When you think of auto theft, you might think of vehicles being hot-wired and stolen off the street, brought into ‘chop shops’ and sold for parts. But beginning in December 2017, investigators with the San Diego Regional Auto Theft Task Force (RATT) began looking into a massive auto theft scheme of a different kind. The investigation revealed that the defendants fraudulently purchased vehicles, laundered money, set up fake companies and scammed banks to get away with millions of dollars, making it one of the biggest auto theft-related cases in recent memory in San Diego.

San Diego County District Attorney Summer Stephan today joined RATT Commander, California Highway Patrol Captain, James Portilla, to announce that 21 defendants have been charged as a result of ‘Operation Blindside,’ an investigation led by RATT and supported by its law enforcement partners. Investigators followed a trail of multiple financial schemes that ultimately led to the identification of over 100 vehicles obtained through fraudulent means.

[WATCH THE ANNOUNCEMENT LIVE STREAMED, HERE]

During the investigation several other methods of defrauding vehicle finance companies, financial institutions and payment processing companies were discovered.  Investigators learned that 21 defendants formed 54 shell companies and opened in excess of 45 bank accounts at various financial institutions to facilitate the fraudulent scheme and launder money. The total amount of fraud exceeds $5 million.

“This criminal enterprise involved a network of individuals and dozens of shell companies that allowed the ringleader to pull the strings and carry out this scam for over 3 years,” said District Attorney Stephan. “Banks, vehicle finance companies —and ultimately the consumer—are all victims of this aggressive organized criminal operation.”

The San Diego County District Attorney’s Office charged 21 defendants with more than 275 felony violations relating to their fraudulent conduct. Law enforcement made arrests and executed multiple search warrants across San Diego, Riverside and San Bernardino Counties last week. The defendants face various felony charges including money laundering, auto theft, grand theft and theft by false pretense. Thirteen of the suspects that have been arrested as part of Operation Blindside have been arraigned. One additional defendant is scheduled to be arraigned today at 1:30 p.m. in San Diego Superior Court and another defendant is in custody in Washington state. There are outstanding arrest warrants for the remaining six defendants.

During Operation Blindside, more than 100 vehicles were identified, of which 75 vehicles became the primary focus of the vehicle fraud investigation.  The estimated value of those vehicles is approximately $3.75 million dollars. The vehicles included high-end luxury vehicles, motorhomes, recreational vehicles and water crafts.

“As newer vehicles become equipped with effective anti-theft technologies, traditional methods of stealing vehicles are not as effective,” said RATT Commander James Portilla, “As a result, we have seen an increase in vehicle theft using a variety of fraud schemes.”

Defendant Bryan Orr, 34, was the ringleader of the elaborate scheme involving a network of co-conspirators.

In one scam, a straw buyer would purchase and finance a new vehicle. Thereafter, the auto loan would be paid in full by other co-conspirators.  Once the title to the vehicle was sent to the purchaser, the vehicle would be immediately re-sold. Once the sale proceeds were secured, the individuals who made the payments would falsely report the fraudulent use of their bank accounts, leading financial institutions to refund the payments that had been made on the vehicles. Immediately the funds were withdrawn and passed on to Orr. For their effort, the co-conspirators received a percentage.

The purchase of vehicles was not the only one fraudulent scheme used by Orr to steal from financial institutions. Vehicle loans, business lines of credit, and personal credit cards were issued to several of Orr’s accomplices so that he could further defraud the financial institutions.

Another fraudulent scheme involved the purchase or return of “merchandise” between the various shell companies. Once the seller withdrew the proceeds from the transaction, the buyer would dispute the purchase and receive a provisional credit from the bank. Similar to the vehicle purchase scheme, upon receipt of the refund, the funds would be withdrawn immediately or used to make fraudulent purchases with other “shell companies.” Orr used the shell companies to steal in excess of $2.5 million from banks during this time period.

One defendant created false financial documentation that enabled the purchase of vehicles by individuals with little to no income. Multiple Defendants were also involved in the sale and purchase “trade-lines.” The inflated credit rating creates a false sense of credit worthiness for lenders. Vehicle loans, credit cards and business lines of credit have been issued to several Defendants so that Orr could continue to defraud.

To create the appearance of legitimacy, fake websites were created for the various “shell companies.” The websites were researched by the financial institutions seeking to verify its customers’ employment or the existence of the business when reviewing request for refunds relating to disputed purchases.

If convicted, Bryan Orr faces over 100 years in prison.

Operation Blindside began with an investigation lead by the Regional Auto Theft Task Force (RATT). Ultimately, the investigation expanded to include investigators from the San Diego County District Attorney’s Office, National Insurance Crime Bureau, California Department of Motor Vehicles, and various other local, state and federal investigative units.

According to CHP statistics, last year 10,213 vehicles were stolen in San Diego County, a 2.8% reduction from the year before.  From January through May 2019, 4,083 vehicles were reported stolen.

[WATCH THE ANNOUNCEMENT LIVE STREAMED, HERE]

The mission of San Diego County’s Regional Auto Theft Task Force (RATT) is to collaborate effectively to reduce the incidence of vehicle and cargo theft and increase the arrests and prosecution of professional thieves using regional pro-active investigative methods and public education.  The task force is led by the California Highway Patrol and members include the San Diego Police Department, San Diego County District Attorney’s Office; San Diego County Sheriff’s Department; Chula Vista Police Department, La Mesa Police Department, National City Police Department California Department of Insurance; California Department of Motor Vehicles; National Insurance Crime Bureau (NICB); San Diego County Probation Department; United States Border Patrol; and United States Secret Service.

When Marlene Ruiz, a bank employee for over 30 years, noticed that her elderly and wheelchair-bound client was falling victim to an obvious scam, she intervened and was able to prevent the victim from having thousands of dollars stolen from his bank account. Marlene’s story is just one example of financial elder abuse and exploitation that bank employees sometimes witness and are required to report under California Mandated Reporter laws. Coinciding with Financial Elder Abuse Awareness Month, District Attorney Summer Stephan today announced an outreach campaign to increase awareness and remind financial institution employees about their legal duties as mandated reporters when they see suspected financial elder abuse. [TWEET THIS]

“Bank and credit union employees are some of our best eyes and ears for spotting and preventing the exploitation of older and dependent adults,” said District Attorney Summer Stephan. “Employees in financial institutions can make a real difference in the lives of some of the most vulnerable in our community to help protect them from losing their life savings.”

[WATCH News Conference, here]

Studies estimate that $36.5 billion is lost annually in the United States due to elder financial exploitation. In 2018, U.S. banks reported 24,454 suspected cases of elder financial abuse to the Treasury Department, more than double the amount five years earlier. The issue of financial elder abuse is likely to grow just as the elder population increases as well. According to the Pew Research Center, an average of 10,000 Americans are turning 65 years old every day, a pace expected to continue through the year 2030. In San Diego County, during Fiscal Year 2017-2018, Adult Protective Services received 4,563 referrals that involved financial abuse allegations, 14 percent of those came from financial institutions.

The goal of the DA’s new outreach campaign is to partner with San Diego Bank and Credit Union branches to prevent financial elder abuse by reinforcing training of bank employees to identify and to report any suspicious activity before it is too late.

The outreach includes a palm card, a brochure and a training video reminding bank employees about their mandated reporting duties under the law with examples of red flags and warning signs to watch out for, as well as details on how to report any suspected abuse. The video features industry representatives from the Credit Union League and Western Bankers Association, as well as Marlene Ruiz, a local bank employee who helped prevent a financial crime before it happened. Ruiz was honored by the District Attorney’s Office as a Citizen of Courage in 2018 for her actions. In the video, DA Summer Stephan and Sheriff Bill Gore explain the importance of reporting any suspected financial elder abuse.

“The San Diego County Sheriff’s Department takes all reports of financial elder abuse seriously,” said Sheriff Bill Gore.  “Our Financial Crimes and Elder Abuse Units work closely with the District Attorney’s Office to investigate and pursue those who take advantage of this vulnerable population.”

The DA’s Office will distribute these materials to all the banks and credit unions in San Diego County. The outreach also involves collaboration and participation from the two major sectors of financial institutions, the Credit Union League and Western Bankers Association.

“Our association was proud to work with the California Legislature to enact the Financial Elder Abuse Reporting Act in 2005, and proud to support the legislation making the act permanent in 2011,” said Steve Andrews, president and CEO of the Western Bankers Association. “Our member banks are committed to helping prevent financial abuse of the elderly, and have dedicated millions of dollars to train bank employees to recognize the warning signs of potential abuse of our seniors. We applaud District Attorney Stephan’s efforts to draw attention to this devastating crime, and we are so pleased to be a part of this important awareness campaign in San Diego County.”

“SDCCU is in full support of the District Attorney’s new outreach campaign to help stop elder financial abuse. We applaud their efforts and will do our due diligence to help stop this crime,” said Teresa Campbell, president and CEO at SDCCU, which is a member of the California Credit Union League. “At SDCCU, security of our members is of the utmost importance. As San Diego’s largest locally owned credit union and a member of the California Credit Union League, we encourage all credit unions in the County to use these materials to train front-line staff on identifying red flags and remind them that they are required to report suspected abuse.”

In California, the law defines employees of financial institutions, including all banks and credit unions, as legally required to report suspected elder and dependent adult financial abuse whether they have direct contact or handle a transaction with him/her, or even just observe an incident they suspect may be financial abuse. [TWEET THIS]

[WATCH News Conference, here]

A Mira Mesa dentist, April Rose Ambrosio, 58, fraudulently billed multiple insurance companies $592,550 claiming she performed 623 root canals on 75 patients. Ambrosio, who was arraigned in San Diego Superior Court today on 75 counts of insurance fraud, billed eight insurance companies for nearly $600,000 and ultimately received more than $200,000.

Ambrosio’s deception involved billing for more than 100 root canals over a three-month period for a family of four.

“This is a case of repeated and flagrant fraud by a medical professional,” District Attorney Summer Stephan said. “Unfortunately, when scam artists bill for dental services not rendered, they get rich at the expense of honest consumers who ultimately pay the price through higher premiums.”

The Department of Insurance spent two years investigating this case and worked closely with the District Attorney’s Insurance Fraud Division to bring Ambrosio to justice. Investigators say she was running the billing scam for three years.

“Medical providers are held to the highest standard and their patients trust them to be honest when it comes to their care,” said Insurance Commissioner Ricardo Lara. “Ambrosio violated that trust when she fraudulently billed for services she never performed.”

If convicted of all charges, Ambrosio faces up to 83 years in prison. She will next be in court on September 5.

Insurance fraud in the U.S. costs consumers about $80 to $90 billion per year. In California, it is a $15 billion-a-year problem. Insurance fraud is the second-largest economic crime in America, exceeded only by tax evasion. The District Attorney’s Insurance Fraud Division is dedicated to preventing all forms of insurance through outreach efforts, investigation and prosecution. This team handles workers’ compensation fraud, disability healthcare insurance fraud, auto insurance fraud and life insurance and annuity product financial abuse.

Individuals with mental health issues frequently come into contact with the criminal justice system and too often, the outcomes fall short of helping people who face those challenges. Today, San Diego County District Attorney Summer Stephan announced two initiatives designed to improve the way law enforcement interacts with people with mental health issues, including up to $1.5 million in funding for access to Crisis Intervention and De-escalation Training for police officers and a 911 Mental Health Checklist card. The announcement comes during Mental Health Awareness month in May. [TWEET THIS]

[WATCH THE NEWS CONFERENCE, HERE]

Last year, law enforcement across San Diego County responded to more than 53,000 calls for service that involved a mental health issue. A 25-year study of officer-involved shootings in San Diego County shows 79 percent of the incidents included people who had drug and/or mental health issues. And, according to the San Diego Sheriff’s Department, about 30 percent of inmates in San Diego’s jails receive medication for a mental health disorder.

Recognizing this significant nexus between mental health, substance abuse and criminal justice, the District Attorney’s Office brought more than 200 stakeholders and experts together over the past year to map the intersection of mental health, homelessness and criminal justice, to better-identify problems and recommend concrete solutions.

The District Attorney also publicly released its Blueprint for Mental Health Reform: A Strategic New Approach Addressing the Intersection of Mental Health, Homelessness and Criminal Justice in San Diego County which includes system reform recommendations to improve public safety outcomes. The 70-page document contains 30 specific recommendations for how law enforcement and the justice system can better respond to people facing mental health challenges. Crisis and De-escalation Training and development of the 911 Checklist Card are two of the recommendations included in the report.

“We have a crisis in our community that cannot be solved by public safety agencies alone,” District Attorney Summer Stephan said. “Nor can it be solved by public health agencies alone. There needs to be a sea change in the way we address the needs of people living with mental illness in our community who find themselves involved with the criminal justice system. These two initiatives represent a step toward a new approach in San Diego County to improve the way law enforcement approaches individuals in a mental health and substance abuse crisis, while still keeping our neighborhoods safe.” [TWEET THIS]

The DA-funded Crisis Intervention and De-escalation Training will consist of a newly-created curriculum that builds upon, and enhances the current training peace officers receive. The training will include classroom discussions led by PERT (Psychiatric Emergency Response Team) experts, role playing ‘real life’ situations, and use of a video simulator known as the MILO Range Theater. Officers will also be trained to recognize the signs of methamphetamine toxicity, a condition often encountered by police. Meth is the most common drug found in individuals following an officer-involved shooting incident.

The District Attorney’s Office is uniquely positioned to collaborate on the de-escalation training, since it works directly with all police agencies in the County and reviews officer-involved shooting incidents. The DA’s Office is committed to engaging in the development and implementation of effective, evidence-based crisis intervention and de-escalation programming by providing access to tools in support of law enforcement officers, dispatchers, first responders, and others who may come into contact with persons in crisis. The goal is a reduced need for the use of deadly force, improved officer safety, and reduced likelihood of injury to persons in crisis and/or the public. [TWEET THIS]

The MILO system is being purchased by the DA’s office using federal asset forfeiture funding. The interactive simulator improves on similar training systems currently available in San Diego County. The training is also portable, so it can travel countywide in order to promote maximum participation by law enforcement while allowing departments to perform their ongoing duties.

“Police agencies across San Diego County are grateful for access to this additional training on how peace officers and first responders address mental health-related calls in the field,” said Chief Craig Carter, President of the San Diego County Police Chiefs’ and Sheriff’s Association. “Offering de-escalation training and scenario-based hands-on training will give us even more tools to rely on as we strive to resolve these contacts with the least amount of force necessary. Every agency in the county appreciates the services of PERT and the leadership of the District Attorney’s office as we embrace mental health-related reforms and work collaboratively to address this ongoing public safety issue.”

PERT clinicians respond with law enforcement or EMS to assist persons in mental health crisis or proactively engage persons to direct them to supportive services. For many years, PERT also has been the major training provider to County law enforcement involving the identification of signs of mental illness and related intervention/de-escalation skills to facilitate compassionate, safe, and effective interactions with persons in mental health crisis.

“The growth and success of PERT is directly tied to a collaborative spirit with San Diego County Behavioral Health Services and other providers, public safety agencies, and consumers as well as their family members and other supports,” said PERT Director Dr. Mark Marvin. “Our partnership with the District Attorney’s Office will facilitate an expanded training menu to County first responders and PERT looks forward to expanding our collaboration with the District Attorney’s Office to ensure the utmost in care for all members of our community.”

Working with NAMI (National Alliance on Mental Illness) San Diego, the DA has also developed a “911 Mental Evaluation Checklist Card” that’s being distributed in English and Spanish to the public. The card contains a checklist of important information that callers should provide to dispatchers when a family member or loved one is in crisis and may be a danger to themselves or others. The goal is to provide responding officers with more information about the individual’s mental state and history before they arrive on scene.

“NAMI San Diego has been honored to participate in reform efforts by providing the perspectives of those living with mental health challenges as well as the expertise of professionals working in the mental health field,” said Cathryn Nacario, CEO of NAMI San Diego.

The District Attorney’s Office is working closely with San Diego County Behavioral Health Services on mental health initiatives to promote healthy, safe and thriving communities throughout the County.

“I want to thank District Attorney Stephan for her leadership of a crisis stabilization approach that can help support the community we serve,” said County Behavioral Health Services Director Luke Bergmann. “Ensuring our law enforcement officers are thoroughly trained to identify, deescalate and work with people experiencing a behavioral health crisis will lead to reduced trauma and better outcomes for San Diegans.” [TWEET THIS]

A Poway man who stole nearly $8 million dollars from dozens of victims over a five-year period in San Diego County, most of them senior citizens, has been charged by the District Attorney’s Office with more 80 felony counts. Christopher Dougherty, 46, has been charged with grand theft, fraud and financial elder abuse, and other charges reflecting crimes committed against at least 31 families. Dougherty, a former licensed insurance agent, solicited at least $7.75 million in investments as part of a large-scale Ponzi scheme that eventually collapsed and left victims with nothing. Twenty of the 31 victims were 65 or older at the time of their investments. [TWEET THIS]

“This was a classic Ponzi scheme where the defendant stole millions of dollars from trusting families and senior citizens. These aren’t rich investors, they’re people who worked hard and trusted their life savings with someone who preyed on their vulnerabilities,” said District Attorney Summer Stephan said. “I’m very proud of the investigative work done by the DA’s Insurance Fraud Unit and our law enforcement partners to bring justice to dozens of victims preyed upon by a heartless con man.”

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Dougherty was arrested at his home in Poway on April 25 and booked into jail. He was arraigned in Superior Court on April 26 and pleaded not guilty. The court set bail at $5 million. He faces up to 35 years in prison if convicted of the charges.

Currently, 31 households have been identified as having invested with Dougherty, but investigators are currently evaluating the information of approximately 26 additional victims, many of whom are expected to be added to the case in the future.

Many of the investors were identified when Dougherty filed bankruptcy in federal court in October of last year, but additional victims were identified when investigators began looking more closely at Dougherty’s financial records. Some of the victims met Dougherty when he was designated by various school districts (including Sweetwater Union High School District, Imperial Unified School District, and El Centro Elementary School District) as an investment advisor for employees. Other victims were introduced to Dougherty by his current clients. Dougherty leveraged a reservoir of trust he had developed with long-standing clients, convincing them to cash out of established, conventional investments and move their money to his private investments.

Dougherty offered private investments in various companies he owned. One of the investment opportunities Dougherty pitched investors was a 100-acre “organic” cattle ranch in Alpine. While the farm was real, it didn’t actually generate any profits for investors. Dougherty also promoted a marijuana growing project on that Alpine property.

Dougherty shuffled money around in classic Ponzi fashion, paying “profits” to complaining investors with funds invested by more recent investors.  In addition, Dougherty used investor funds for personal expenses, including home remodel, travel, college tuition, and large cash withdrawals. Once investors began to demand their money and Dougherty couldn’t pay it back, the Ponzi scheme collapsed.

“Unfortunately, financial scams have become an all too common reality. As your Sheriff, I want you to know that people who masquerade as financial experts only to steal your life savings will be held accountable,” said San Diego County Sheriff William Gore. “I applaud the collaborative action in exposing Dougherty’s scheme before he had a chance to manipulate additional victims out of their hard-earned retirement.”

“Dougherty’s criminal enterprise is callous and indefensible,” said Insurance Commissioner Ricardo Lara. “Crimes against the elderly are especially reprehensible. Increasingly we are uncovering complex financial scams that target seniors, and other vulnerable California communities and consumers. We will continue to work with our district attorney partners to aggressively investigate and prosecute anyone who targets seniors.”

The case was investigated by a task force comprised of members from the San Diego Sheriff’s Department, California Department of Insurance, California Department of Business Oversight, and the San Diego Police Department.  The case is being handled by Deputy District Attorney Michael Zachry from the San Diego District Attorney’s Office’s Insurance Fraud Division.

“The SEC alleges that Dougherty took advantage of his clients’ trust by using their retirement savings to run a Ponzi scheme,” said Michele Wein Layne, Director of the Los Angeles Regional Office.  “The SEC is committed to protecting clients by holding accountable any investment advisers who so grossly abuse the duties they owe to their clients.”

Anyone who believes they are a victim of Christopher Dougherty, and have not already been in communication with law enforcement, may contact the California Department of Insurance at (858) 693-7100.

Many Ponzi schemes share common characteristics. The DA’s Office urged investors to look for these warning signs: [TWEET THIS]

• High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any “guaranteed” investment opportunity.
• Overly consistent returns. Investment values tend to go up and down over time, especially those offering potentially high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions.
• Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company’s management, products, services, and finances.
• Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
• Secretive and/or complex strategies. Avoiding investments you do not understand, or for which you cannot get complete information, is a good rule of thumb.
• Issues with paperwork. Do not accept excuses regarding why you cannot review information about an investment in writing. Also, account statement errors and inconsistencies may be signs that funds are not being invested as promised.
• Difficulty receiving payments. Be suspicious if you do not receive a payment or have difficulty cashing out your investment. Keep in mind that Ponzi scheme promoters routinely encourage participants to “roll over” investments and sometimes promise returns offering even higher returns on the amount rolled over. [TWEET THIS]

In keeping senior citizens safe, the key to prevention is knowledge and awareness. In addition to the Insurance Fraud Division, which is handling this case, the District Attorney’s Office has an Elder Abuse Prosecution Unit. The specialized unit handles about 200 felony cases per year with a lead prosecutor, two victim advocates and a full-time investigator.

Information on how protect yourself and your loved ones from becoming victims of elder abuse can be found on the District Attorney’s public website at www.SafeSeniorsSanDiego.com.

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