U.S. Seizes Property of Suspended Deputies : Allegations Claim Vacation Houses, Boats Were Bought With Stolen Drug-Raid Money

Federal agents have seized $300,000 worth of vacation homes, power boats and furniture from two Los Angeles County Sheriff’s deputies and have provided the first detailed description of how an elite narcotics squad allegedly stole hundreds of thousands of dollars of dollars during drug raids.

The disclosures are contained in court documents filed here in support of the seizure of property from Deputies Eufrasio G. Cortez and Ronald E. Daub, both members of a nine-person Sheriff’s Department drug team that was suspended Sept. 1. No charges have been filed.

“When the majors unit to which (Cortez and Daub were) assigned made a contact with targeted individuals who had little or no narcotics but large amounts of currency,” said the documents, “the majors unit would obtain the disclaimer of each (suspect) releasing any claim to the money.”

Then, federal agents alleged, “each member of the majors team involved would have an opportunity to remove as much cash as he needed prior to the official count of the funds.”

From January, 1988, through May, 1989, the suspended nine-person “majors” squad reported seizing more than $4 million, said the forfeiture complaints filed in federal court in Phoenix on Sept. 14.

Since January, 1988, Cortez and Daub have made purchases totaling $261,000, federal agents alleged. Daub, sometimes carrying money in a briefcase, made cash purchases of $153,000, while Cortez paid out $38,000 in cash, agents said.

“Seizure of large sums of cash . . . correspond directly to large cash outlays” by Daub and Cortez for what the complaints said are two vacation houses in Bullhead City, Ariz., recreational vehicles and expensive home furnishings, the complaints said.

Motorcycle Seized

Daub also recently arranged to buy a $350,000 home in Placentia and paid $20,000 cash as a down payment for a Peterbilt tractor, the documents said. Agents seized a late-model motorcycle from Daub and confiscated a 1988 Oldsmobile purchased by his mother for cash, according to Daub’s lawyer, Jay Lichtman.

Cortez and Daub have declined comment, but both maintain their innocence, said Lichtman and Gregory Petersen, who represents Cortez.

Petersen characterized the federal investigation as “overzealous,” insisting that some assertions in the forfeiture documents are false. “At the appropriate time and in the appropriate court we will prove (it),” the lawyer said. He maintained that Cortez has been suspended without sufficient legal cause and said he has demanded his client’s immediate reinstatement.

“He earned that money (as a deputy),” Petersen said, “and, as far as we are concerned, working for a living is not a crime.”

Cortez has in his possession documents that show most of his purchases--including payments for construction of his new 2,300-square-foot vacation home--have come from income, savings, family gifts and loans, Petersen said.

By filing the forfeiture complaints, federal agents began a process by which the government hopes to gain ownership of the vacation homes near the Colorado River in Bullhead City and the other possessions. Internal Revenue Service agents maintain that the property was purchased with money stolen during drug raids, which makes it subject to forfeiture.

Daub, Cortez and seven other officers who made up one of four elite Sheriff’s Department drug squads were suspended more than three weeks ago on suspicion of stealing seized drug money. Sources have said that a videotape of a federal sting operation last month shows at least two deputies taking cash from a money bag and putting it into a separate pouch.

The other suspended officers are deputies Terrell H. Amers, James R. Bauder, Nancy A. Brown, John C. Dickenson, Daniel M. Garner and Michael J. Kaliterna and Sgt. Robert R. Sobel.

The investigation is being conducted in Los Angeles by the FBI, the IRS and the Sheriff’s Department. Reid C. Pixler, an assistant U.S. attorney in Phoenix, said the seizures from Cortez and Daub are the only ones in his state against the nine officers. “This protects the government’s interest until the case is resolved or litigated,” he said.

It is not known how much property has been seized from the other suspended officers because the forfeiture complaints filed in California, unlike those in Arizona, were sealed and remain confidential. They will not be opened until prosecutors decide whether to file charges, authorities said.

Federal agents did seize Sobel’s 31-foot sailboat late last week, but no action has been taken against his cars or his home, said his attorney Mark Beck.

The Times has reported that Sobel bought his 1984 Huntermar sailboat for $31,500 in cash and cashiers’ checks over a two-week period in June. All the payments were for less than $10,000--the level at which federal law requires a bank to report transactions to regulators. In 1988, Daub purchased a new ski boat for $17,668, making three payments over one week in amounts of $6,000 or less, The Times found.

Like Pattern Alleged

Likewise, the IRS’ forfeiture complaint alleges that agents found the same pattern in some of Daub’s $153,000 in cash purchases.

“The purchases include expensive vehicles which were purchased from a briefcase of cash or structured cash equivalent transactions involving cashier’s checks of less than $10,000 from numerous financial institutions within a short period of time,” the complaint said.

Agents seized from Daub, his wife, mother and brother a double-wide mobile home and residential lot they bought for $70,000 a year ago, the complaint said. “This purchase was made through the use of cashier’s checks ranging from $3,000 to $10,000 from several different financial institutions and a wire transfer,” the complaint said.

Agents also seized a $20,000 ski boat and $15,000 in home furnishings and entertainment equipment from Daub, it said.

The documents said that Daub and his wife reported “adjusted gross incomes” totaling $174,727 for the past three years--including $69,000 in 1988.

Cortez’s $160,000 Arizona home, a $20,000 recreational boat and $15,000 for furnishings and entertainment equipment were seized because they were purchased with money that came largely “from individuals involved in the trafficking of illegal controlled substances,” documents said. Cortez made “substantial cash payments” toward purchase of the home, the documents noted.

Cortez and his wife reported adjusted gross incomes over the last three years of $196,301, with earnings of $69,000 in 1988, federal agents said in the document.

According to warrants, federal agents also searched Cortez’s former office desk in Whittier, his Sheriff’s Department car and his homes, looking for cash and records. There has been no indication that cash was found in those searches.