A former Orange County man who operated a car-leasing company in Anaheim was arrested Thursday in Los Angeles on suspicion of evading state income tax by city authorities who seized $26,000 in cash, three handguns and records of his operations.
Los Angeles authorities raided four locations, including the Los Angeles home of the suspect, E.T. Strickland, in a search for evidence of illegal activity, according to an affidavit in support of the search warrant.
In a separate action Thursday, Orange County Superior Court Commissioner Ronald L. Bauer appointed a receiver for Strickland, who operated the now-defunct National Security Financial Services Inc. in Anaheim. Authorities said he was operating a similar car-leasing company called Century Management out of his home.
The actions against Strickland arose out of efforts by the Legal Aid Society of Orange County, the state Department of Consumer Affairs and the City of Los Angeles to shut down subleasing businesses. Such firms assume car and insurance payments for people who no longer can afford them and then sublease the cars, usually to customers who have trouble qualifying for leases or car loans.
But bankers and leasing companies have said the subleasing arrangements are occurring without their knowledge, and that standard lease and purchase contracts forbid such subleasing.
In an Orange County lawsuit filed by Legal Aid, a judge has issued a preliminary injunction forbidding Strickland and others associated with National Security from operating automobile subleasing businesses, at least in the county, unless they get approval from the bankers and original leasing companies.
The receivership is aimed, among other things, at freezing up to $90,000 Strickland may have in a West Los Angeles bank, protecting some 55 luxury automobiles he was handling and unwinding his subleasing transactions, said Robert J. Cohen, director of the Legal Aid Society of Orange County.
National Security collected an estimated $400,000 in non-refundable service fees for arranging subleases for some 400 customers in its six-month existence, which ended about March, 1985, he said. The company was started by James Trawick II, who was named in the Legal Aid suit, Cohen said.
Two Dozen Imitators
The company spawned at least two dozen imitators throughout the state, according to Cohen, prosecutors in Southland counties and the Department of Motor Vehicles.
Legal Aid and the state Department of Consumer Affairs, which recently joined the lawsuit, hope to get a final court ruling that will declare automobile subleasing illegal.
Strickland remained in the Los Angeles County Jail late Thursday on suspicion of failing to file a 1985 state income tax return with intent to evade payment, a misdemeanor. Bail was set at $25,000, and arraignment tentatively was scheduled for today in Los Angeles Municipal Court.