CALIFORNIA : Bail Cut Denied in Loan Fraud Case : Courts: Alleged ‘queenpin’ remains behind bars as search continues for a second suspect.

The alleged “queenpin” of a fraudulent Southern California home-loan business was denied a reduction in her $5-million bail Wednesday. She remained jailed in San Jose while criminal authorities continue searching for the fugitive head of the firm.

Saying that she is a flight risk and noting that she is charged with preying on the elderly, a Santa Clara County judge denied the request of Sharon Palmer-Ross, 39, former vice president of Tri-Star Mortgage Co., of Woodland Hills. Palmer-Ross was arrested last month at the border near San Diego while allegedly transporting illegal immigrants in the trunk of her car.

Santa Clara County prosecutors, who have charged five people with grand theft, conspiracy and elder abuse in the Tri-Star case, said Wednesday they are continuing to pursue leads on the whereabouts of Edward Rostami, 37. He is the former president of Tri-Star and two affiliated firms that state regulators and private attorneys say bilked dozens of people and businesses out of millions of dollars.

Officials said they are uncertain if Rostami, who faces at least $12.5 million in civil judgments, is in Mexico or the United States.

Palmer-Ross gave a Rosarito address when she was arrested Aug. 11 at the San Ysidro border crossing, while purportedly trying to enter the U.S. with three Mexican nationals hiding in her car trunk.

A records check by Border Patrol agents turned up the Santa Clara County warrant, and Palmer-Ross was transferred to the Santa Clara County jail. Her lawyer, Craig Kennedy, who Wednesday asked Superior Court Judge Nazario A. Gonzalez to lower the bail, said Palmer-Ross plans to plead not guilty.

Rostami and Palmer-Ross were “quite clearly the kingpin and queenpin” of the home-loan scam, said Santa Clara Deputy Dist. Atty. Paul Colin.

State regulators and lawyers for former Tri-Star clients say the firm over several years swindled borrowers and lenders alike through bait-and-switch tactics and outright forgery and theft. One loan firm, the Money Store, which sued Tri-Star for skimming the proceeds of loans intended mainly for elderly and low-income borrowers, secured an $8.4-million civil judgment but was unable to collect.

But the Santa Clara case, narrowly focused on Tri-Star’s dealings with a single elderly woman in that county, represents the only criminal prosecution to date. And that has triggered fresh complaints of inaction on the part of federal authorities in Los Angeles, who launched an investigation well over two years ago and knew as early as May 1997 that Rostami might be a flight risk, documents show.

The federal probe “is ongoing and we expect it to be concluded in the not-too-distant future,” said a representative of the U.S. attorney’s office in Los Angeles, who declined comment on the criticism and asked not to be identified.

Representatives of the FBI, the IRS and postal inspectors joined state and local officials at a May 20, 1997, strategy meeting, where officials stated that Rostami was continuing to bilk victims and might be a flight risk, according to an internal memo from the state Department of Real Estate, which sent representatives to the meeting.

Citing the advanced age of many alleged victims, Murray Bankhead, a San Diego lawyer, said he was “bewildered” as to why federal authorities “couldn’t put their case together faster.”