Consumer Fraud Trial Cut Short : Leasing Firm Operator Pleads Guilty to Tax Evasion

A man who ran an Anaheim firm that subleased automobiles--allegedly without the consent of owners--pleaded guilty Wednesday in mid-trial to a misdemeanor charge of tax evasion and did not contest 16 other charges stemming from a similar scheme he had operated in Los Angeles.

Eustace T. Strickland, 53, will face up to a year in jail at his Los Angeles Municipal Court sentencing, scheduled for Sept. 9. No contest pleas are treated as guilty pleas for purposes of sentencing.

Judge Ernest L. Aubry ordered Strickland, meantime, to pay $25,416 in back income taxes to the state Franchise Tax Board.

Strickland’s plea cut short a trial that started April 21 and was expected to last six months.

Wanted Out of Leases

Los Angeles City Atty. James K. Hahn said the consumer fraud involved a scheme by which Strickland took in leased cars and sublet them to others without the permission of owners.

Strickland’s cars were provided by people who wanted to get out of leases without returning the vehicles to the owners and paying hefty penalties. Strickland then sublet the cars to people who generally were unable to finance a purchase because of bad credit.

Strickland collected fees of $2,000 to $7,000, plus monthly payments, for arranging subleases, Hahn said.

Strickland’s Orange County firm, National Security Financial Services, collected an estimated $400,000 in nonrefundable service fees for arranging subleases for about 400 customers before it folded in April, 1985, according to a civil lawsuit filed by the Legal Aid Society of Orange County. National Security was in business only six months.

Strickland’s Century Management firm in Los Angeles was a successor to the Anaheim firm he ran briefly.

The practices of National Security led to a civil court injunction against Strickland and others from operating such a business. It also led to investigations statewide and a new state law that bans subleasing of automobiles without consent of the owners, usually bank leasing firms.