Law Enforcement

NOTE TO EDITORS: Dr. Wesley Albert was booked this morning on second degree murder for violating Penal Code Section 187(a). Our earlier report of a PC 192(a) involuntary manslaughter charge was incorrect.

RIVERSIDE--Following a ten-month investigation, California Department of Justice special agents today arrested Dr. Wesley Albert, 78, in Lake Elsinore for writing large quantities of prescription drugs which led to an individual's death in Riverside last year.

“Prescription drugs are extremely potent, even lethal,” Attorney General Edmund G. Brown Jr. said “The California Department of Justice will crack down on crooked doctors who sell dangerous narcotics to people without a legitimate medical condition,” Brown added.

The California Department of Justice opened its investigation into Dr. Albert’s medical practice after a former patient was arrested in Encinitas in April 2007 for possessing controlled prescription drugs. Undercover agents discovered that Dr. Albert was running a prescription mill from his room at the Lake Elsinore Casino and Hotel in which he churned out hundreds of prescriptions for dangerous narcotics including Vicodin, Xanax, Soma and Oxycontin.

Dr. Albert routinely prescribed more than 5 times the normal quantity of these drugs, sometimes up to 500 pills per person per month, and pocketed between $50 and $100 cash per prescription.

In November, Jason Morgan, 28, a resident of Riverside, died after Dr. Albert gave him large prescriptions for Soma, also known as Carisoprodol, which is a centrally acting skeletal muscle relaxant prescribed for treatment of acute, musculoskeletal pain. Investigators found Jason Morgan with 30 bottles of narcotics that Dr. Albert had prescribed.

Early this morning, special agents arrested Dr. Albert at his residence at the 18000 block of Applewood Way in Lake Elsinore, California. Agents charged Dr. Albert with second degree murder, Penal Code Section 187(a), for prescribing medication without pathology. He was booked into Riverside County Jail in Murrieta. Bail is set for $2 million.

Dr. Albert is expected to be arraigned on Friday at 1:00 p.m. in the Riverside County Superior Court. The Riverside County District Attorney’s Office will prosecute the case.

The San Diego Pharmaceutical Narcotic Enforcement Team, often referred to as RxNet, led the investigation which resulted in today’s arrest. RxNet, part of the California Department of Justice Bureau of Narcotic Enforcement, conducts investigations into forged, altered, and fraudulent prescriptions, and the illegal and illicit diversion of pharmaceutical controlled substances.

Other agencies which assisted during the investigation include the Riverside County District Attorney's Office and the Drug Enforcement Agency.

For more information on the California Attorney General's Bureau of Narcotic Enforcement visit: http://ag.ca.gov/bne/

RICHMOND-- California Attorney General Edmund G. Brown Jr. today announced a “major expansion” of California’s DNA laboratory and database, preparing the state to begin collecting DNA samples from every felony arrestee beginning January 1, 2009.

"Today's major expansion of the state laboratory prepares California to collect DNA from every felony arrestee starting in 2009,' California Attorney General Brown told a news conference at the Jan Bashinkski DNA Laboratory in Richmond. 'California's DNA program is giving local law enforcement critical investigative leads in thousands of unsolved crimes,' Brown added.

Since Proposition 69 passed in 2004, the state laboratory has uploaded an average of nearly 200,000 DNA profiles annually. When law enforcement begins collecting DNA from every adult felony arrestee in January 2009, the quantity of DNA submissions is estimated to increase to 390,000 per year.

In preparation for the incoming DNA, the state has expanded its laboratories and storage facilities in Richmond by approximately 28,000 square feet.

At today’s grand opening ceremony, Attorney General Brown announced that California’s DNA database, which currently houses more than 1 million offender DNA profiles, has completed a $10 million expansion to accommodate the more than 2 million samples expected over the next 5 years as a result of Proposition 69 expansions, starting in 2009.

Susan Fisher, the Governor’s Crime Victims Advocate, joined Attorney General Brown in making today’s announcement.

The California Attorney General’s Office has the third largest DNA database in the world, just behind national databases in the United States and United Kingdom. The current DNA budget is approximately $31.5 million, $28 million of which is Proposition 69 funding.

To date, the state laboratory has reported over 6,000 hits, links between crime scene evidence and an offender in the DNA database or to other crime scenes. These hits continue to solve crimes and improve public safety in California.

The Bureau of Forensic Services is the scientific arm of the Attorney General's Office whose mission is to assist the criminal justice system. Forensic scientists collect, analyze, and compare physical evidence from crime scenes or persons. They also provide criminalistics, blood alcohol, and related forensic science information services to state and local law enforcement agencies, district attorneys, and the courts.

For more information on Prop 69 and the state’s DNA program visit: http://ag.ca.gov/bfs/prop69.php

SAN FRANCISCO--After a thorough investigation that included reviewing prior investigations conducted by the Santa Clara County Sheriff’s and District Attorney’s Offices and conducting its own independent investigation, the California Department of Justice (“DOJ”) announced today that it found insufficient evidence to support the filing of criminal charges in connection with the alleged assault of a 17-year-old-girl (“Jane Doe”) at a March 2007 De Anza College house party.

The DOJ began its review of the case at the request of Santa Clara District Attorney Dolores Carr following that office’s determination that there was insufficient evidence to bring criminal charges in connection with the alleged assault at the De Anza party. The DOJ reviewed hundreds of pages of reports and grand jury testimony and scores of audio and video taped interviews that contained the testimony and statements from over 30 witnesses who attended the party, including the men in the room where the alleged assault occurred. The DOJ independently interviewed over 20 witnesses, including Jane Doe and the young women who removed her from the party. The DOJ also obtained and analyzed physical evidence not previously sought, including cell phones and computers.

Although the behavior alleged in the case was reprehensible, the DOJ investigation revealed significant evidentiary problems that made impossible the establishment of a crime or the identification of a perpetrator. Notably, the extreme level of alcohol consumption appears to have clouded the memories of many of the people at the party. Jane Doe has no memory of anything that happened at the party beyond her initial arrival. The men who allegedly engaged in assaultive behavior give inconsistent accounts of the events and do not believe that a sexual assault occurred. In addition, the responsible young women who removed Jane Doe from the party witnessed the events only briefly and from a limited vantage point and, as a result, were unable to provide consistent, useful identifications necessary to pursue criminal charges.

In sum, there are such wildly conflicting accounts of the evening that it is impossible to determine what actually happened, when it happened, and who was involved. Based on this record, the DOJ concluded that there is insufficient admissible evidence to support the criminal prosecution of any suspect.

The DOJ’s response to the Santa Clara District Attorney’s request is attached.

SACRAMENTO—California Attorney General Edmund G. Brown Jr. today announced a new DNA search policy that will improve the ability of local law enforcement to investigate unsolved violent crimes by providing new investigative leads.

“California will help local law enforcement catch violent criminals by providing, under special circumstances, the identity of a person in the DNA database who is the close relative of a suspect,” Attorney General Brown told the California District Attorneys Association at their annual DNA/Cold Case Summit. “This new technique will assist local law enforcement with unsolved crimes committed by killers and sex offenders.”

Currently, the state laboratory alerts local law enforcement when a crime scene sample exactly matches--at all 26 genetic markers--the DNA of an offender in the state offender database. 15 or more shared markers indicate that the person in the database could be a close relative of the source of the crime scene evidence. Under California’s new search technique, the state laboratory will release this relative’s identity to local law enforcement if the agency adheres to a strict protocol to ensure that personal privacy is carefully protected.

California’s DNA offender database currently contains more than 1 million profiles from persons convicted of any felony and those arrested or charged with a homicide or sex offense. To date, the laboratory has released more than 5,000 exact matches, cold hits which provide key evidence to help solve crimes.

California’s new search technique imposes multiple conditions, as specified in the attached policy bulletin, which must be met before the California Department of Justice will release the identity of a suspect’s relative. This process was developed to strike an effective balance between privacy concerns and the need to provide information that may solve a violent crime.

If there is a serious public safety risk, for example a violent sex offender is at large, state scientists may also search the database in an effort to identify possible relatives of the suspect. If such a search returns multiple results, scientists will use a kinship analysis to determine whether any of the matches are likely to be a relative. The local agency must then conduct an additional genetic test to confirm the relatedness.

At more than 1 million DNA profiles, the California Attorney General’s Office has the third largest DNA database in the world, just behind the United States as a whole and the United Kingdom. Each month, the laboratory releases more than 200 cold hits, matches between crime scene samples and persons in the state database.

In September 2007, Attorney General Brown announced that the backlog of DNA samples collected from convicted felons and certain arrestees--which stood at 295,000 in July 2006--had been completely eliminated.

California’s new DNA search policy is attached. For more information on DNA testing in California visit: http://ag.ca.gov/bfs/

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

THE SCAM

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

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

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

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

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

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

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

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

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

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

THE SCAM ARTISTS

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

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

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

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

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

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

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

THE VICTIMS

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

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

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

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

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

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

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

THE CHARGES

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

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

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

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

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

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

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

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

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

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

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

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

Information on the suspects includes the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Suspect Information:

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

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

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

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

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

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

The investigation into this case is ongoing.

The criminal complaint is attached.

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

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

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

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

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

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

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

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

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

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

The settlement agreement and original lawsuit are attached.