A federal grand jury on Thursday indicted 10 Los Angeles County Sheriff's Department narcotics officers--including all nine members of an elite team--on charges of stealing more than $1.4 million in seized drug cash and using much of that money to buy homes, luxury cars, jewelry and stocks.
The 10 veteran officers were also accused of conspiring to take money from suspected drug dealers during narcotics raids over the last two years. Two deputies were charged with extortion, and eight face various money-laundering and tax-evasion charges in the 27-count indictment.
The grand jury also accused one officer's wife of helping hide stolen funds from the Internal Revenue Service and other federal agencies.
The indictment climaxed a 16-month investigation into what has become the worst scandal to shake the nation's largest sheriff's department in decades.
After federal prosecutors announced the indictment at the Federal Courthouse in Los Angeles, Sheriff Sherman Block told reporters that he felt "a great, great sadness."
"In 34 years (in the department), this has been the saddest day outside of a loss of life," Block said. "This kind of thing comes very close to that."
Assistant U.S. Atty. Thomas A. Hagemann added: 'No one in law enforcement likes, or would wish to investigate one's own but . . . the FBI, IRS and the Sheriff's Department have worked side by side in difficult times to ensure that this case was properly handled."
Indicted deputies and their attorneys contacted by The Times said that the officers were innocent of all charges.
Harlan Braun, attorney for Deputy Daniel M. Garner, said: "He's going to prove that he's innocent. He's been a good officer, and the judicial system will vindicate him."
All nine members of a narcotics team known as "Major Violators Crew Two" had used their law enforcement positions to steal cash from drug dealers and money launderers, the grand jury alleged.
After arresting or detaining a suspect and confiscating large amounts of cash, the narcotics officers often would obtain statements from the alleged traffickers disowning the money, the indictment said.
"Before turning in the seized currency to the (Sheriff's Department), defendants would steal a substantial portion of the currency for later distribution among themselves," the indictment said, adding that the officers would then file false police reports and understate the amount of money taken during the raid.
Named in the indictment were Sgt. Robert R. Sobel, a 19-year veteran who headed the narcotics team, and Deputies Terrell H. Amers, James R. Bauder, Nancy A. Brown, Eufrasio G. Cortez, Ronald E. Daub, John C. Dickenson, Michael J. Kaliterna and Garner.
The 10th indicted officer, Deputy Macario M. Duran, was a member of another major narcotics crew. He and his wife, Maria, were accused in the indictment of using a financial scheme to hide $88,500 in money allegedly stolen during drug raids and of using more than $11,000 as payment toward a Mercedes-Benz automobile.
Eight other deputies who were suspended in the money-skimming case were not named in the indictment. However, the sheriff and federal prosecutors made it clear Thursday that the investigation is continuing, and a Sheriff's Department source said there may be a second round of indictments.
The officers worked out of the narcotics bureau headquarters in Whittier and handled investigations throughout the county and region. Often working undercover, the officers made some of the county's largest cocaine and money seizures in recent years.
According to the indictment, one of the deputies told a colleague in late 1987 that he could "make him rich," and the following year crew members stole nearly $1.2 million in drug raids. They allegedly took another $200,000 last year before being suspended, the indictment said.
Among the specific theft allegations:
- In January, 1988, Cortez and Amers took $527,000 during a Woodland Hills raid. A month later, Garner used $20,000 of the money to help buy a condominium. Cortez spent $21,000 to pay for a swimming pool and $14,500 in cash for a 1928 Ford.
- In June, 1988, Cortez stole $30,000 from a LaPuente man and gave Duran a share of the stolen cash.
- That same month, Daub and Kaliterna stole about $350,000 in a Los Angeles raid. Daub reportedly gave Sobel some of the stolen money and told a fellow crew member that "I took so much it scared me."
- In July, 1988, Cortez stole $70,000 in a Diamond Bar raid. In two other raids later that year, Cortez took $135,000 and gave packages containing $10,000 to three fellow officers in December, telling them: "Here is your Christmas bonus."
- In September, 1988, Bauder stole about $40,000 in a Los Angeles raid--and barely a week later paid $3,000 cash for helicopter lessons.
The officers paid hundreds of thousands of dollars in cash for vacation homes in Arizona, vehicles, home landscaping, stock market accounts, satellite dishes and a "horsing syndicate," the indictment said.
"Our investigation has shown that . . . over $500,000 in stolen funds were used by the defendants to buy cars, boats, homes and other valuable assets," said Michael J. Quinn, IRS district director, whose agents participated in the Sheriff's Department investigation.
The amount allegedly spent by the deputies ranged from $8,600 for Bauder to $208,595 by Cortez.
During an 18-month period, Cortez purchased three cars costing $44,500; a $21,000 swimming pool; a $4,500 television, and $27,000 in stocks, the indictment said. He also spent $101,500 on a Colorado River vacation home in Arizona.
Some of the deputies also face tax evasion and money-laundering charges. And Cortez and Amers are accused of extorting $65,000 from an alleged drug dealer during a narcotics arrest in Pomona.
Assistant U.S. Atty. William F. Fahey, chief of the public corruption and government fraud unit, said the indicted officers are expected to surrender later today when arraignments will begin.
Prosecutors have requested $100,000 bail for each of the officers, attorneys for the officers said.
If convicted of the theft charges, the officers could face penalties ranging from a maximum of 128 years and a $3.6-million fine for Cortez to 13 years and a $600,000 fine for Duran. Maria Duran faces a possible 10-year sentence and $500,000 fine.
"I haven't done anything wrong," said Bauder, a nine-year Sheriff's Department veteran. "I realize that by the nature of the investigation there's an aura of wrongdoing around me, but I'm convinced that ultimately I will be exonerated, because I didn't do anything wrong."
Kaliterna said: "I didn't steal anything. I haven't done anything wrong."
Sobel has emerged as the central figure in the case. Once regarded as a chief suspect, Sobel is expected to be the prosecution's principal witness against his fellow officers, according to sources close to the investigation.
Sobel, 44, began cooperating with the U.S. attorney's office shortly after his crew was suspended last September, the sources said. By early October, the sergeant moved his family to Northern California, and he was placed in a federal witness-protection program, the sources said.
They would not say what kind of deal, if any, Sobel has negotiated with prosecutors in exchange for his testimony.
Sobel's attorney, Mark Beck, declined to comment.
When asked if any of the defendants are cooperating with prosecutors, federal prosecutor Hagemann declined to comment.
Gregory Petersen, attorney for Cortez, challenged the truthfulness of Sobel as a witness.
"I've always been skeptical of police officers who attempt to extricate themselves from criminal liability by pointing their fingers at other police officers," he said.
Block, who dismantled his department's four major narcotics teams in the wake of the money-skimming scandal, said that employees in his 7,000-officer department feel betrayed. The scandal, he said, "compromises the integrity of the department (and) adversely impacts the trust relationship that must exist between us and the community."
Block had suspended Sobel and his eight deputies last Sept. 1, two days after federal agents had conducted a videotaped sting that allegedly caught several of the narcotics officers stealing $48,000.
When suspended, seven of the officers had a total of $66,000 in cash in their possession, prosecutors allege.
A month later, Block took nine other officers off the job as the investigation widened.
Block said Thursday the investigation began in October, 1988, when an internal audit showed what appeared to be a misappropriation of funds handled by a narcotics unit. The FBI was brought in on the case last May, and the Internal Revenue Service joined in July.
Vacation homes, boats and cars belonging to the officers were seized, and business ledgers, appointment books and other property were confiscated by investigators.
According to sources close to the investigation, the grand jury heard testimony from wives, parents and other relatives of indicted officers, as well as business partners who were subpoenaed to appear.
The indictments come as law enforcement officials continue to grapple with the fallout from the months-long investigation.
After the scandal broke last September, members of the major narcotics teams were sent to local stations, and the amount of cocaine seized by the department has dropped sharply.
In 1988, the Sheriff's Department had seized $33.9 million in drug money and 6,068 pounds of cocaine. Last year through the month of November, the department reported seizing 3,093 pounds of cocaine--down 49% from the year before--and it confiscated $33 million in drug cash during the same period.
Block blamed some of that drop-off in cocaine seizures to the loss of his major narcotics teams. "That's partially the result, although last year there were some unusually large seizures, single seizures," he said. "We're pretty much on track."
The scandal has also affected a number of cocaine-trafficking cases handled by state and local prosecutors, including one case that involved the seizure of as much as 1,700 pounds of cocaine and another where $3 million of alleged drug money was seized by narcotics officers.
At least eight cases have been dismissed by judges or withdrawn by prosecutors because the Sheriff's Department has refused to provide investigative records about suspended deputies or the deputies themselves would not testify.
Assistant Dist. Atty. Curt Hazell, who oversees the district attorney's major narcotics and forfeiture division, said four other pending cases involve deputies who have been implicated in the scandal. But the indictments could help prosecutors decide which cases to pursue and which cases to drop, he said.
"If the result of indictment is that a lot of the information asked for will be provided to the defense, we will be in a better posture to decide whether to proceed with the case," he said.
Times staff writers Ron Soble and Paul Lieberman contributed to this story.
RELATED STORIES: A26
Ten Los Angeles County sheriff's officers were indicted Thursday in connection with the following alleged thefts of drug money during the past two years. The indictment said deputies divided the money--totaling $1,420,000--among themselves after the alleged thefts. JAN. 26, 1988--Deputies Terrell Amers and Eufrasio Cortez allegedly steal $527,000 in connection with a Woodland Hills search. JUNE 2, 1988--Cortez allegedly steals $30,000 in connection with an arrest and currency seizure in or near La Puente. JUNE 6, 1988--Deputies Ronald Daub and Michael Kaliterna allegedly steal $350,000 during a currency seizure in Los Angeles. JULY 8, 1988--Cortez allegedly steals $70,000 in a Diamond Bar seizure. AUG. 18, 1988--Deputy Daniel Garner allegedly steals $40,000 in connection with an arrest and narcotics and currency seizure in Sylmar. SEPT. 1, 1988--Deputy James Bauder allegedly steals $40,000 in a currency seizure in Los Angeles. NOV. 2, 1988--Amers and Cortez allegedly steal $65,000 in connection with arrests and narcotics and currency seizures in or near Pomona. DEC. 6, 1988--Cortez allegedly steals $70,000 during a currency seizure in Wilmington. FEB. 15,1989--Deputies Bauder and Garner and Sgt. Robert Sobel allegedly steal $30,000 in connection with arrests and a currency seizure in Paramount. MAY 11, 1989--Cortez allegedly steals $50,000 during a currency seizure in Placentia. MAY 22, 1989--Bauder allegedly steals $100,000 in connection with a currency seizure in Northridge. AUG. 30, 1989--Bauder and Garner allegedly steal $30,000 during a currency seizure in Sherman Oaks. Subsequently, Deputy Nancy Brown and Sobel allegedly steal an additional $18,000. Complied by Times researcher Cecilia Rasmussen
THE MONEY-SKIMMING SCANDAL
Following are key events and disclosures in the continuing investigation into alleged money skimming by some Los Angeles County Sheriff's Department narcotics officers: OCTOBER, 1988--The Sheriff's Department begins an inquiry into a tip that narcotics officers are stealing confiscated drug money. MAY, 1989--The Federal Bureau of Investigation is brought into the case. JULY, 1989--The Internal Revenue Service joins the investigation. AUG. 30, 1989--Federal investigators videotape a 12-hour sting operation directed against nine Sheriff's Department narcotics officers suspected of skimming drug money. SEPT. 1, 1989--Nine veteran members of the Sheriff's Department's Narcotics Bureau are suspended pending completion of federal and county investigations. SEPT. 7, 1989--Investigation expands after drug dealers in separate drug cases allege that money seized from them is missing. SEPT. 14, 1989--Federal agents seize $300,000 worth of personal property owned by two officers. SEPT. 20, 1989--Sheriff's Department disbands its four elite narcotics squads, transferring at least 30 officers from the Narcotics Bureau headquarters in Whittier to stations throughout the county. OCT. 3, 1989--Nine more narcotics officers are suspended, bringing the total to 18, and their homes and businesses in California and Arizona are searched by federal agents. Federal agents also seize records from a Norwalk businessman's vehicle repair shop because they suspected him of laundering money for several suspended deputies. The home of a Los Angeles Police Department narcotics investigator is searched as part of the investigation. OCT. 23, 1989--Eufrasio G. Cortez, one of the 18 suspended narcotics officers, files suit claiming that he was unlawfully relieved of duty and placed under "house arrest" with no formal charges made against him. NOV. 15, 1989--The investigation focuses primarily on Sgt. Robert R. Sobel and 14 deputies who have worked for him on three different drug squads since 1985. DEC. 10, 1989--The Norwalk businessman suspected of laundering stolen money for the Sheriff's Department narcotics officers is ambushed by a gunman as he returns home. The businessman is not wounded. FEB. 22, 1990--A federal grand jury indicts 10 sheriff's officers, accusing them of conspiring to steal $1.4 million in drug money. Compiled by Times researcher Cecilia Rasmussen