Fugitive in Fraud Case Arrested in London

A former Van Nuys man who fled the country to escape indictment on charges of masterminding a $1-million fraud scheme has been arrested and jailed in London on suspicion of running a call-girl ring in a fashionable section of that city, authorities said.

Deputy U. S. Atty. David Katz said federal prosecutors have begun extradition proceedings against Thomas Leonard Balla, who was arrested in England with James Foster, a former Calabasas resident, on Sept. 28.

Katz said Balla and Foster were charged with living off “immoral earnings” gained through what British authorities said was a call-girl ring involving more than 200 prostitutes in London’s Mayfair district. Balla, 25, and Foster, 41, were also charged with traveling under false passports and were being held without bail.

Balla traveled under the alias Tom McFadden and Foster under the alias Frank Shero, Katz said.

Bail Request Withdrawn

Defense attorneys representing the men in England had asked a court to set bail in the case but withdrew the request Thursday after prosecutors presented information, supplied by U. S. authorities, concerning Balla’s indictment and Foster’s criminal record, Katz said.

Foster is not involved in the U. S. fraud case involving Balla. However, he was convicted of receiving stolen property and of grand theft in California in the late 1970s, Katz said.

Balla is accused of bilking more than 300 U.S. companies of $1 million while operating a Long Beach vacuum-cleaning company from October, 1984, until August, 1985, Katz said.

A 20-count indictment, unsealed after Balla’s arrest, said he purchased Knolls Vacuum & Sewing Center, a legitimate company, and used its favorable credit rating to order more than $1 million in electronic goods, food, clothing, toiletries and fitness equipment.

Merchandise Resold

Balla set up a phony retail outlet in Oxnard to receive the merchandise, then trucked goods to two Canoga Park warehouses where they were sold to other people, the indictment said.

“With the exception of a few token payments, the victim companies were never paid for the merchandise sold on credit to Knolls,” the indictment continued.

Oxnard police, operating on a tip, arrested Balla in Van Nuys on Aug. 16, 1985, and confiscated about $300,000 in merchandise at the warehouses, Katz said. Balla was released on $100,000 bail about a week later, Katz said.

The Ventura County district attorney then dropped the charges and canceled his bail requirement to let federal prosecutors take up the case. But it was not until nine months after his arrest that a federal grand jury returned an indictment on June 4, 1986. By then, Balla had left the country, Katz said.

Continuing Investigation

Katz noted that Balla was 22 when he operated Knolls. “It’s very unusual for somebody at that age to mastermind a scheme this complex, which is one reason we’re investigating whether he was the front man for other people,” he said.

No one else has been indicted in the case, he said.

If convicted of the U.S. charges, Balla would face a maximum sentence of five years in prison, a $250,000 fine for each count and would be forced to pay restitution to the companies, Katz said. He did not know what penalties Balla and Foster would face if convicted in England. He said Balla would have to complete any sentence there before extradition.

“The charges against him are very serious,” Katz said, adding that Scotland Yard detectives had the call-girl ring under surveillance for several months. “It was a very important prostitution ring in their judgment.”