FBI Arrests 3 in Alleged Scheme to Sell Phony Bonds

Two officials of a Canoga Park company have been arrested by FBI agents investigating an alleged scheme to sell more than $3 billion in phony Japanese government bonds, federal prosecutors said.

The two men and an associate were arrested Friday in Las Vegas after selling one of the bonds to an undercover FBI agent, said James W. Erbeck, an assistant U. S. attorney in Las Vegas.

Arrested were Michael Dow, 33, of Canoga Park; C. K. Lee, 43, of Glendale and Jessie Levine, 46, of Philadelphia. Dow and Lee are officers of Sutter Financial Corp., which is headquartered at Dow’s Canoga Park home, the prosecutor said Wednesday.

The three men were released by a federal magistrate Monday after each pledged $50,000 in assets as security.

Erbeck called the operation a “very sophisticated scam. These men were able to show ownership interest passed down to them with numerous documents, all fraudulent.”

The prosecutor said each of the men was arrested on one count of conspiracy to defraud, which carries a maximum penalty of five years, and one count of passing a forged document, for which the maximum term is three years.

“Substantially more counts” of the same charges could be added when the case goes to a federal grand jury in Las Vegas today, Erbeck said. The trio also could be accused of several counts of wire fraud because a telephone had been used in peddling the counterfeit bonds, he said.

Neither Dow nor his attorney, Richard Hernandez of Canoga Park, returned a reporter’s telephone calls.

Authorities Received Tip

Erbeck said authorities were tipped off after Levine sought to sell a 50-billion yen bond, the equivalent of $247 million, to a Las Vegas art dealer.

The dealer became suspicious because Levine offered to sell the bond for $14 million, the prosecutor said.

An FBI agent posing as a casino developer then approached Levine seeking to buy some of the bonds, authorities said.

Dow and Lee accompanied Levine to the meeting with the FBI agent, Erbeck said. The three had a number of phony Japanese bonds in their possession, totaling more than $3 billion in face value, he said.