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National Institute of Justice

United States Department of Justice
Washington, D. C. 20531

,11/4/83 \"
 "

REPORT/MAY 1982

SPECIAL
PROSECUTIONS
UNIT
>,\
Office of the Attorney General
California Department of Justice
George Deukmejian
Attorney General

Michael Franchetti
Chief Deputy Attorney General
U.S. Department of Justice
Nationalinolllule of Justice
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Timothy A. Reardon
per0Gfl (II (jlfFlf 11at ufl or'g'~';j,!;nh I; ~~;~~)~00 d~l~ (j(J n~1 n(lCO'J~(mly
1 l Senior Assistant Attorney General r\ n
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SACRAMENTO SlSlt14 I. Introduction
(SIte) .c.cI$.SlIII$I$
meput1mtttt nf dJuntitt The Special Prosecutions Unit was formed by Attorney General George Deukmejian to discharge the
~PDr!W 1l1rumjiutt statutory mandate given to the Department of Justice of "[i] nitiatil1g and participating in the
prosecution of individuals and groups involved in organized crime activities." The Unit is comprised of
(P"ONOUNCEO DUKE.MAY·GIN)

Attltfneg Cieuerul six attorney-agent teams, with a team consisting of one Deputy Attorney General and two Special
'1 Agents. For statewide operation, teams are located in Sacramento, San Francisco, Los Angeles and
I San Diego.

I The goals and objectives of the Special Prosecutions Unit have been fonnulated to comply with the
Department's statut)ry mandate and to meet the recognized need for combating organized, multi-
jurisdictional criminal activity at the state level. These goals and objectives include the initiation and
I participation in the prosecution of 1) syndicated organized crime figures and their associates;
2) members of other recognized organized crime groups; 3) individuals and groups engaged in
'\ economic or white collar crime that is conducted in a multijurisdictiollUl setting and having a
This report on the activities of the Special Prosecutions Unit of the California \ substuntialmonetary impact upon the citizens of this state; and 4) individuals and groups engaged in
Attorney General's Office hus been prepared to acquaint you with some of the major narcotic trafficking.
prosecution efforts of the Unit during 1981.

I am pleased to be able to present this summary. The experierlCe reflected in the

pages of this report is that a specialized proseeutions unit working at the state
level to deal with multijurisdictional criminal problems is both necessary and
effective.

After you have reviewed the material, I invite your comments and urge you to
bring matters which you believe would fall into the jurisdiction of the Special
Prosecutions Unit to the attention of the team in your geographic area.

Most cordially,

~?r~~~
GEORGE DEUKMEJIAN

1
 II. Summary III. Prosecutions Concluded

Since becoming operational in October of 1979, the Special Prosecutio~s Unit, through Ap.ril of 1982, San Diego Organized Crime Ring
has initiated and/or participated in 52 criminal prosecutions. ProsecutIons have resulted m the
Frank Debbas and members of his crime ring have been convicted in the San Diego County Superior
conviction of 62 defendants of 153 felony counts.
Court on charges ranging from conspiracy to commit burglary, conspiracy to sell controlled
substances, to soliciting tile commission of robbery. The chnrges were brought foHowing a two-month
Of tllOse cOllvicted, 50 have been sentenced and received the following disposition:
joint investigation by the Departrr.ent's Bureau of Organized Crime and Criminal Intelligence and the
National City Police Department.
23 state prison
2 federal prison
20 state felony probation Debbas, an associate of the late organized crime figure Frank Bompensiero, was convicted of 14 felony
5 federal probation counts and sentenced to six years in state prison. Thomas Hercules Pipinos, a high-ranking member in
the organization, wus convicted of five felony COu!ltS. including conspiring with Debbas to sell
Fifty percent of those sentenced thus far have received terms ill either sta~e or federal prison. This controlled Substances. He hf1s been sentenced to four ye~rs in state prison. Joseph Louis Hardy, who
commitment rate is considerably higher than the statewide rate of approxllnately 33 percent. acted as a fence for the organization, was convicted of receiving stoll''1 property and has been
sentenl!ed to two years in st:tte prison.
SPECIAL PROSECUTIONS UNIT OTHER
Cocaine ConsiJirncy With Eastern Crime Ties
Vito Alberti and Nicholas A. Delviscovo, recent arrivals from New Jersey, were arrested in the
clubhouse of the Woodland Hills Country Club after selling approximately a pound of cocaine to a
State narcotics agent. The two had fled the scene of the nlleged cocaine transaction in a 1979 Cadillac
EI Dorado with Florida license plates. The Cadillac was abandoned at the Country Club and the two
were apprehended inside the clubhouse by deputies of the Los Angeles Sheriff's Office. Subsequent
investigation determined that the vehicle used in the alleged cocaine transaction belonged to Louis
John Ippolito of Sherman Oaks. Ippolito is the son of Joseph Ippolito, Sr., former member of the New
Jersey-based DeCavalcante organized crime family. In early 1979, Ippolito was indicted by the Federal
Strike Force in Brooklyn, New York, for narcotics smuggling. He was convicted and sentenced to eight
years in federal prison in October 1981.

The success of the Unit can also be measured by the fact that 90 percent of the cases accepted for On August 12, 1981, Delviscovo was convicted in the Los Angeles County Superior Court of
prosecution ended wich convictions being obtained. conspiracy to possess cocaine for saJe, and has been sentenced to two years in state prison. On
September 4, 1981, Alberti was convicted in the same Superior Court of conspiring to sell cocaine and
The Unit was involved in state prosecutions in 17 different counties, and participated in two federal sale of cocaine, and has been sentenced to four years in state prison.
prosecutions in the Central and Southern District, respectively.
Joint State and Federal Prosecution of Organized Crime Figures
Amollg t/rose prosecuted by the Special Prosecutions Ullit were 14 organized crime m~lIIbers or Robert Lewis Lee and Alexander James Turner, both long-time targets of organized crime investigators
associates. Six major narcotic rings were also broken tlfJ and those involved prosecuted el~"er for tile in Southern Calif"rnia. have been convicted in Federal District Court in Los Angeles of conspiracy to
sale or productioll of controlled substallces. Additionally. several major fraud proseclItlOlls were manufacture and distribute mecloqualone, the active substance in the widely abused drug quaalude.
undertaken involving losses rangillg from $300,000 to $40 millioll. Each defendant has been sentenced to two ycar~ in federal prison.
Some of the cases concluded in 1981 and a number of pending prosecutions are discussed herein. An investigation conducted by the State Bureau of Narcotic Enforcement established that the
substance was being manufactured at a remote laboratory site near Tehachapi in Kern County for
eventLlal distribution in the Los Angeles area. Because the substance, mecloqualone, was controlled
under federal but not state law, a prosecutor from the Special Prosecutions Unit was appointed Special
Assistant United State!' Attorney for the purpose of trying the case in federal court. The prosecution

. , J
was successful notwithstanding a setback suffered when a confidential informant, who was to testify
in the case, was found dead in a Bellflower hotel room from an apparent overdose. Authorities are

\
investigating that death as a possible homicide.

Still at large is indicted coconspirator James Anthony Grogan, aka William "Billy" Incardona, who
authorities believe to be an enforcer for organized crime interests.
II
~
2 3

., 6
r m
 4 ,

Major "Quaalude" Manufacturing Organization

Palm Springs Embezzlement Conspiracy
A San Francisco business executive and his crime partner have been sentenced to state prison for their
Two former fi.1anciai o;'t'icers of the Eisenhower iviedical Center in Palm Springs have been convicted
leadership role in an organization that manufactured and sold the illicit drug methaqualone.
in connection with a fraudtllent scheme that resulted in the embezzlement of approximately $350.000
Methaqualone is the generic term for quaalude, a suppressant drug similar to Valium and having a
in hospital funds, Thomas Lindsay of Hurricane, Utah, and Gerald D. Anderton of Sandy I Utah, were
retail value of $4 a tablet.
indicted by the Riverf'ide COl'nty Grand Jury and charged with conspiracy to commit grand theft,
grand theft. forgery and falsifying corporate records. It Was established at trial that Lindsay and
The Central Lighting Company at 237 Clara Street in San Francisco served as a front for the illicit lab.
Anderton, through use of their official positions and by alteration of corporate records, secured
Evidence adduced at trial disclosed that chemicals necessary to the manufacturing process were being
issuance of Medical Center checks, two in the amount of $ ] 40.000, payable to entities under their
ordered and transported from Southern California to the Clara Street address. Installation of an
control. Additionally, the fraudulent &cheme included the issuance of checks to former patients. which
electronic tracking device, with court approval. enabled investigators to trace the route of the chemical
checks were recorded on hospital records as overpayments from insurance cOl11pal1i~s. The payee-
containers. Intensive surveillance by state narcotic agents indicated a pattern of activity consistent
patient's endorsement was then forged and the money deposited in an Anderton bank account. One
with a major manufacturing operation.
such check involved a former patient who was deceased; another was made payable to a former l)atient
who was found to be a prison inmate. A check in the amount of $10,000 was made payable to
When a search warrant was executed at the site of the alleged lab,. agents found and seized mUltiple
CHAMPUS (Civilian Health and Medical Program. Unifonned Services). This check. with the agency's
thousands of quaalude tablets packed in several plastic bags weighing approximately a pound each,
endorsement upon1t, was deposited into an Anderton account.
several pounds of powdered material that had not yet been pressed into tablets and more than 50
five-gallon drums of raw chemicals. A tabbing machine capable of pressing 100 'tablets a minute was
The embezzlement probe was initiated when Lindsay and Anderton, following their resignations from
also found on the premises. This press had the capability of imprinting a legitimate manufacturer's
the Medical Center, were arrested in Phoenix. Arizona, in connection with an attempt to import and
label on the illicit tablets to incrc:lse the street value. Also seized at the site of the alleged lab were
sell illegal drugs. The scheme failed when the drug connection turned out to be a Phoenix undercover
three handguns, four rines. one semiautomatic rine and $69,750 in cash.
narcotics officer. The drug smuggling plan, whid1 included the purchase of an airplane, was to be
finrnced by use of the embezzled funds.
William Joseph Ahern. president of San Francisco Lighting and Supply Company, and crime partner
Robert Leroy Wilhite, were each sentenced to three years in state prison by the San Francisco
The investigation leading to the indictlT.ent encompassed five states and required the examination of
County Superior Court.
17 bank accounts in order to trace the embezzled funds, which had been laundered through these
various accounts.
Head of Organized Gambling Syndicate Convicted
Following conviction, each defendant was sentenced by the Riverside County Superior Court to a Ar. investigation by the Special Prosecutions Unit and the San Luis Obispo District Attorney's Office
term of three years in state prison. re:mlted in the arrest of Jack Gordon Green of Arroyo Grande. Green has been described in the
Orgallized Crime Control Commission Report of May 1978 as "a kingpin of an organized gambling
Northern California Commodity Investment Fraud syndicate which operates in Fresno, Los Angeles, Ventura, Santa Barbara, San Luis Obispo, and
Sacramen to Coun ties."
Michael McCluskey, president of Capital InvestOl';, has been convicted in the Sacramento County
Superior Court of corporate securities violations in connection with an investment fraud thac bilked
On October 4, 1981, searches pursuant to search warrants were conducted at three locations in San
investors in Northern California of approximately $537,000 in a nine-month period. The Special
Luis Obispo County which netted agents booking markers representing thousands of dollars in wagers
Prosecutions Unit was assisted in its investigation by the California Department of Corporations.
and other bookmaking paraphernalia. A stolen 9mm automatic pistol was also recovered at Green's
residence. Additionally, acting under authority of the warrant, agents intercepted and recorded
The fraudulent scheme involved misrepresentations guaranteeing investors high returns on 60- to
numerous telephone calls at each of the locations from bettors placing wagers on Sunday's
90-day commodity investment pools that Capital claimed to manage. Instead of returns to investors
professional football games.
McCluskey converted the investment funds to his own llse. '
During the course of the investigation, agents made wagers with Green totaling in excess of $5,000 on
In sentencing McCluskey to four years in state prison, the trial judge aptly described the fraudulent
college and professional footban games. This particular investigation followed two unsuccessful efforts
operation as "a diabolical scheme that took life savings from an awful lot of people."
to bring charges against Green in 1969 and again in 1977.

After being held to answer at a preliminary hearing, Green entered pleas of guilty to two COJ.mts of
bookmak;ng and one count of maintaining a place for recording wagers. He was placed on five-year
probation by the San Luis Obispo County Superior Court and fined $15,000.

4 5

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IV. Prosecutions Pending

Multimillion Dollar Advance-Fee Scheme
Two officers of People's Financial Corporation of Encino, a loan-packaging company, have been found Bonanno Brothers Prosecution
guilty by a Tulare County jury of felony fraud charges following a two-month trial in the Tulare
The two sons of reputed organized crime chieftain Joseph "Joe Bananas" Bonanno, Sr., are awaiting
County Superior Co urt. Joseph J. Lennon, former corporation president, and Peter C. Tripp, former
trial in the Alameda County Superior Court on charges of conspiracy to commit grand theft and grand
vice president, were convicted of conspiring to commit grand theft and nine grand theft counts in
theft in connection with an alleged fraudulent home improvement scheme. Salvatore Vincent "Bill"
connection with an advance-fee scheme described by prosecutors as one of the largest such frauds
Bonanno and Joseph Charles Bonanno, Jr., were indicted by an Alameda County Grand Jury based
perpetrated In the state.
upon information develoPed by the Attorney General's Special Prosecutions Unit. The Attorney
General convened the investigative grand jury to make formal inquiry into the activities of the
Evidence presented at the lengthy proceedings established that the corporation officials conspired to
Bonanno brothers and their involvement in several companies, including the Los Gatos Construction
obtain advance loan-packaging fees ranging from $1,500 to $5,000 per client by promising guarantees
Company, Los Gatos Construction and Development Company, Olympic Construction Company,
that Small Business Administration loans would be received by their clients. Loans were not received
Kachina Enterprises Incorporated, and Lavine and Company. The indictment alleges that the
and fees were not returned. The prosecution established that sales representatives of the corporation
fraudulent scheme generated approximately a quarter of a million dollars from home improvement
were specifically trained to imply to clients that the loans were guaranteed. even t!'Jugh the
contracts and loans, a major portion of which was funneled to the Bonannos. It is further alleged that
agreements signed by the victims disclaimed such a guarantee.
the monies were obtained from elderly victims through a pattern of fraudulent sales of contracts
involving bracing, plumbing, wiring and termite extermination.
The People's Financial Corporation was in operation throughout this state and nationally. It has been
estimated that the victimization within the state involved I ,474 persons who lost $2.8 millioll. In 29
Up(m return of the indictment, Salvatore "Bill" Bonanno left this country. A state arrest warrant and
other states, the estimated loss is $3.5 million involving 3,300 victims.
a federal unlawful flight to avoid prm1ecution warrant issued.
The investigation leading to the criminal charges was conducted by the Tulare County Sheriffs
While Bill Bonanno was at large, Joseph Bonanno, Jr., and Anthony Bressi of Glendora, New Jersey,
Office and agents of the Special Prosecutions Unit. Assisting in the im'estigation was the Fraud/
who was also indicted, demanded a postindictment preliminary hearing. That hearing has been held
Forgery Unit of the California Department of Justice. This case, which was featured 011 "60 Minutes,"
and each has been bound over for trial in the Alameda County Supe1'ior Court.
was jointly prosecuted by an attorney from the Special Prosecutions Unit and the Tulare County
District Attorney's Office. Tht: defendants are awaiting sentencing.
On November 23, 1981, Bill Bonanno was arrested in Mexico by the Baja California State Judicial
Police. He was deported, at that time, as an undesirable alien, and delivert.~d into the custody of the
Ii
Federal Bureau of Investigation on the federal unlawful flight warrant. FoHowing a hearing before a
'I
j
I! U.S. Magistrate in San Diego, agents from the Special Prosecutions Unit to~')k custody of the defendant
Ii and returned him to Alameda County for ~)rosecution by the Unit. At the time of his arrest, Bonanno
II was living in a cottage in Baja under the assumed name of Bill Dorn.
I)
~
I! The Special Prosecutions Unit was assisted in its investigation by the Department of Justice's Bureau
II of Organized Crime and Criminal Intelligence, the Federal Organized Crime Strike Force in San
,
'I
Francisco, the Federal Bureau of Investigation in San Francisco and San Diego, the District Attorney's
1\II
Office in Alameda, Santa Clara and Santa Cruz Counties, and the State Contractors Licensing Board.

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Organized Crime Associate Charged With Fraud
Richard Ashley Parker of Scottsdale, Arizona, has been charged with nine felony Cl')unts in Santa Clara
County involving grand theft and corporate securities violations in connection with the operation of
11
I, Spa and Country Club Management, Ltd., a Bahamian corporation, of which Parker is president.
<I
Parker is alleged to have solicited two California residents to purchase stock in Spa and Country Club
II
I
Management, Ltd., on fraudulent representations that the corporation planned to develop a health spa
at the South Ocean Beach Hotel and Country Club in the Bahamas and that investment funds were
I
needed to secure a lease of the hotel with an option to purchase. The proposal also involved a plan to
I manufacture "rejuvenation pills."

i According to the complaint, one victim paid $50,000 for stock in SPA and lost his entire investment.
Another victim and his wife paid $50,000 for stock in SPA, it is alleged, and received no stock and lost
their entire investment. In addition to the alleged thefts, the stock offering was not qualified for sale
in California.

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Statewide Hemin Ring
Parker received notoriety in 1975 when he attempted to acquire a controlling interest in United
Founders Life Insurance in Oklahoma City. At that time, he was publicly linked with several organized In November of 1981, 13 major heroin distributors were arrested following a three-month intensive
crime figures, including Samuel Ray Calabrese of Las Vegas and Edward Alfred Zuber, who has been statewide investigation by a joint law enforcement task force consisting of the Department's Bureau
convicted of investment fraud and sentenced to federal prison. of Narcotic Enforcement, the Monterey County Sheriffs and District Attorney's Offices, the Salinas
Police Department, the U.S. Drug Enforcement Administration, and the Special Prosecutions Unit.
Parker has been held to answer on all charges at a prelinlinary hearing, and trial is set for May in the The case was initiated in August based upon information developed by the task forct' showing a large-
Santa Clara County Superior Court. Following the filing of the state charges. Parker was indicted by a scale heroin smuggling and distribution network operating out of Monterey County with a monthly
federal grand jury in San Diego for securities fraud in connection with his operation of another business netting approximately $3.5 to $4 million. Over the three-month period, agents conducted 20
cl)rporation. "buys" of Mexican brown heroin from dealers for over $35,000. The estimat~d street value of the
"buys" is almost $.5 million.
Arson For Profit
As a result of this statewide investigation, charges have been filed against members of the organization
An investigation conducted by the Special Prosecutions Unit and the Long Beach Police Department, in Monterey County, Santa Clara County, Madera County, Fresno County, and Los Angeles County.
with assistance from the Uniterj States Attorney's Organized Crime StnKe Force in Los Angeles, has Attorneys from the Special Prosecutions Unit and the Monterey District Attorney's Off1ce are
resulted in the filing of charges against Donald B. Howard of San Dimas, chairman of the board and currently prosecuting these cases. Six defendants have been convicted to date. Thi') effort represents
chief executive offic.,er of Western Fanus Processed Foods, for arson, conspiracy to commit arson only the second time that a statewide task force was formed to target major narcotic organizations.
and insurance fraud in connection with a fire that destroyed the Western Fanus plant in Long Beach.
It is alleged that Howard hired one John Kozell to cOlTIlait the arson. Kozell died as a result of the fire. Northern California and Central Valley Bustout
The original charges against Howard were dismissed when the magistrate at the preliminary hearing An organization of individuals of Jordanian extraction have perpetrated a series of bust outs in the
refused to admit into evidence, as a dying declaration, a statement by Kozen implicating Howard in clothing goods industry in Northern California and tl'e Central Valley. The tenu "bustout" is
the arson. Additional evidence was gathered and a new complaint was filed. At the second preliminary commonly used to describe the systematic encumbering of assets of a business entity. which leaves
hearing, the magistrate admitted the dying declaration and held Howard to answer in the Los Angeles that company's creditors assuming whatever less the perpetrators have created, by liquidation of the
County Superior Court. company's merchandise at below wholesale cost.

On the day set for trial, Howard fled the jurisdiction and is presently being sought as a fugitive by An investigative task force of state and local agencies was formed, headed by the Department's Bureau
state and federal authorities. of Investiation. The investigation disclosed a systematie fraud in obtaining merchandise on credit from
various manufacturers, concealing that merchandise, and then abandoning the business without
Murder For Hire payment to the manufacturers.
An investigation by the Special Prosecutions Unit and the Pasadena Police Department, with assistance As a result of this investigation, members of this bustout organization have been charged in San
from the California Prison Gang Task Force, has resulted in the filing of a two~count complaint Joaquin, Santa Cruz, Monterey, and San Benito Counties. Upon the filing of felony charges, two
charging Donald Claude Bulpitt, M.D., 36, of San Gabriel, and Salvador Guitteriz Buenrostro, 35, of defendants, Faluuy Saleh Suboh and Saleh Al Jada, fled to the Virgin Islands. A federal unlawful flight
Pico Rivera, with murder in violation of section 187 of the Penal Code and conspiracy to commit warrant was secured and the two defendants, apprehended in the Virgin Islands, have been returned
murder in violation of Penal Code section 182. Tn addition, spec.ial circl~mstance~ relating to the for prosecution.
potential imposition of the death penalty are alleged as to the murder charge. These special
circumstances allegations recite that the murder was committed for financial gain within the meaning Statewide and Interstate Fraudulent Factoring Operation
of Penal Code section 190.2(a)( 1) and, further, that the killing was perpetrated While the defendant
Buenrostro was lying in wait within the meaning of Penal Code section 190.2(a)( 15). Two men are being sought in connection with the operation of an alleged fraudulent factoring
enterprise that has victimized small business persons in Northern and Southern California, Arizona
The felony charges relate to the murder of one Charles Snodgrass, who was killed on the evening of and New Jersey. Joseph Jay Levy and Robert Robbins, aka Hyman S. Rabinowitz, have been charged
September 11, 1979, approximately two blocks from the headquarters of the Pasadena Police by the Special Prosecutions Unit with conspiracy to commit grand theft and ten grand theft counts
Department. He was killed by a single gunshot wound to the head in what appeared to be a well- resulting from the operation of Pacific Acceptance Co. (PAC) in San Mateo County. Warrants of .lrrest
orchestrated "hit" type murder. It is alleged that the evidence will show the murder was a contract have issued for each subject, with bail set in the warrant at $300,000.
slaying perpetrated for financial reasons and related to narcotic trafficking.

Defendant Bulpitt, who is alleged to have been the employer, was arrested in a stolen vehicle in San
Gabriel by an agent of the Special Prosecutions Unit. Defendant Buenrostro, who is alleged to have
been the hired assassin, is a member of the EME, sometimes known as the Mexican Mafia. Both
defendants have been held to answer at a preliminary hearing and will b~ tried in the Los Angeles
County Superior Court.

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~________________________________~_ _ _ _MD_ _ _ _ _ _""""""""""""~""""""""""""""""". . . . . ..r.~........................................IIII..II..IIII..IIIIIIIIIIIIII....IIIIIIII..."i-~~-~"~--

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It is alleged that Burton and his associates, through the operation of Universal Financial and California
The felony complaint alleges that Levy and Robbins, from April through mid-July 1981, defrauded Equities, obtained more than $80 million dollars from approximately 6,000 investors during a seven-
local business persons by obtaining accounts receivable on the false representation that PAC would month period in 1980. The investors were led to believe that they would receive a high return on their
pay the business person 90 percent of the amount owed, whether the debt was collected by PAC or investment, an investment that was represented as well secured by deeds of trust on real estate. In
not. After obtaining the accounts on the basis of this representation, Levy and Robbins, using high- reality these real estate loan brokerage firms were merely companies by which Burton operated a
pre~sure tactics, collected approximately $100,000 in a three-month pe.dod. None of this money was
giant p'yramid scheme. In order to generate the amount l,f (.'11«;11 necessary to operate this pyramid
returned to the PAC customers, the business office was closed in mid-July and, it is alleged, Levy and scheme, Burton or one of his associates would locate a parcel of property to purchase, prepare an
Robbins absconded with the proceeds of this frau':ulent enterprise.
appraisal of as much as double the purchase price, create a trust deed in favor of investors in an
amount far in excess of the purchase price, usc the investors' money to purchase the property, and
In 1967, Levy was convicted in Santa Clara County for perpetrating a virtually identical scheme under
then take the excess funds for himself. An example of such a transaction charged in the complaint
the business name of United Acceptance Co. He was sentenced to state prison as a result of that
involved the opening of an escrow for the purchase of a building at a price of $3 million. Burton then
conviction. In early 1981, Levy was arrested in New Jersey in connection with a fraudulent accounts
used $3.5 million of investors' money to close the $3 million escrow and kept $500,000 for himself. A
receivable factoring scheme. Both Levy an.d Robbins are also being sooght by Orange County
trust deed was then issued to the investors based upon his appraisal of the building at $6 million.
authorities regardinJ, a fraudulent factoring scheme perpetrated in that jurisdiction. Additionally,
Another count charged in the complaint involved the use of $4.7 million of investors' money to
according to the Organized Crime Investigation Unit of the Phoenix Police Department, Levy has been
purchase property wherein $1.9 million went for the property amI miscell:meous costs and $2.8
identified as the perpetrator of an identica13cheme in Phoenix that occurred in late 1981 art into
January of 1982. million to Burton. It is estimated that investors lost in excess of $40 million as a result of the alleged
fraudulent operation.
Levy is an associate of Rocco Victor Passananate and Milton Zucker Mende, each of whom were The year-long 1I1vestigationleading to the charges was conducted by agents of the Special Prosecutions
identified in the Attorney General's Organized Crime Control Commission Report of May 1978. ,\

;1
<! Unit working in cooperation with the San Bernardino County District Attorney's Office. The
1\
<! investigation involved extensive investor interviews, the examination of over 150 bank accounts and
Fraud Ring Victimizes Student Loan Program ii
it the review and analyzation of voluminous documentary evidence.
i
By felony complaint filed in Los Angeles, five subjects have been charged with conspiracy to commit i;1l
grand theft in connection with a fraudulert scheme to obtain money through the submission of false The case is beingjointIy prosecuted by the Special Prosecutions Unit and the San Bernardino COlillty
applications for guaranteed student loans. Ii District Attorney's Office.
II
:1
The complaint alleges that this fraud ring submitted in excess of 100 Guaranteed Student Loan II
u V. l.egislation
applications seeking loans that averaged approximately $4,000 per application. The applicatic:.tls were It
false, it is alleged, in that none of the applicants were students, as claimed. The scheme included the !)
II The Attorney General has sponsored legislation that would greatly assist in the prosecution of
use of fictitious names, utilization of mail drops for receipt of the loan checks, and forgery of the state II
Ii
college endorsement on the checks when received. ~ organized criminal activity in this State and would provice a substantial deterrent to such activity.
I'II SB 247, entitled the "California Control of Profits of Criminal Enterprise Act," has been introduced
Ii
by Senator Ken Maddy and is designed to protect legitimate business from infiltration by organized
The group operated throughout the state in submitting loan applications to California state universities II
in Sacramento, San Francisco, Los Angeles, Long Beach and San Diego. Execution of search warrants crime. The bill seeks to control profits derived from continuing criminal activity by prohibiting the
ij investment or use of these illegally derived proceeds to acquire an interest in any enterprise. In
tl
at three locations in the San Fernando Valley uncovered fictitious identification documents, loan II"
application forms, notary public stamps and state university endorsement stamps. addition to prescribing punishment for such acUvity, the bill provides for court-ordered forfeiture,
upon conviction. of any interest that is illegally acquired. Finally, the bill provides for civil recovery of
II treble damages for any private citizen who is injured by the defined criminal activity.
The Special Prosecutions Unit was assisted in its investigation by the Secretary of State's Office, the
Postal Inspector's Office and the Los Angeles Police Department. Apprehension of the principals in 1\

~
this fraud organization prevented a major diversion of funds identified for assistance to legitimate By attacking the profits derived by organized crime, the legislation attacks the very purpose for its
college students. existence, and thereby provides a significant tool in combating the activities of organized crime and
presents a real and meaningful deterrent.
Statewide Mortgage Loan Fraud
II
Eight individuals have been charged in San Bernardino County in connection with a statewide 1\
VI. Conclusion
operation that has been described as the largest real estate loan brokerage fraud in the history of the 11
!I
state. The 182-count felony complaint alleges five separate conspiracies between the various
defendants, 94 grand thefts, 37 forgeries, 30 corporate securites violations, 2 thefts from insurance
!( This report, in discussing some of the cases handled by the Special Prosecutions Unit during 1981,
II' demonstrates that a concerted and cooperativ(:) effort by local, state and federal law enforcement
companies in furtherance of these conspiracies and 14 state income tax violations.
\
! ,
, \ agencies can have a real impact upon organized criminal activity in this state. Continued concentration
\ and coordination of efforts will ensure that an effective campaign against those engaged in organized
I, \ crime is waged.

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10
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11

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 -.-
ATTORNEY GENERAL'S SPECIAL PROSECUTIONS UNIT
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TIMOTHY A. REARDON HUGH W. ALLEN Ii ~~l
Senior Assistant Attorney General Supervising Special Agent ~f
6000 State Building 555 Capitol Mall, Suite 435 iI
San Francisco, CA 94102 Sacramento, CA 95814 \
;1
I
(415) 557-0201 (916) 323-3993 .\
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NORTHERN CALIFORNIA TEAMS

Sacramento San Francisco

c
JOHN A. GORDNIER (Team No.1) DERALD E. GRANBERG (Team No.2) jl
1\
Deputy Attorney General Deputy A.torney General
555 Capitol Mall, Suite 435 6000 State Building !l
Sacramento, CA 95814 350 McAllister Street II
(916) 323-3993 San Francisco, CA 94102
Special Agent Philip L. Morris (415) 557-1214 1\
Special Agent C. M. Bennett Special Agent Edward L. Montgomery :1
II
Special Agent Oscnr A. Breiling
\
MICHAEL D. WHELAN (,ream No.3) I
,!
Deputy Attorney General :1
6000 State Building
350 McAllister Street
II
'I
II
San Francisco, CA 94102 11

(415) 557-1243 II
Special Agent Vernon S. Piccinotti 11
Special Agent Earl W. Ansley II
II

SOUTHERN CALIFORNIA TEAMS

I
Los Angeles San Diego II
SANDY R. KRIEGLER (Team No.4) GARY W. SCHONS (Team No.5)
Deputy Attorney General Deputy Attorney General II
3580 Wilshire Boulevard, Room 800 110 West A Street, Suite 600
Los Angeles, CA 900 I a San Diego, CA 92101 II
(213) 736-2243 (714) 237-7499 I)
Special Agent Paul J. Tulleners Special Agent George R. Roberts It
Special Agent Eugene D. Dague Special Agent Howard W. Rhoads, Jr.
Special Agent Nicolas Castro f
I
MICHAEL E. LASATER (Team No.6)
ROGER W. BOREN Deputy Attorney General I
Deputy Attomey General 110 West A Street, Suite 600 ~
3580 Wilshire Boulevard, Room 800 San Diego, CA 92101 fl
Los Angeles, CA 900 1a (714) 237-7751 ~
(213) 736·2199 Special Agent Nelson W. Murray
1
(Temporarily reassiBned to Criminal Division) Special Agent Marcel G. Nadeau
1\
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