Travel,” Brown said. “Abel Moses Somilleda promised a vacation to Mexico, but when the trip was cancelled, he pocketed the students’ money instead of providing refunds.”

Abel Moses Somilleda, 35, of Hawthorne, Calif., was arrested in Hawthorne by California Department of Justice Special Agents. He is charged with:

• Nine counts of grand theft in violation of Penal Code section 487(a);
• One count of failure to return moneys in violation of Business and Professions Code section 17550.14; and
• Nine counts of failure to deliver on ticket or voucher in violation of Business and Professions Code section 17550.17(b).

Somilleda opened Big Bad Student Travel in 2004 after working for ten years in the student travel business and coordinating several trips of his own.

In 2006, Somilleda organized a spring break trip to Cancun, Mexico, for dozens of high school and college students. Students paid approximately $700 for the flight, hotel room, and expenses.

Three months before the trip, however, Somilleda learned that it would be cancelled. But instead of immediately informing those who had signed up, Somilleda continued to accept payment for the trip. It was only two or three days before the trip was scheduled to take place when Somilleda notified students that it had been cancelled.

Somilleda promised the students that they would receive a refund within several days. The students, however, never received refunds.

In total, Somilleda pocketed some $55,000. A search warrant uncovered that Somilleda had spent most of the money on his own personal expenses -- including rent, dinners, groceries, and utilities.

If convicted of all charges, Somilleda faces eight years in prison.

California requires all sellers of travel to register with the California Attorney General’s Office and display their registration number on all advertising. To check the registration of a Seller of Travel visit the Attorney General’s website at http://www.ag.ca.gov/travel/

To help prevent becoming a victim of travel fraud, the Attorney General’s Office has offered a few tips and warning signs.

GET IT IN WRITING AND READ IT CAREFULLY
Before you pay any money, read all the terms and conditions relating to your travel services including cancellation conditions, fees and other restrictions.
PAY BY CREDIT CARD
You have a right in certain circumstances to have credit card charges reversed if you do not receive what you paid for. Check with your credit card company for details. This protection is not available when you make a payment with a check, money order, or cash.

KNOW BEFORE YOU GO
Check beforehand with your local Better Business Bureau or California Department of Consumer Affairs ( http://www.dca.ca.gov/ ), which may tell you how long the seller of travel has been in business, whether there have been any law enforcement actions brought against it in the past, and the nature of consumer complaints it has received, if any.
CONFIRM TRAVEL PLANS DIRECTLY
It is a good practice to confirm all of your travel arrangements directly with the businesses providing the transportation, hotel, or car rental.
BEWARE OF “FREE” TRIPS
While there are legitimate businesses that offer free trips, there are others that offer “free” trips to entice consumers into buying their products or services, which include hidden costs.
INTERNET SCAMS
There are many legitimate sellers of travel that provide great deals on the Internet, but if an offer seems too good to be true, it probably is.
USE ONLY A REGISTERED TRAVEL COMPANY OR AGENT
Sellers of travel must register every year with the Attorney General's office in order to do business or market in California. They must clearly display their registration number in all advertising materials. Do not deal with unregistered travel companies. While registration does not mean that the seller is reputable, you should avoid any seller who has not adopted the safeguards required by law to protect your payments.

IF YOU HAVE BEEN SCAMMED
Taking money without delivering goods or services that are promised can be a crime. If you believe you have been a victim of a crime, call your local police agency. If your travel seller’s main place of business is in California, and under certain other circumstances, you may be entitled to make a claim for restitution from the Travel Consumer Restitution Fund. For more information about how to file a claim, please go to http://ag.ca.gov/travel/consumer.php.

ORANGE COUNTY- Attorney General Edmund G. Brown Jr. today announced the arrest of two scam artists -- Mary Alice Yraceburu and Marianne Curtis -- who “coldly and heartlessly” conned over one hundred and sixty victims out of thousands of dollars for non-existent loan modification services.

“These scam artists coldly and heartlessly preyed on Californians desperate for help in saving their homes,” Attorney General Brown said. “Homeowners in financial trouble have to be on guard against loan modification fraud, so they don’t make a bad situation worse.”

Attorney General Brown today filed 49 felony charges Orange County Superior Court against Mary Alice Yraceburu, 45, of Riverdale and Marianne Curtis, 67, of Costa Mesa.

Yraceburu was arrested today in Fresno County and Curtis was arrested today in Orange County on the following charges:

• 24-counts of grand theft;
• 25-counts of violations of California’s foreclosure consultant statutes;
• One special allegation that the total value of theft was over $65,000;
• One special allegation that the total value of theft was over $100,000;

Both women are convicted felons who have served time in state and federal prisons.

The two women operated a company called Foreclosure Freedom, which sent hundreds of fliers to Californians promising help in stopping the foreclosure of their homes. The fliers read: “FINAL NOTICE – Respond only to this notice immediately.” This is similar to First Gov scam, which the Attorney General stopped late last year.

When homeowners called the number on the flyer, they were told their mortgages could be renegotiated to a lower monthly payment. Victims, however, were required to pay thousands of dollars in up-front fees and were instructed not to contact their lenders.

Victims were assured the company had “private lenders and specialists exclusive to their company who are very experienced in the options and methods used to renegotiate home loans,” yet neither of the women who operated the company had real estate licenses, legal training, or any experience in the home mortgage market.

Investigators found no evidence of any successful loan modifications and most of the victims were either forced into bankruptcy or lost their homes to foreclosure.

Assets seized through search warrants served at Foreclosure Freedom and the bank accounts held by Mary Alice Yraceburu and Marianne Curtis totaled over $10,000.

If convicted of all charges, Yraceburu and Curtis face 21 years in prison.

Copies of the complaint and arrest warrant affidavits are attached.

Los Angeles – Attorney General Edmund G. Brown Jr. today discussed charges filed Thursday evening against three individuals -- Howard K. Stern, Doctor Khristine Eroshevich, and Doctor Sandeep Kapoor – who “engaged in a criminal conspiracy to illegally furnish” controlled substances to Anna Nicole Smith.

“There is ample evidence that Howard K. Stern and these two physicians engaged in a criminal conspiracy to illegally furnish unwarranted amounts and combinations of highly addictive medications to Anna Nicole Smith,” Attorney General Brown said.

Over a period of three years, Doctor Khristine Eroshevich, Doctor Sandeep Kapoor, and Howard K. Stern furnished thousands of prescription pills to Ms. Smith, including opiates, benzodiazapines, and other controlled and non-controlled substances.

Doctor Eroshevich and Doctor Kapoor falsified prescriptions and furnished thousands of prescription pills to Anna Nicole Smith, often for no legitimate medical purpose. Howard K. Stern funneled those medications to Anna Nicole Smith.

The investigation, launched in March 2007, was a cooperative effort between Attorney General Brown’s Office, the Medical Board of California, the U.S. Drug Enforcement Administration, and the California Department of Insurance, Fraud Division.

Agents from these organizations worked in conjunction with the Los Angeles County District Attorney’s Office executing multiple search warrants, reviewing over 100,000 computer images and text, analyzing patient profiles and pharmacy logs, and have interviewed dozens of witnesses throughout the country and abroad.

Eleven felony counts were filed Thursday by the Los Angeles County District Attorney’s Office.

Counts 1-3: Each defendant was charged with conspiracy counts for prescribing, administering, and dispensing controlled substances to an addict; obtaining a controlled substances by fraud, deceit, or misrepresentation; obtaining a controlled substance by false name or address; issuing a prescription that is false or fictitious; and repeatedly and excessively prescribing, furnishing, dispensing, or administering drugs.

Count 4: Howard K. Stern and Doctor Kapoor were charged with unlawfully prescribing a controlled substance.

Count 5: Howard K. Stern and Doctor Eroshevich were charged with unlawfully prescribing a controlled substance.

Count 6: Doctor Kapoor was charged with obtaining a prescription for opiates by fraud, deceit, or misrepresentation.

Count 7: Doctor Eroshevich was charged with obtaining a prescription for opiates by fraud, deceit, or misrepresentation.

Count 8: Doctor Kapoor was charged with obtaining a prescription for opiates by giving a false name or address.

Count 9: Doctor Eroshevich was charged with obtaining a prescription for opiates by giving a false name or address.

Count 10: Howard K. Stern and Doctor Kapoor were charged with prescribing, administering, or dispensing a controlled substance to an addict.

Count 11: Doctor Eroshevich was charged with prescribing, administering, or dispensing controlled substances to an addict.

Bail was set for $20,000 for each defendant. Arraignment dates have been set for May 2009.

Doctor Kapoor and Mr. Stern turned themselves in to California Department of Justice agents at the Whittier Police Department Thursday night, and subsequently posted $20,000 bond. Doctor Eroshevich is expected to turn herself in and be taken into custody early next week.

Prescription drug abuse is not isolated to this case. Attorney General Brown’s office has investigated and filed charges in more than 200 cases -- both against physicians who have abused their trust and patients who go from doctor to doctor in search of drugs.

Attorney General Brown has also made it a priority to improve California’s prescription monitoring program, known as CURES, which is a critical tool in assisting law enforcement in investigating these types of crimes.

Los Angeles – Attorney General Edmund G. Brown Jr. announced that three individuals -- Howard K. Stern, Doctor Khristine Eroshevich, and Doctor Sandeep Kapoor – have been charged with conspiring to “repeatedly and excessively” furnish controlled substances to Anna Nicole Smith.

Attorney General Brown will discuss the charges and the arrests Friday, March 13 at 10:00 a.m.

“These individuals repeatedly and excessively furnished thousands of prescription pills to Anna Nicole Smith, often for no legitimate medical purpose,” Attorney General Brown said. “There is ample evidence that Doctor Eroshevich and Doctor Kapoor violated their ethical obligations as physicians, while Mr. Stern funneled highly addictive drugs to Ms. Smith.”

Over a period of three years, Doctor Khristine Eroshevich, Doctor Sandeep Kapoor, and Howard K. Stern furnished thousands of prescription pills to Ms. Smith, including opiates, benzodiazapines, and other controlled and non-controlled substances.

Doctor Eroshevich and Doctor Kapoor falsified prescriptions and prescribed unwarranted amounts and combinations of highly addictive medications. Howard K. Stern, Ms. Smith’s attorney and confidant, served as a vital link in obtaining, delivering, and administering these prescription drugs to Anna Nicole Smith.

What: Brown to Discuss Charges and Arrests in Anna Nicole Smith Investigation

Date: Friday, March 13, 2009

Time: 10:00 a.m.

Location: Los Angeles Office of the Attorney General
First Floor
300 South Spring Street
Los Angeles, CA 90013-1230

The investigation, launched in March 2007, is a cooperative effort between the California Attorney General’s Office, the Medical Board of California, the U.S. Drug Enforcement Administration, and the California Department of Insurance, Fraud Division.

Agents from these organizations worked in conjunction with the Los Angeles County District Attorney’s Office executing multiple search warrants, reviewing over 100,000 computer images and text, analyzing patient profiles and pharmacy logs, and have interviewed dozens of witnesses throughout the country and abroad.

Eleven counts were filed today. Arraignment dates for the defendants have not yet been scheduled. Bail was recommended at $20,000 for each defendant.

San Diego -- Attorney General Edmund G. Brown Jr. today forced Lobel Financial, a sub-prime auto lender, to stop its “illegal campaign of harassment and intimidation” against borrowers behind in their bills.

“This company charged its customers exorbitant interest rates for car loans and then waged an illegal campaign of harassment and intimidation when they couldn’t pay up,” Attorney General Brown said. “Now Lobel must stop its abusive tactics and comply with the law.”

Lobel Financial is headquartered in Anaheim, Calif. but makes loans to customers in Los Angeles, San Diego, Sacramento, the Bay Area, the Central Valley, and other areas of the state.

Lobel provides financing to people with poor credit who purchase vehicles through used-car dealerships. The typical interest rate of their loans is between 21-23 percent. Lobel performed its own debt collection efforts when consumers failed to make the required payments.

In 2007, the California Attorney General’s Office initiated an investigation into Lobel’s debt collection practices. The investigation found that Lobel frequently violated California’s Fair Debt Collection Act by:

• Calling its customers repeatedly and allowing the phone to ring continuously;
• Calling a customer’s employer and family members; and
• Using a false name when calling.

Additionally, the company used more sophisticated “pre-texting” tactics to obtain confidential information of their customers.

For instance, Lobel deceived ATT Wireless into providing confidential telecommunications records of at least 190 California ATT customers.

Lobel also used a calling card scam to con consumers into providing their calling information. Lobel had a third-party vendor send the customer a “free” phone card; the company would then obtain information about the calls made by the customer using the calling card.

Hundreds of California consumers across the State were victimized by Lobel’s constant harassment and illegal debt collection activities.

Lobel Financial will pay $150,000 in civil penalties and $100,000 to the State for attorneys’ fees and costs.

A copy of the complaint and the judgment submitted to the court are attached.

SAN BERNARDINO -- Attorney General Edmund G. Brown Jr. announced that three individuals have pled guilty to loan modification fraud against hundreds of 'desperate California homeowners' and were sentenced to as much as 6 years of prison.

“While doing nothing to help and pocketing all the money, these individuals ripped off desperate California homeowners who paid thousands of dollars to stop the foreclosure of their homes,” Attorney General Brown said.

The defendants sentenced were part of a foreclosure scam engineered by the First Gov company, which was based in San Bernardino, Calif.

• Rosa Conrado, 51, of San Bernardino, was sentenced today to six years, four months of prison for 6 counts of grand theft.

• Alejandrina Maldonado, 33, of St. Lucie, Fla., was sentenced on February 26, 2009, to a three year prison term for one count of grand theft.

• Martin Jesus Flores, 33, of Baldwin Park, was given three years of probation today based on his limited participation in the scheme.

• David Giron, 44, of Ontario, and Saul Amador, 23, of West Covina are scheduled for a preliminary hearing on March 19, 2009, for theft, money laundering, and conspiracy.

• Three other members of the ring -- Juan Jose Perez, 48, of Grand Terrace, Isuara Hernandez, 33, of La Habra, and Antonia Gonzalez, 66, of San Bernardino – are believed to have fled the jurisdiction and may be out of the country.

In November 2008, Attorney General Brown announced the break up of the First Gov scam ring. First Gov, -- which also operated under such misleading names such as Foreclosure Prevention Services; Resolution Department; Reinstatement Department; and Reinstatement Processing -- solicited hundreds of homeowners, offering to help them stop the foreclosure of their homes.

Ring members promised victims they would renegotiate their mortgages and reduce monthly payments. They demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program.

Victims were told to stop making mortgage payments and communicating with their lender because this would interfere with the loan modification process. After collecting their fee, ring members pocketed the money and did nothing to help victims.

The action today is part of Attorney General Brown's campaign to fight predatory lending and loan modification scams.

• In March 2008, the Attorney General’s office arrested members of Lifetime Financial Corporation for perpetrating a similar mortgage-modification scam that cheated hundreds of California homeowners out of hundreds of thousands of dollars.

• In October 2008, the Attorney General secured $8.6 billion in loan relief for eligible homeowners in a landmark settlement with Countrywide Financial Corporation for engaging in deceptive and predatory lending practices.

The Attorney General has also issued a Consumer Alert regarding foreclosure scam rings and tax reassessment scams. Homeowners should be on high alert when approached by companies offering ways to save your home or lower your property taxes.

The press release announcing the First Gov arrests in November can be found at: http://ag.ca.gov/newsalerts/release.php?id=1627

FOR IMMEDIATE RELEASE
February 27, 2009
Contact: Christine Gasparac (916) 324-5500

Brown Announces Arrest of Fugitive who Masterminded $20 Million Real Estate Fraud Scheme

NEVADA COUNTY —Attorney General Edmund G. Brown Jr. and the Nevada County District Attorney announced that the man behind a $20 million “fraudulent real estate scheme,” Thomas Hastert, was taken into custody and arrested Thursday in Santa Cruz.

“Thomas Hastert’s days of swindling millions from investors and borrowers are at an end,” Attorney General Brown said. “Now the case moves to the courtroom, and Mr. Hastert can be held accountable for his fraudulent real estate scheme.”

A warrant was issued for Hastert’s arrest last Friday. Santa Cruz investigators, working with the Nevada County District Attorney’s Office, arrested him yesterday morning at his daughter’s house. Bail was set at $540,000.

Seventy-three criminal counts were filed against Thomas Hastert in the Nevada County Superior Court last Friday for embezzlement, securities fraud, 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.

In this case, 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.

o The loans that Hastert brokered were required by law to be placed into a special trust account overseen by a third-party escrow firm. The firm had to verify whether funds being withdrawn by borrowers were being used for construction projects. Despite telling investors he had established such a trust account, Hastert never did, and the money was regularly withdrawn and misused by borrowers with no oversight.

o 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.

If convicted, Hastert could face up to 11 years and 4 months in prison. Bail was set at $540,000. A warrant was issued for his arrest today.

To view the press release about his charges, please follow this link:

http://ag.ca.gov/newsalerts/release.php?id=1683

# # #

FOR IMMEDIATE RELEASE
February 20, 2009
Contact: Christine Gasparac (916) 324-5500

Brown Files Criminal Charges Against Broker who Masterminded Elaborate Real Estate Scheme

NEVADA COUNTY – Attorney General Edmund G. Brown Jr. and Nevada County District Attorney Cliff Newell today announced that criminal charges were filed against a hard-money real estate broker who “brazenly deceived” investors and borrowers, embezzled fees, and filed false paperwork.

“This man brazenly deceived investors and borrowers, promising high returns and easy loans, ripping off his customers for his own personal enrichment,” Attorney General Brown said. “Ultimately, this criminal scheme collapsed when many of these loans failed, costing hundreds of people more than $20 million.”

Seventy-three criminal counts were filed against Thomas Hastert in the Nevada County Superior Court this morning for embezzlement, securities fraud, 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.

In this case, 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.

o The loans that Hastert brokered were required by law to be placed into a special trust account overseen by a third-party escrow firm. The firm had to verify whether funds being withdrawn by borrowers were being used for construction projects. Despite telling investors he had established such a trust account, Hastert never did, and the money was regularly withdrawn and misused by borrowers with no oversight.

o 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.

If convicted, he could face up to 11 years and 4 months in prison. Bail was set at $540,000. A warrant was issued for his arrest today.

The complaint and declaration are attached.