3 Held for Alleged Fraud, Counterfeiting After Police, Secret Service Surveillance : Crime: Anaheim fraud ring established false credit histories to bilk banks of millions of dollars, authorities say. Bogus currency is also seized.

A fraud ring that allegedly bilked banks of millions of dollars by selling false credit histories was smashed with the arrest of three men, Anaheim police and U.S. Secret Service agents announced Thursday.

Police said the operators of Crossroads Leasing on West Katella Avenue, which for five years was a front for the ring, would establish false credit histories for their customers for as little as $500 and provide them with dummy addresses, birth certificates, driver’s licenses and Social Security cards.

The customers would then use the phony histories and documents to apply for credit cards and credit lines and use those to run up thousands of dollars in charges and cash advances that they never repaid, police said.

Investigators, who set up a phony consulting firm across the hall from Crossroads during a nine-month surveillance of its operations, said it is impossible to determine how much the ring’s customers stole over the years but estimate it to be in the tens of millions of dollars.

Officials also said the ring recently acquired $3 million in counterfeit $20 bills, which it wanted to sell at 15% to 20% of face value to anyone willing to pass them.

“This was a very complex operation and our investigation could continue on for months and months,” said Anaheim Police Chief Joseph T. Molloy. “When we first began our investigation in January we thought we had a minor credit fraud operation that maybe also handled a little gambling. But it didn’t take us long before we realized we had something major.”

Arrested were Lee Lowery, 67, of Anaheim; Caleb Ong Chua, 39, of Walnut, and Manuel Lawrence Souza, 70, of Artesia. Police said none of the three has a known arrest record, although police believe Lowery used his cut to finance an out-of-control gambling habit.

The men were arrested during a raid Saturday of Crossroads’ offices and Chua’s home that netted the phony $20 bills, fraudulent credit cards, documents and five 9-millimeter handguns.

They each pleaded not guilty Wednesday in U.S. District Court in Los Angeles to federal counterfeiting charges.

Anaheim police said that within the next few days the three will likely be charged with fraud and that arrests of lesser figures in the case, including some of the ring’s customers, are expected within weeks.

Souza was released Wednesday night from federal jail in Los Angeles after posting $10,000 bail. Chua and Lowery remain jailed Thursday in lieu of of $150,000 and $25,000 bail respectively.

Anaheim Detective Werner R. Raes, who led the investigation, said his department asked that Chua and Lowery receive bails of $1 million each and that Souza’s bail be set at $500,000, but a federal magistrate reduced those figures.

“It worries me that these guys will be able to make bail,” Raes said.

Raes said he and other officers began to examine Crossroads after an investigator for First Chicago National Bank informed them that an Anaheim address was being used to fraudulently apply for a number of credit cards.

First Chicago officials declined comment Thursday.

Raes said an investigation of that undisclosed Anaheim address, which he refused to reveal, led detectives to Crossroads, a firm Lowery operated in two suites of an office complex at 1811 W. Katella Ave. The two-story complex houses about a dozen small businesses, including a travel agency, an export company and an advertising firm.

Crossroads’ offices have been vacated, and the firm did not have phone book listings.

Molloy said that undercover officers working out of the surveillance suite befriended Lowery, who began to reveal the group’s operation.

“Lowery was a criminal who facilitates other criminals and does not necessarily commit the big crime himself,” Molloy said.

Lee K. Wagoner, the agent in charge of the Secret Service’s Orange County office, said his agency recently joined the investigation after Anaheim police informed him the group was branching into counterfeiting.

He said the agency has been unable to locate either the ring’s printing press or plates, which he believes the suspects or accomplices destroyed, but he said he does not think it circulated many bills. The quality of the bills was mediocre, he said.

Employees at other businesses in the complex with Crossroads said Lowery was a friendly man, but that Chua and Souza were rarely, if ever, seen.

Lyle Higger, an officer of Marathon Financial, a small mortgage firm that moved next door to Crossroads’ main office last month, said he once met Lowery.

“They had a lot of people come and go over there,” Higger said. “They closed up about two weeks ago and since then I have had a lot of people stop in asking what happened to them.”