A Businessman Long Wanted by the Law

Operating its real estate business out of a fried-chicken stand in Compton, no-frills Wolf River Holding Corp. has aroused more than a few suspicions.

Last year, a team of local and federal agents raided the chicken stand as part of a long-running investigation into an alleged arson-for-profit ring involving fugitive businessman Kevin S. Merritt, who investigators say controls Wolf River.

But after hauling away a cache of records, authorities are still weighing the next step in their seemingly endless pursuit of Merritt, whose case reflects the difficulty of prosecuting white-collar crime in Southern California, the nation’s leading hotbed of fraud.

Officials say the inquiry by the Los Angeles Arson Task Force, made up of local and federal investigators, is in its final stages and will probably be completed by the end of the year. Los Angeles Deputy District Atty. Michael Cabral, who is in charge of the case, would not predict the outcome.

If Merritt is charged, there will still be the problem of getting him to trial, as he is already a fugitive in another case. Indeed, the brainy, street-smart Merritt, who is thought to be in South America, for years has kept one step ahead of the law, including once when an ex-girlfriend engineered a sexual encounter that compromised a criminal investigator.

Merritt, 38, who grew up in La Canada Flintridge and launched his career as a real estate investor while still in his teens, has cut a wide swath through many of the Southland’s minority and low-income neighborhoods, leaving frustrated prosecutors, legal aid lawyers and scores of alleged victims in his wake.

Over the years, he has been sued more than 200 times, although few of his adversaries managed to collect damages. And in a long-running game of cat-and-mouse with the district attorney’s office, he has more than held his own. Felony charges of defrauding clients, most of them poor and unsophisticated homeowners, have been pending against Merritt since 1991, and although he pleaded not guilty he fled the country in 1996 shortly before his scheduled trial.

Even since going into hiding, Merritt has continued running his real estate business--buying, renting and selling commercial and residential property--as authorities discovered in the chicken stand raid.

The raid at the Louisiana Fried Chicken stand on West Alondra Boulevard occurred in July, 1997, but remained secret until recently disclosed in court documents. Investigators from the federal Bureau of Alcohol, Tobacco and Firearms and local agencies carted away more than 50 boxes of evidence, including a computer and 1,200 files relating to Wolf River and an affiliate company incorporated in the Turks & Caicos Islands.

From e-mail and other information seized in the raid, authorities said, they learned that Merritt was in hiding in the Pacific port of Guayaquil, Ecuador’s largest city, along with former Wolf River President Milton Roca, who is also a suspect in the arson investigation. But they said they found clear indications that Merritt was still firmly in charge--via fax, cellular phone and computer--of Wolf River, which in recent years has bought and sold a large portfolio of properties in Southern California and in Florida, Texas, New York, New Jersey and other states.

Merritt’s minions would sign on to the office computer and Merritt, from Ecuador, “would e-mail them and give them their morning instructions,” said James Thornton, an arson investigator with the Los Angeles Fire Department who took part in the raid.

“He would tell them what documents to file, where to file them, who to put on the documents,” Thornton said. “He was a very hands-on micro-manager, even down to when people could take off to go fix their automobiles and . . . who was to collect what rents from who.”

Investigators also seized records in Palmdale, Palm Desert and West Los Angeles from offices of an insurance agency that sold coverage to Wolf River and from insurance adjusters who examined the firm’s claims.

In a recently released affidavit requesting the search warrant, Thornton said investigators had cause to believe that Merritt, Roca and others had committed arson, insurance fraud and grand theft “in an arson-for-profit scheme at various locations within and outside of the city of Los Angeles.”

Investigators say at least nine Wolf River buildings in Los Angeles and Orange counties were hit by arson fires, mostly in 1994 and ’95. One of the structures--a 28-unit apartment building in the 400 block of South Burlington Avenue in Los Angeles--was set afire four times in the space of several weeks before a six-figure insurance settlement was paid, they say.

However, Wolf River attorney Vicki M. Roberts denied the existence of any arson-for-profit scheme, and noted that one of the buildings was not even insured.

In one of the strange twists that seem to characterize the Merritt case, Roberts herself has been named as a suspect. She has responded by suing the city and county of Los Angeles, claiming defamation and civil rights violations.

According to Roberts, the “suspect” label stems from investigators’ mistakenly believing that she helped to buy a Torrance hotel building where a fire took place. By refusing to correct their error, Roberts told The Times, they have “destroyed my life on a daily basis.”

In her recent suit, which has yet to be served, Roberts said she had been effective in representing Wolf River and was therefore being targeted so prosecutors could bump her from the defense team. Cabral declined to comment.

The precocious Merritt was just 31 when he was charged in 1991 with 32 felonies. At the time, the Los Angeles district attorney’s office portrayed him as the most notorious of a clever breed of loan brokers and investors who preyed on desperate homeowners, many of them seeking a way to save their property from foreclosure.

The case exploded in scandal the next year when a former girlfriend of Merritt who had agreed to turn state’s evidence lured an investigator from the DA’s office to her home and secretly taped him making sexual advances and coaching her on how to incriminate Merritt.

Merritt’s attorneys played the tape for a judge, charging prosecutorial misconduct and moving for dismissal of all charges. Instead, the judge disqualified the DA’s office and ordered the case turned over to the state attorney general. An appeals court later reinstated the DA, but only after a long delay.

In 1994, an indictment superseding the 1991 charges was filed accusing Merritt of 18 counts of forgery and grand theft in transactions with a dozen victims. As in the original indictment, Merritt pleaded not guilty.

Typical are counts involving Merritt’s dealings with Edermiro and Eddia Torres, who bought a home from Merritt in Carson--or thought they did.

According to the indictment, Edermiro Torres gave Merritt a $10,000 down payment, spent $30,000 to remodel the house, and made payments to Merritt of $970 per month.

But a year and a half later, when Torres tried to sell the house, he found that title to the property was in another person’s name. According to the indictment, Merritt told Torres there was no way to get his money back.

The case remains in limbo, since Merritt left the country.

By the fall of 1996, when Merritt fled, the separate arson inquiry was underway, and investigators seeking information about Wolf River found the firm operating in a large, otherwise vacant manufacturing complex, according to the Thornton affidavit.

On a return visit by investigators a short time later, Wolf River was gone and “the complex was completely occupied with other businesses,” the affidavit said.

But rather than seeking more upscale digs, Wolf River had set up shop in the chicken stand.

“That is not the normal way that a legitimate business conducts itself,” Thornton said. “It’s very clear that they don’t want anybody to know where they’re at.”

On a recent visit by a reporter to the stand, a counter worker said the operator, Hi Don Yang, was away in South Korea. But peering from behind a sign saying “Keys cut here” was Roberto Ricafort, identified in corporate records as Wolf River’s secretary and treasurer. Ricafort declined to be interviewed, however, and referred questions to Roberts.