Orange County Effort : Business Booming for D.A.’s Fraud Probers
Somewhere out there, Wendy G. Brough figures, Arthur M. Shubin may be going door to door trying to clean someone’s carpet, supposedly for $6.50 a room. If he is--and she finds him--she’s going to go after his assets.
Brough is one of three Orange County deputy district attorneys assigned to prosecute people who they believe use fraudulent business tactics to separate consumers from their money. Shubin, whose Sante Fe Springs operation was put out of business by Brough three years ago, is just one target.
There are dozens of others, and no shortage of victims.
“We have so many cases, our problem is deciding which ones deserve the most attention,” Brough said.
250 Calls a Day
The small consumer fraud unit, located on the ground floor of a red brick building across Civic Center Drive from the county courthouse in Santa Ana, fields 250 telephone calls a day, Monday through Friday. Most are from consumers who either want to inquire about a business before they buy, or complain about one that already has defrauded them.
Court figures show that the consumer fraud unit last year turned over more than $950,000 to the county’s general fund from penalties paid by companies.
The companies under investigation come in a variety of sizes, pitching products or services from dream vacations to bargain health spa memberships to low-cost home security systems.
Prosecutors also go after charity scams, or even respectable companies that occasionally stray across the line of fairness.
Deputy Dist. Atty. Diane S. Kadletz, a fraud prosecutor for eight years, has almost seen it all.
“A lot of people get excited when they see something that’s just too good to be true,” she said.
Those people include homeowners who called Arthur M. Shubin’s Carpet & Upholstery Steam Cleaning, which ran ads in Penny Savers in Orange, Los Angeles and Riverside counties in the early 1980s.
For $6.50 a room, his ads read, he could steam-clean carpeting or do five rooms for $31.95. The ad was thick with appealing offers: “No hidden charges” and “Free spot removing and pre-manual scrubbing.”
But Robert Imboden of El Toro was typical of nearly 100 consumers who complained about Shubin’s.
Two Shubin employees named Pat and Jose visited the Imbodens’ home to clean the carpet, Imboden said in a court declaration. But the man named Pat told Imboden and his wife that the carpet was much too dirty to be cleaned for the advertised price. It must be preconditioned, they said, for $99.50.
All of the other complainants said they were told their carpets were too dirty for the $6.50-a-room job.
But Imboden said he would stick with the $6.50 service. OK, Pat told him, but the entire job would be done in five to 10 minutes.
“It did not seem possible that they could spot-clean, manually pre-scrub and steam-clean 900 square feet of carpet in that time,” Imboden said.
He ordered them to leave. When they insisted on a $10 service fee, he called the police.
One woman told the court that after the $6.50 quickie, she complained to Shubin’s about the poor quality of the work. “You get what you pay for, lady,” she was told.
In June, 1985, Brough took Shubin to court.
Called a Classic
“Shubin’s was a classic bait and switch,” Brough said. “You advertise one price, then use high-pressure tactics to try to force the consumer into something more expensive.”
But she did not try to have Shubin thrown in jail.
With only a few exceptions, consumer fraud in Orange County is a civil issue, not criminal. Brough said prosecutors can act more quickly to solve problems for the consumer if they are not forced into long criminal proceedings in which they must prove intent to defraud.
Shubin--faced with the volume of evidence from so many upset customers--agreed to pay $185,000 in total penalties for actions by two carpet businesses he either owned or partly owned.
He immediately filed for federal bankruptcy. So far, according to court records, he has paid only $25,000 of what he owes. That’s why Brough is interested in knowing what he’s doing these days. It wouldn’t matter what kind of business venture Shubin was engaged in. Despite bankruptcy, future assets can be attached if the debtor still owes a public entity.
Attempts to reach Shubin at his two known addresses were unsuccessful.
Another consumer complaint brought Deputy Dist. Atty. John L. Flynn III one of his most interesting fraud cases last year.
“One fellow thought he wasn’t getting enough pina colada’s from his mix,” Flynn said.
Short-Weight Problem
The result was a referral to prosecutors from the state’s Food and Agriculture Department about the Puerto Rico-based Coco Lopez Co. The company was a few sips shy of the 13 ounces the label promised on its bottles of cream of coconut syrup, used to make pina coladas.
The company agreed to install a quality assurance program and paid a small fine. The company has refused to comment on the issue.
The result of that case is typical of the county’s consumer cases. “We’re not here to try to put most of these people out of business,” Brough said. “We just want to protect the consumer. We also want to give some protection to competitors who are out there playing by the rules.”
The Coco Lopez case is typical for another reason. Often, prosecutors don’t take action unless the targeted company already has ignored suggestions from other agencies that they stop their unfair practices.
But sometimes, even the teeth of civil prosecution are not enough.
Deputy Dist. Atty. Gay Geiser-Sandoval of the consumer fraud unit decided that J&H; Productions had pushed its luck too far.
John C. Feldman and Hoa Thi Adams, owners of J&H;, are on trial right now in Central Municipal Court facing 76 misdemeanor criminal counts of charities fraud. Prosecutors say it is the first such case to reach a criminal trial in Orange County under the state’s Charitable Solicitations Act.
Boiler Room Charge
Prosecutors allege that J&H; Productions operated a telephone boiler room, soliciting donations for two wheelchair basketball programs and one for underprivileged children. Typical donations ranged from $50 to $100, and the biggest was $650, Geiser-Sandoval said.
Those organizations exist, prosecutors say. But J&H; failed to tell contributors that only 10 cents of every dollar actually went to charity, prosecutors say. The rest went to J&H; productions.
Ordinarily, this still would have been treated as a civil case. But when the owners allegedly ignored two previous court orders to stop, the were charged with contempt of court.
“They’ve had two chances; this time, I think they should go to jail,” Geiser-Sandoval said.
Sometimes the complaint is not about what a company states in its ad, but what it implies.
A case still is pending against Great Earth International of Orange County, a health food company based in Los Angeles. Brough claims that Great Earth International advertises a cure for AIDS, for which there is no known cure.
The company’s ads say nothing about acquired immune deficiency syndrome. But the ads are placed in gay magazines and promote a drug that the ads claim will bolster the immune system from communicable diseases. The drug, Nutrimmune, has been falsely rumored as an AIDS remedy, Brough said.
“Some people believe anything they read,” Brough said. “But it’s not just people who are naive. It’s hard to keep your guard up all the time.”
Unfulfilled Promise
In some of the team’s successes, a Quaker granola bar box was pulled from the shelf on the basis of an implication that the box contained more of the product than it did. And Jet Setters International was put out of business after selling memberships to a club that it admitted would probably never exist.
Brough, Geiser-Sandoval and Flynn handle most of the consumer fraud prosecutions. They are helped by a team of investigators and by volunteer college students who pore over newspaper and magazine ads, looking for trouble spots, such as businesses that continue one-time-only sales for three months.
Kadletz helps out by screening every complaint made to the office. She answers every complaint in writing.
“Sometimes we just can’t be of help, or sometimes we have to refer people to another agency. But it’s important for us to know what these businesses are doing,” she said.
