4 Accused in High-Tech Gas Pump Scam

The Los Angeles County district attorney’s office has filed criminal charges against four men, including a Fountain Valley resident, who allegedly masterminded a high-tech scam that cheated Southern California customers out of at least $1 million by giving them less gasoline than they paid for.

Three were arraigned Thursday in Los Angeles Municipal Court and pleaded not guilty to criminal charges. The fourth suspect was not yet in custody.

Two managers of Mepco Oil, based in Santa Fe Springs, and two others are suspected of replacing the computer chip that regulates the quantity of gas delivered at the pump with an altered chip.

Investigators found 140 altered chips in 12 stations throughout Los Angeles, Orange, San Bernardino and Kern counties.

Dist. Atty. Gil Garcetti referred to the alleged scheme as a “high-tech innovation used to steal money from consumers who don’t know they’re victimized.”

The altered chip would cause the pump to speed up its reading, giving the customer 7% to 25% less gasoline than indicated, officials said.

In 1995, complaints from consumers began trickling in. Some reported that they had paid for more gallons of gas than their vehicle’s fuel tanks held, said Cato Fiksdal, a county weights and measures official.

“Since we believe the average consumer was charged about a dollar more for gasoline than what ended up in his tank, you can see the extent of this case,” Garcetti said.

But “it was virtually unprovable until you took apart the gas pump,” Garcetti said.

Pinpointing the problem was even more difficult because the chips were programmed to give correct amounts of gasoline at five and 10 gallons--the amount used by inspectors to test accuracy. After continued complaints, chips from the pumps in question were sent to their manufacturers, who said they were not the original chips.

Mepco owns 27 gas stations in Southern California. Authorities served search warrants at those stations in October 1997 and removed the circuit boards from the gas pumps. With the help of the pumps’ manufacturers, they discovered that pumps at 12 of the stations in Los Angeles and Orange counties had been altered. They include Arco, Shell, 5-Star, Beacon and Mepco-brand stations.

Criminal charges of conspiracy, grand theft and other crimes have been filed against Mepco general manager Mohamed Mourad, 42, of Fountain Valley; his brother Bragin Mourad, 31, of Bell; Humberto Flores of Norwalk, who is also a Mepco manager, and Ernesto Escobedo of the city of Industry.

Mohamed Mourad was being held in lieu of $100,000 bail, Bragin Mourad in lieu of $150,000 and Escobedo in lieu of $5,000. All pleaded not guilty Thursday and are due back in court Nov. 23 for preliminary hearings. If convicted, they could face up to six years in prison, Garcetti said.

An attorney for Mohamed Mourad denied that his client had any knowledge of the tampering. “When he saw people pumping nine gallons, he thought they were getting nine gallons,” Harland Braun said.

A civil lawsuit against Mepco Oil Inc. and its president, Peter Tejera, was settled earlier this week. An agreement of $640,000 and a permanent injunction against using the fraudulent technology was reached, Garcetti said. Some of those funds will be used for training and investigation of gasoline short-measure cases, he said.

Tejera, who will not have criminal charges filed against him, said he has been cooperating with the district attorney’s office.

Garcetti heralded the lawsuit as the first of its kind and said it could have national implications.

“I would be amazed if it’s not happening in other jurisdictions throughout the country,” he said.

Similar problems have been reported in other states, Fiksdal said, but no links to computer chip fraud have been established.

Investigators urge consumers to watch the pump gauges carefully and to keep track of their mileage.