Woman Receives 21-Month Sentence for Fraud

An Anaheim Hills woman, already imprisoned for selling adulterated gasoline and violating California pollution and tax laws, has been sentenced to 21 months in prison on a separate federal conviction for bankruptcy fraud.

Divine Grace Lazar had pleaded guilty last December to two counts of fraud for hiding $6.6 million worth of assets during her and her former husband’s personal and corporate bankruptcy cases in 1991.

She also was sentenced Monday by a federal judge in Los Angeles to three years of supervised release after her prison term is completed.

Her former husband, Gary Lazar, 49, who also pleaded guilty last year to bankruptcy fraud, was sentenced in September to 51 months in prison. He also has been in prison on state court convictions, including selling adulterated gasoline.

The Lazars ran a string of 200 Southern California service stations that doctored gasoline, faked tests on leaky underground fuel tanks and failed to pay nearly $25 million in state sales, gas and cigarette taxes. The Lazars mixed gasoline with alcohol and “transmix”--a brew of kerosene, diesel and gas--apparently damaging thousands of cars that used the fuel.

The Lazars were sentenced in February 1995 to 8 1/2 years in state prison, Assistant U.S. Atty. Brent A. Whittlesey said.

In a separate federal operation aimed at bankruptcy fraud, the Lazars were among 110 people nationwide who were indicted in February 1996.

Whittlesey said the couple transferred 29 service stations from their company through a series of European companies to a trust they allegedly controlled.

In addition, they were accused of transferring cash and other property to other names to hide their ownership.

Their federal prison terms run concurrently with their state terms. As a result, Grace Lazar, who was transferred to federal custody from the state prison system in March 1996, has nearly completed her federal term. Whittlesey said she soon will be transferred back to the state system to complete her term for the earlier convictions.