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4 Indicted in Alleged Fake-Church Scam in O.C.

The men are accused of bilking $11 million from people seeking to give to charities.

October 25, 2002|H.G. Reza | Times Staff Writer

A federal grand jury on Thursday indicted four men for allegedly bilking $11 million from contributors by setting up several phony churches in Orange County whose sole purpose was to solicit funds.

The men are accused of pocketing the contributions from hundreds of donors who thought they were giving to charitable causes such as AIDS research and programs for families of police officers killed in the line of duty.

The indictment was unsealed in U.S. District Court in Los Angeles and charged the defendants with 48 counts of mail fraud, money laundering and other federal violations.

Named in the indictment were Timothy James Lyons, Gabriel Bernardo Sanchez, Roger Nolan Lane and Steven Lawrence de la Torre.

Assistant U.S. Atty. Ellyn Lindsay said Thursday that Lane and De la Torre were in custody. She said Sanchez is expected to surrender to FBI agents today, but Lyons was still being sought.

Lindsay said the four concocted a scheme in which Sanchez and De la Torre established phony charities that were then used by Lyons and Lane to raise money that was distributed among the four men.

She said the alleged scam began in 1993, when Sanchez established the First Church of Life in Costa Mesa with no members or sanctuary. According to the indictment, he began using the "church" in 1994 to register numerous phony charities that did not have tax-exempt status.

Sanchez and De la Torre allegedly established three other churches, all of which were labeled "sham churches" by prosecutors, to establish at least 12 organizations that prosecutors labeled "sham charities."

"Virtually none of the funds ... was spent for charitable purposes," prosecutors said in the indictment.

In addition to hiring telemarketers, the four also used mass mailings to raise money. No telemarketers or mailing firms were named in the indictment, but Lindsay said they may be charged in other jurisdictions.

Donors were told their contributions were tax deductible, but none of the charities had received tax-exempt status from the IRS, according to records. The Franchise Tax Board revoked First Church's tax-exempt status in 1998.

"It's morally egregious to take money from the generous public supposedly for charitable causes and instead use it for somebody else's cause," Lindsay said.

One of the phony charities allegedly established by the defendants was the Children's AIDS Council. According to literature, the aim of the council was to "provide funds to infant AIDS wards and promote compassion for children who have contracted HIV."

Donors were also told another of the defendants' groups, the Police and Sheriff's Support Fund, provided "monetary support to families of officers hurt or killed in the line of duty."

Sanchez and De la Torre allegedly changed the name of First Church of Life to Christian Outreach Ministries, Mercy Ministries and Glory Ministries to perpetrate the fraud, Lindsay said.

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