O.C. Couple Arrested in Hazardous Material Case : Pollution: The gas-station owners and two others face charges of contaminating soil and ground water with gasoline from leaky storage tanks.

From Times Staff and Wire Reports

An Anaheim Hills couple, owners of 150 Southern California gas stations, were jailed with two associates Thursday on charges of contaminating soil and ground water with gasoline from leaky storage tanks.

The district attorney’s office said the grand jury indictment unsealed at a hearing represents the first felony case in the United States involving illegal underground storage of hazardous material.

The indictment alleged that for six years, Gary and Divine Grace Lazar falsified underground storage tank tests required by regulatory agencies. Under the law, gasoline station owners are required to annually test tanks to ensure they are not leaking.


Also named in the indictment was James Lemley, who worked for a testing company and allegedly provided false reports, and George Gallo, a former manager of the Lazar companies, accused of conspiring in the fraud.

After prosecutors argued that the defendants have sufficient wealth and overseas connections to flee the country, Gary Lazar’s bail was set at $1 million, while his wife’s was set at $500,000. Gallo and Lemley were held in lieu of $50,000 apiece.

Deputy Dist. Atty. Anthony G. Patchett said the Lazars own gas stations in Los Angeles, Orange and San Bernardino counties.

He said the investigation began more than two years ago after authorities learned that all of the yearly tank tests on Lazar-owned gas stations indicated no leaks in any underground storage tanks.

Normally, he said, such underground tests show that 20% or more of the tanks have leaks and need to be replaced.

In an affidavit submitted with a request for high bail, investigating officer Pete Martinez said Divine Lazar was pocketing more than $250,000 a month by not paying excise taxes, and a search warrant turned up her bank checkbook containing $3 million. The affidavit also said she was moving money out of the country through a San Francisco bank.


During a search of Lemley’s home, located on a lake with a private dock, Martinez said an underground safe was found containing about $30,000.

“Lemley said he could not recall how he received all that cash,” the affidavit said.

The indictment concerns six specific gas stations in Azusa, Alhambra, Cudahy, Montebello and Santa Fe Springs. But Patchett said authorities believe many other stations of Lazar’s are leaking hazardous material into ground water.

Also named in the indictment are the Lazars’ companies, California Target Enterprises Inc., Alameda Management Co. Inc. (which does business as Buy Rite Service Stations), Pronto Marketing Co. and P&M; Service Stations Inc.

The Lazars were arrested in Anaheim Hills, Lemley in Victorville and Gallo in San Luis Obispo.

Target Enterprises, which is not affiliated with the Target chain of discount stores, has a history of health and consumer-product violations. In 1985, it paid $550,000 to settle a lawsuit in which it was accused of defrauding motorists.