The Tidwell Legacy

FORMER SB COUNTY SHERIFF FLOYD TIDWELL
BY Barb Stanton

The San Bernardino County District attorney’s Office has filed indictments against 15 people - including the son of former San Bernardino County top cop Floyd Tidwell.

His son, Daniel Tidwell, 53, and Daniels wife, Shirley Tidwell, 47, have been charged with two counts of conspiracy relating to unlawful solicitation of bail bonds and one count of unlawful solicitation of bail bonds - among other charges. The Tidwells are connected with three bail-bonds companies and accused of illegally soliciting bail-bond business at West Valley Detention Center in Rancho Cucamonga.

Added to the charges for Daniel Tidwell are indictments on two counts of possessing assault weapons, one count of receiving stolen property - a gun - and one count of grand theft of a firearm. Shirley Tidwell has been indicted on several counts relating to unlawful notary practices, filling false or forged documents and perjury.

Last week 15 defendants appeared in San Bernardino County Superior Court. All indicted on charges alleging participation in a scheme to corner the county’s market on bail bonds.

Three bail bond companies - Boone’s Bail Bond - Arzate Bail Bond - and Bail Hotline are accused of offering inmates cash kickbacks, three-way phone calls and lower bail premiums for their help in soliciting bond customers.

Weekly meetings were held by Tidwell and his employees to determine how they could utilized the inmates at West Valley Detention Center in Rancho Cucamonga to solicit business for them, according to court documents.

The three bail bonds companies offered incentives like, three-way phone calls and lower bail premiums. The phone bills at Boone’s Bail Bonds were ranging around $15,000 per month while the scam was running unfettered, according to authorities. San Bernardino County District Attorneys are still trying to figure out how much money the bail-bonds companies raked in.

Steven Tidwell, another son of the former Sheriff and owner of Tidwell Bail Bonds, pleaded guilty in 2004 after being charged with unlawfully soliciting bail, in exchange for a lighter jail sentence. He testified against the other 11 defendants connected to the case.

The saga began unraveling in January 2004 when investigators raided the homes of the Tidwell brothers looking for evidence of the bail-bonds scheme. During the raids they found 24 guns reportedly given to them by their father.

Due to the involvement of former sheriff Tidwell - the Tidwell brothers - and the number of people involved -the case quickly garnered widespread attention.

Also charged in January 2004 - Attorney Geoffery Newman of Rancho Cucamonga, and Mike Steele, of Hesperia, a former sheriff’s deputy.

Floyd Tidwell was charged with several counts of concealing stolen property and accused of taking more than 500 guns from the Sheriff’s Department’s property room - all while serving San Bernardino County at the top cop. Tidwell struck a deal with prosecutors in exchange for cooperating with the investigation and helping retrieve some of the missing guns. Tidwell pled guilty to four felony counts of concealing stolen property.

When challenged about the delay in the case prosecutor Bill Lee recently commented that, “the case got stuck in the system.”

All 15 defendants appeared in San Bernardino Superior Court last week but arraignments were delayed until attorneys could be secured by some of them. All have been charged with two counts of conspiracy relating to unlawful solicitation of bail bonds and one count of unlawful solicitation of bail bonds. The Tidwells, Daniel and Shirley have the additional charges.

All the defendants are facing a maximum of three years in prison if convicted. Daniel’s could received sixteen months more for his additional charges.

In 2004 it was discovered through the bail bond scheme and the raid that the family had the weapons and that’s when former sheriff Floyd Tidwell came into play. Floyd Tidwell pleaded guilty to a reduced charge for cooperating with the investigation and for promising to return the missing weapons...unfortunately for the people of San Bernardino County Daddy Tidwell only produced about 89 of the missing weapons. Some former reports indicated that as much as 800 weapons were missing from the evidence room at the San Bernardino County Sheriffs station.

Tidwell bemoaned the fact that he served the county for more than 40 years under exemplar conditions and felt he should not be prosecuted for the ‘missing’ weapons. After promising to return the weapons the paltry amount that actually were returned is appalling. Tidwell said he gave the guns away to other officers - to his sons - added to his collection.

Daddy Tidwell said that his safety would be at risk if prosecutors pursed felony gun charges against him. “I’ve put a lot of people away,” Tidwell, then 74 said.

Tidwell served as sheriff from 1983 to 1991.

To this day more than 500 of the weapons are missing. Floyd Tidwell never did a day of jail time
even though he was unable or unwilling to produce the hundred’s of missing weapons.

Ultimately Daddy Tidwell agreed to a $10,000 fine, and prosecutors agreed to reduce the felony charges to misdemeanors if Daddy Tidwell cooperated with law enforcement in searching for the missing guns.

Daddy Tidwell cried, “I’m not guilty of anything, dang it - I’ve turned in every gun I had.” After being questioned about the whereabouts of the hundreds of missing weapons. He went on to say, “The others have either been destroyed or distributed, and I gave a list of those to the Sheriff’s Department, and they said they’d contact those people. What else can I do?”

Alleging that Daddy Tidwell stole the guns while he was in office, prosecutors said he was beefing up his private collections and handing out others as gifts to his friends and volunteer reserve deputies.

Daddy Tidwell wanted to remain well-armed, according to his attorney, David Call. Call stated that, “Tidwell knows you can’t keep firearms if you’re convicted of a felony. He wants to be able to protect himself and his family.”

Daddy Tidwell frightened of spending time in jail stated, “ How would you like to be Colonel Sanders and be put in the chicken coop?”

San Bernardino County Sheriff, Gary Penrod sent inner office memos asking any officers who may have received any of the weapons to return them - no questions asked...That didn’t work well - or the officers didn’t have the weapons as Tidwell indicated.

And the beat goes on...now almost four years later...and after much prodding the San Bernardino County District Attorneys Office has called the rest of the Tidwell clan into court to be held accountable for their alleged numerous illegal activities...

15 in the bail bond business indicted

SAN BERNARDINO
15 in the bail bond business indicted

More than a dozen people in the bail bond business, including Danial Tidwell, son of former San Bernardino County Sheriff Floyd Tidwell, were indicted Friday on a host of charges, including perjury, falsifying documents and grand theft.

The 15 people involved worked for Boone's Bail Bond, Arzate Bail Bond and Bail Hotline, according to the San Bernardino County district attorney's office.

Eight employees of Boone's in Fontana were indicted, including owner Danial Tidwell, 53. He was indicted on two counts of possessing assault weapons, one count of receiving stolen property and one count of grand theft of a firearm. His wife, Shirley, 47, was indicted on a charge of filing false and forged documents and perjury.

Three Arzate employees were indicted for unlawful solicitation of bail bonds and four people from Bail Hotline were indicted on similar charges.

Defendants hear indictments in bail-bond case

10:00 PM PST on Friday, December 14, 2007

By JOHN F. BERRY and IMRAN GHORI
The Press-Enterprise

SAN BERNARDINO - More than a dozen people, including the son of former San Bernardino County Sheriff Floyd Tidwell, appeared in court Friday a week after they were indicted on charges involving the bail-bond industry.

Their arraignment was delayed until Feb. 22, when all 15 are scheduled appear in a downtown San Bernardino courtroom.

Most of the defendants indicted Dec. 6 by a special criminal grand jury were charged in January 2004 following a two-year district attorney investigation into illegal kickback schemes among bail-bond companies.

Story continues below

According to the indictments, the defendants were based in San Bernardino County and worked for Boone's Bail Bonds, Arzate Bail Bonds and the Bail Hotline. Most of their charges involve unlawful solicitation, conspiracy for unlawful solicitation and filing false or forged documents.

Danial Blayne "Boone" Tidwell, 53, appeared earlier Friday before Superior Court Judge Colin Bilash. Tidwell's wife, Shirley Tidwell, 47, appeared with the other defendants Friday afternoon. She declined to comment afterward.

John Barnett, attorney for Shirley Tidwell, said later that his client was not surprised by the indictment as the same allegations had been made in the criminal complaint.

"Our position is they committed no crimes and they'll be vindicated," Barnett said.

In court, Bilash told Shirley Tidwell that she could continue staying with her husband in Wyoming while the case winds through the courts.

"Do not miss anything," Bilash said. "If you're not in court, I will revoke your (release)."

Tidwell's other son, Steven Wayne Tidwell, 59, accepted a plea agreement in February 2004 and agreed to surrender his bail-bond license and testify for the prosecution.

Almost 30 people were charged in connection with the bail-bond investigation in 2004. More than a dozen eventually accepted plea agreements. Many of those who fought the charges were indicted last week.

Their cases remained stagnant in the courts after almost four years of delays during numerous courtroom appearances, and they never completed a preliminary hearing.

Deputy District Attorney Bill Lee, the third prosecutor on the bail-bond cases, said four years is an unusual amount of time to pass without a preliminary hearing.

"It was difficult due to the logistics of so many attorneys," Lee said.

In a preliminary hearing, a judge decides whether there is enough probable cause to send defendants to trial. Defendants, in open court, get a chance to cross-examine witnesses.

Grand juries are secret, but 12 of the 19 grand jurors are needed for indictments, Lee said.

Lee said he spent five days in late November and early December presenting his evidence before a grand jury specially empanelled to hear this case.

"This was a way of getting past the initial stumbling block, which is prelim," he said.

The indictments said almost three dozen witnesses appeared before the jurors.

Attorney Don Jordan criticized the district attorney's office for seeking indictments instead of waiting for a preliminary hearing. He said the defendants wanted to cross-examine their accusers.

"My opinion is that is an abuse," he said. "They had all this time. We were counting on having the advantage -- which is a big one -- of a preliminary hearing process in this complex case."

"The truth of the fact is the delays were not caused by the defense," Jordan said. "Several of the (prosecutors) had no interest in the case. They did nothing."

In June 2003, authorities executed 13 search warrants as part of the investigation. Fourteen weapons were found at Danial Tidwell's home in Phelan.

The haul included two rifles reported stolen from the Fontana Police Department in 1999, two machine-gun pistols banned under the California assault-weapons ban and a rifle and a shotgun belonging to the San Bernardino County Sheriff's Department.

The weapons were connected to former Sheriff Floyd Tidwell, who served from 1983 to 1991.

He was sentenced in November 2004 to three years three years unsupervised probation on four misdemeanor charges related to concealing those 14 weapons. He paid $10,000 in restitution.

Reach John F. Berry at 909-806-3058 or jberry@PE.com

Gang Rape Cover-Up by US, Halliburton/KBR

KBR told victim she could lose her job if she sought help after being raped, she says.

A Houston, Texas woman says she was gang-raped by Halliburton/KBR coworkers in Baghdad, and the company and the U.S. government are covering up the incident.

Jamie Leigh Jones, now 22, says that after she was raped by multiple men at a KBR camp in the Green Zone, the company put her under guard in a shipping container with a bed and warned her that if she left Iraq for medical treatment, she'd be out of a job.

"Don't plan on working back in Iraq. There won't be a position here, and there won't be a position in Houston," Jones says she was told.

In a lawsuit filed in federal court against Halliburton and its then-subsidiary KBR, Jones says she was held in the shipping container for at least 24 hours without food or water by KBR, which posted armed security guards outside her door, who would not let her leave.

"It felt like prison," says Jones, who told her story to ABC News as part of an upcoming "20/20" investigation. "I was upset; I was curled up in a ball on the bed; I just could not believe what had happened."

Finally, Jones says, she convinced a sympathetic guard to loan her a cell phone so she could call her father in Texas.

"I said, 'Dad, I've been raped. I don't know what to do. I'm in this container, and I'm not able to leave,'" she said. Her father called their congressman, Rep. Ted Poe, R-Texas.

"We contacted the State Department first," Poe told ABCNews.com, "and told them of the urgency of rescuing an American citizen" - from her American employer.

Poe says his office contacted the State Department, which quickly dispatched agents from the U.S. Embassy in Baghdad to Jones' camp, where they rescued her from the container.

According to her lawsuit, Jones was raped by "several attackers who first drugged her, then repeatedly raped and injured her, both physically and emotionally."

Jones told ABCNews.com that an examination by Army doctors showed she had been raped "both vaginally and anally," but that the rape kit disappeared after it was handed over to KBR security officers.

A spokesperson for the State Department's Bureau of Diplomatic Security told ABCNews.com he could not comment on the matter.

Over two years later, the Justice Department has brought no criminal charges in the matter. In fact, ABC News could not confirm any federal agency was investigating the case.

Legal experts say Jones' alleged assailants will likely never face a judge and jury, due to an enormous loophole that has effectively left contractors in Iraq beyond the reach of United States law.

"It's very troubling," said Dean John Hutson of the Franklin Pierce Law Center. "The way the law presently stands, I would say that they don't have, at least in the criminal system, the opportunity for justice."

Congressman Poe says neither the departments of State nor Justice will give him answers on the status of the Jones investigation.

Asked what reasons the departments gave for the apparent slowness of the probes, Poe sounded frustrated.

"There are several, I think, their excuses, why the perpetrators haven't been prosecuted," Poe told ABC News. "But I think it is the responsibility of our government, the Justice Department and the State Department, when crimes occur against American citizens overseas in Iraq, contractors that are paid by the American public, that we pursue the criminal cases as best as we possibly can and that people are prosecuted."

Since no criminal charges have been filed, the only other option, according to Hutson, is the civil system, which is the approach that Jones is trying now. But Jones' former employer doesn't want this case to see the inside of a civil courtroom.

KBR has moved for Jones' claim to be heard in private arbitration, instead of a public courtroom. It says her employment contract requires it.

In arbitration, there is no public record nor transcript of the proceedings, meaning that Jones' claims would not be heard before a judge and jury. Rather, a private arbitrator hired by the corporation would decide Jones' case. In recent testimony before Congress, employment lawyer Cathy Ventrell-Monsees said that Halliburton won more than 80 percent of arbitration proceedings brought against it.

In his interview with ABC News, Rep. Poe said he sided with Jones.

"Air things out in a public forum of a courtroom," said Rep. Poe. "That's why we have courts in the United States."

In her lawsuit, Jones' lawyer, Todd Kelly, says KBR and Halliburton created a "boys will be boys" atmosphere at the company barracks which put her and other female employees at great risk.

"I think that men who are there believe that they live without laws," said Kelly. "The last thing she should have expected was for her own people to turn on her."

Halliburton, which has since divested itself of KBR, says it "is improperly named" in the suit.

In a statement, KBR said it was "instructed to cease" its own investigation by U.S. government authorities "because they were assuming sole responsibility for the criminal investigations."

"The safety and security of all employees remains KBR's top priority," it said in a statement. "Our commitment in this regard is unwavering."

Since the attacks, Jones has started a nonprofit foundation called the Jamie Leigh Foundation, which is dedicated to helping victims who were raped or sexually assaulted overseas while working for government contractors or other corporations.

"I want other women to know that it's not their fault," said Jones. "They can go against corporations that have treated them this way." Jones said that any proceeds from the civil suit will go to her foundation.

"There needs to be a voice out there that really pushed for change," she said. "I'd like to be that voice."

San Bernardino County officials defend edited credit-card records

San Bernardino County supervisors in the past two years charged more than $55,000 to their county-issued credit cards, mostly for meals, hotels and travel to conferences, records released Wednesday show.

While many of the charges appear to be for legitimate county business, the justification for others is unclear.

The county's lawyers redacted large portions of documents, hiding from public view exactly how supervisors spent tax dollars and raising concerns among open government experts.

"A credit card will work just as easy for a legitimate travel expense as it does for a personal perk," said Tracy Westin of the Center for Governmental Studies, a Los Angeles-based watchdog group.

"It takes human oversight. If it is not visible to the public, there is no way to check to make sure those expenditures are proper," Westin said.

Abuse of government credit cards has been suspected elsewhere in the Inland area. Former Colton city councilman Ramon Hernandez pleaded not guilty to charges of misusing a city credit card. He is expected to go on trial in January.

The Press-Enterprise requested the credit-card documents July 18. The county took nearly four months to compile and release the records that cover purchases for fiscal years 2006 and 2007.

Four messages left Wednesday with County Counsel Ruth Stringer and Principal Assistant County Counsel Dan Haueter were not returned.

Previously, Haueter said some information likely would be blacked out, citing a state court decision that defined "deliberative process." It says elected officials should be able to meet with some people without having to reveal their identities.

The exemption is not specifically part of the Public Records Act.

Board of Supervisors Chairman Paul Biane said the redactions are appropriate.

"It is important for the integrity of the process for me to meet with people," he said in a telephone interview. "It is part of the deliberative process."

But Terry Francke of Californians Aware, an open-government advocacy group, said the county has taken too broad a view of the exemption.

"The use of the term deliberative process in this context is mistaken at best and perhaps fraudulent at worst," he said.

Westin said the county should explain the redactions.

"There needs to be some review process so members of the public can ensure their money is not being wasted."

Checks and Balances

Biane said the county has the proper oversight, citing reviews by staff and the auditor/controller-recorders office, which routinely seeks more information to justify the expenses.

"There are checks and balances in place to catch any abuse," he said by telephone Wednesday.

A call to the auditors office was not returned.

In part, the documents released show:

Biane had more than $12,600 in charges in the two years. As the county's representative to the California State Association of Counties, Biane regularly booked airfare and lodging on his credit card.

Other purchases include $178.95 for three pairs of binoculars, and $129.99 for home Internet service.

Biane said the charge for satellite Internet service is justified, since he moved to an area in northern Rancho Cucamonga that has no other form of high-speed Internet access, such as cable or digital subscriber lines.

"Our jobs are 24-7," he said. "I have to have access to Internet with the ability to handle big files such as pictures and maps."

Supervisor Josie Gonzales had more than $20,000 in charges to her credit card and at least one other assigned to her office. Most were for travel to conferences such as the International Council of Shopping Centers in Las Vegas and to view development around a racetrack in Kansas City. The track is owned by the parent company of the California Speedway in Fontana.

The county counsel's office redacted some charges from the documents. But Bob Page, her chief of staff, said the charges were for Gonzales staff member Chris Mardis to attend a Local Government Commission conference held in Yosemite National Park. The officials stayed at the Ahwahnee Hotel, he said.

In October 2006, Gonzales, Biane, Page and his wife, and another person had two dinners totaling $342.55, but county counsel redacted the fifth person's name. Page said Scott Vanhorne, a Biane staff member, attended the dinner. Page reimbursed the county for his wife's portion of the meal.

"We don't have people walking around with cards making willy-nilly charges," Page said. "We recognize this is taxpayer money and we should spend it wisely."

Supervisor Gary Ovitt charged more than $11,500 on his county credit card, while Supervisors Dennis Hansberger and Brad Mitzelfelt, in office since January, spent about $500 and $800, respectively.

The three did not return messages seeking comment.

Bill Postmus, who took office as county assessor in January after serving as a supervisor from 2000 to 2006, had more than $11,000 in charges. Much of Postmus' charges were for meals, but the reasons for the purchases and those who dined with him were redacted.

Spokesman Adam Aleman said Postmus repaid $195.38 for gas purchases in Nevada, Utah and Colorado that he made during a personal trip in June 2006.

As a supervisor, Postmus also signed off on credit-card purchases not assigned to specific supervisors. For instance, a card with the holder's name redacted had $2,200 in charges in September 2006. The purchases included dinner at two Chicago restaurants during a National Association of Counties meeting. One was a $343 dinner at Morton's Steakhouse.

Reach Duane W. Gang at 951-368-9547 or dgang@PE.com

Remember that cop who shot the Air Force veteran three times for obeying his order? He was acquitted on all counts.

Maeve Reston
LA Times
Friday September 21, 2007

A San Bernardino County jury Thursday acquitted a former sheriff's deputy of attempted voluntary manslaughter for opening fire on an unarmed, off-duty Air Force police officer after a high-speed chase last year, a brutal shooting videotaped by a bystander and aired nationwide.

Ivory John Webb Jr., 46, the son of a former Compton, Calif., police chief, was the first law enforcement officer ever to face criminal charges for an on-duty shooting in San Bernardino County in Southern California. Webb, who also was acquitted of assault with a deadly firearm, faced up to an 18-year prison sentence.
The jury of eight men and four women had spent less than half a day deliberating after the four-week trial in the San Bernardino courtroom, a case dominated by the video footage of the January 2006 shooting on a residential street in Chino, Calif., and dueling experts on police tactics and use of deadly force.

The prosecution's case focused on 1 minute, 15 seconds of raw, shadowy video, recorded about 10:30 p.m. Jan. 29, 2006, that showed Webb towering over Elio Carrion and then opening fire as Carrion appeared to be following his order to get up from a sprawled position on the pavement.

Carrion survived the shooting and is on duty at Barksdale Air Force Base in Louisiana.

Carrion, a 23-year-old senior airman who was home on leave after a six-month tour in Iraq, had been a passenger in a Corvette that led Webb on a chase that reached 120 mph through residential neighborhoods, ending when the car crashed into a block wall and Carrion jumped out of the car and onto the ground.

In the video, Carrion is seen raising his left hand toward Webb at least twice and then Carrion appears to use his right hand to gesture as he tells Webb several times, "We're here on your side" and "We mean you no harm." Webb tells Carrion to keep his hands on the ground and then appears to tell Carrion to "get up." When Carrion says, "OK, I'm getting up," and starts to rise, Webb shoots him three times.

Prosecutor R. Lewis Cope also leaned heavily on police tactics experts, arguing the tape showed an angry deputy whose repeated tactical errors led him to fire on Carrion without provocation, including Webb's failure to wait for backup to arrive.

Lead tactics expert Joe Callanan, a former Los Angeles County sheriff's lieutenant who trained officers on the use of force during 22 years with the department, said Webb engaged in "extraordinarily risky" behavior and shouldn't have left the safety of his patrol car.

During his testimony, Callanan also insinuated that Webb's decision to fire his weapon was a "deliberate" act -- not a panicked response -- because the deputy paused for at least a half-second between each of the three shots he fired.

"Rapid fire is more typical of panic situation. Timed fire is more deliberate, more thoughtful," Callanan testified.

However, an expert witness for the defense told jurors that Webb was clearly justified in shooting because, as the video recording showed, Carrion ignored commands to keep his hands on the ground and appeared to reach into his Oakland Raiders jacket for a weapon just before the deputy opened fire.

"There were a couple of times where (Webb) would have been justified in firing," Inglewood (Calif.) Police Sgt. Kent Ferrin testified. "He showed great restraint." Webb's lead attorney, Michael Schwartz, hammered Carrion's credibility, arguing that Carrion was not a heroic Iraq veteran portrayed in the media but a "nameless, faceless suspect" who endangered Webb's life and the lives of others by failing to stop his drunk friend from leading police at more than 100 mph through residential streets.

Schwartz accused Carrion of intentionally misleading the jury about how drunk he was on the night of the shooting.

He argued a military policeman like Carrion should have known better than to argue with a police officer and disobey commands to stop talking and keep his hands on the ground when he was being held at gunpoint.

Schwartz argued that Webb fired in self-defense not just because of one movement by Carrion, but because of a combination of threatening movements that followed a pattern of noncompliance by the airman.

Webb, the only officer present during the shooting, initially told detectives that Carrion had lunged at him after ignoring orders to stay on the ground.

Several days later, after watching a clip of the video, the 46-year-old former deputy told detectives he believed Carrion was reaching for a weapon when he fired.

During the trial, the prosecutor seized on those conflicting statements, saying it showed Webb initially tried to deceive investigators and then was forced to change his story when he realized the shooting was caught on tape.

Webb's attorney dismissed the prosecutor's claims that Webb made conflicting statements to investigators, arguing that Webb's description of what happened in a two-hour interview after the shooting was supported by what was seen in the videotape.

Not every statement uttered that night, Schwartz said, can be heard on the videotape. He said even the transcript of the muddied voices on videotape was in dispute.

Gang of Off-Duty Police Assault Cameraman

[ Click to title to see original article with video]

Officers Caught-On-Video Damaging Camera While Seeking to Intimidate Free Speech and Assault Journalist

JonesReport.com | September 19, 2007

A gang of off-duty New York police assaulted a cameraman, shouted verbal epithets and damaged a camera on a side street near Times Square just days before the sixth anniversary of 9/11.

The cameraman, Aaron Dykes, was filming a 9/11 Truth group that was passing through the street en route to Fox Studios only a few blocks away. Off duty police officers and other members of their group began shouting "a**holes" at the 9/11 truth group when one of the officers told the cameraman to "stop filming" and warned "I wouldn't walk this way," referring to the sidewalk he was blocking off.

The police included officers from throughout New York state (according to some of the recognized badges, which included one from Nassau County, NY) and may have come from other locations as well.

When Dykes refused to stop filming, another officer stepped up to batter the camera while stating "How you doing tonight." (see still frames below)

This prompted yet another officer to shove on the cameraman, saying "Get your f'n camera out of here."

This was witnessed by on-duty officer Donnellan who told the temperamental cops to ignore the cameraman. However, this did not stop the rest of the crowd from unleashing on the cameraman.

This off-duty cop ordered the on-duty officer to "Get that camera out of here right now," referring to the Infowars cameraman filming in the public street.

School board actions violate Brown Act

On Sept. 5, the Bear Valley Unified School District board meeting was delayed waiting for a board member to arrive. When president Ken Turney pounded the gavel and called for the meeting to begin, he made some changes to the agenda. Those changes may have violated the Brown Act.

Turney announced that four items on the open session of the Sept. 5 meeting were being moved until after the board met in closed session. The items weren’t listed on the closed session agenda. Nothing but an unnamed pending litigation case that’s been on the agenda for months was listed.

The Ralph M. Brown Act is a state law that is often called the open meeting law. It assures the public that government does its business openly and not behind closed doors. The Act requires things such as agendas, and posting the agenda and meeting notices 72 hours before the regular meeting. The Act requires the agenda to list items for discussion and action, and allows for the public to comment on items on the agenda among other things.

Closed sessions are allowed for certain discussion and action items, but those items must be disclosed on the posted agenda.

Turney, when he adjourned the open session portion of the Sept. 5 meeting, said, “We do have need for a closed session, and there will be action taken.”

The school board’s agenda has a standard item that appears on every school board agenda: Public Employee Discipline/Dismissal/Release/Reassignment/Transfer/Appointment Request. There were no specifics listed under this heading Sept. 5. Shelley Black, school board administrative secretary and secretary to the board, said the district’s legal counsel advised the district to put that on the agenda years ago. Black said it allows the board to enter into closed session if a serious employee issue arises after the agenda is posted.

According to Tom Newton, attorney for California Newspaper Publishers Association, the blanket public employee listing isn’t legal. The Brown Act was amended in 1994 to prevent government bodies from using a generic and intentionally vague summary item on agendas as a way to retreat behind closed doors without a specific item for discussion. If an agency covered by the Brown Act has a specific need for a closed session, it should be listed, Newton said.

The four items pulled from the open session of the Sept. 5 school board meeting dealt with facilitator agreements and mentor stipends. The first item was a facilitator agreement with Johanna Hofmeister for training she will provide the district’s certificated personnel.

The second item is a facilitator agreement with Elena Peavy. Peavy’s contract is for part-time counseling services at Big Bear Middle School for the 2007-08 school year per the Middle School Supplemental Counseling Program.

The third facilitator agreement pulled for discussion and action in closed session by the school board is an agreement with Mike Clifton to provide support and training for Big Bear High School coaches for the 2007-08 school year.

Hofmeister, Peavy and Clifton are former employees of the Bear Valley Unified School District, but are not considered current employees. Newton said in each case, the contract or facilitator agreements should have been discussed in open session. A government agency can go into closed session to discuss public employees or officers including individuals who function as an employee, Newton said. In this case, Peavy could be considered functioning as an employee, but the item should have been listed under closed session, Newton said.

The fourth item pulled for discussion and action, did have to do with employees. It asked the board to approve on site mentor teachers for the current school year and the stipends paid for assisting new teachers. The mentor teachers and the new teacher the mentors are assigned to are listed on a staff memo prepared by Laurie Bruton, director of curriculum for the school district.

Black said after the closed session, the board returned to open session to consider the four items. The facilitator agreements for Hofmeister and Clifton were approved 4-0. The agreement with Peavy 3-1 with Trustee Larry Poland voting no. The mentor teachers item died for lack of a motion and second.

The personnel exception in the Brown Act is to avoid undue embarrassment of public employees, Newton explained. But only specific items can be discussed behind closed doors under the act. Black does not attend closed sessions, but agreed that the items pulled for discussion didn’t qualify under the personnel exemption.

Carole Ferraud, district superintendent, said only two of the four items were discussed in closed session, the item regarding Peavy and the mentor teacher item. She said it’s her guess that Turney didn’t want to single anyone out, so he pulled all four items. Ferraud said she would speak to Turney about the action. However, Ferraud said the two items that were discussed fall under the personnel exemption.

Ferraud also said she has asked Black to check with legal counsel about the blanket listing for personnel items. The Grizzly asked Ferraud to also check with the district’s legal counsel about bringing the four items back at a future meeting for discussion and action in open session to cure the possible Brown Act violation.

Contact Judi Bowers at 909-866-3456, ext. 137 or by e-mail at jbowers@bigbeargrizzly.net.


School board actions violate Brown Act


By JUDI BOWERS

Wednesday, September 12, 2007 12:35 PM PDT



Editor

On Sept. 5, the Bear Valley Unified School District board meeting was delayed waiting for a board member to arrive. When president Ken Turney pounded the gavel and called for the meeting to begin, he made some changes to the agenda. Those changes may have violated the Brown Act.

Turney announced that four items on the open session of the Sept. 5 meeting were being moved until after the board met in closed session. The items weren’t listed on the closed session agenda. Nothing but an unnamed pending litigation case that’s been on the agenda for months was listed.

The Ralph M. Brown Act is a state law that is often called the open meeting law. It assures the public that government does its business openly and not behind closed doors. The Act requires things such as agendas, and posting the agenda and meeting notices 72 hours before the regular meeting. The Act requires the agenda to list items for discussion and action, and allows for the public to comment on items on the agenda among other things.

Closed sessions are allowed for certain discussion and action items, but those items must be disclosed on the posted agenda.


Turney, when he adjourned the open session portion of the Sept. 5 meeting, said, “We do have need for a closed session, and there will be action taken.”

The school board’s agenda has a standard item that appears on every school board agenda: Public Employee Discipline/Dismissal/Release/Reassignment/Transfer/Appointment Request. There were no specifics listed under this heading Sept. 5. Shelley Black, school board administrative secretary and secretary to the board, said the district’s legal counsel advised the district to put that on the agenda years ago. Black said it allows the board to enter into closed session if a serious employee issue arises after the agenda is posted.

According to Tom Newton, attorney for California Newspaper Publishers Association, the blanket public employee listing isn’t legal. The Brown Act was amended in 1994 to prevent government bodies from using a generic and intentionally vague summary item on agendas as a way to retreat behind closed doors without a specific item for discussion. If an agency covered by the Brown Act has a specific need for a closed session, it should be listed, Newton said.

The four items pulled from the open session of the Sept. 5 school board meeting dealt with facilitator agreements and mentor stipends. The first item was a facilitator agreement with Johanna Hofmeister for training she will provide the district’s certificated personnel.

The second item is a facilitator agreement with Elena Peavy. Peavy’s contract is for part-time counseling services at Big Bear Middle School for the 2007-08 school year per the Middle School Supplemental Counseling Program.

The third facilitator agreement pulled for discussion and action in closed session by the school board is an agreement with Mike Clifton to provide support and training for Big Bear High School coaches for the 2007-08 school year.



Hofmeister, Peavy and Clifton are former employees of the Bear Valley Unified School District, but are not considered current employees. Newton said in each case, the contract or facilitator agreements should have been discussed in open session. A government agency can go into closed session to discuss public employees or officers including individuals who function as an employee, Newton said. In this case, Peavy could be considered functioning as an employee, but the item should have been listed under closed session, Newton said.

The fourth item pulled for discussion and action, did have to do with employees. It asked the board to approve on site mentor teachers for the current school year and the stipends paid for assisting new teachers. The mentor teachers and the new teacher the mentors are assigned to are listed on a staff memo prepared by Laurie Bruton, director of curriculum for the school district.

Black said after the closed session, the board returned to open session to consider the four items. The facilitator agreements for Hofmeister and Clifton were approved 4-0. The agreement with Peavy 3-1 with Trustee Larry Poland voting no. The mentor teachers item died for lack of a motion and second.

The personnel exception in the Brown Act is to avoid undue embarrassment of public employees, Newton explained. But only specific items can be discussed behind closed doors under the act. Black does not attend closed sessions, but agreed that the items pulled for discussion didn’t qualify under the personnel exemption.

Carole Ferraud, district superintendent, said only two of the four items were discussed in closed session, the item regarding Peavy and the mentor teacher item. She said it’s her guess that Turney didn’t want to single anyone out, so he pulled all four items. Ferraud said she would speak to Turney about the action. However, Ferraud said the two items that were discussed fall under the personnel exemption.

Ferraud also said she has asked Black to check with legal counsel about the blanket listing for personnel items. The Grizzly asked Ferraud to also check with the district’s legal counsel about bringing the four items back at a future meeting for discussion and action in open session to cure the possible Brown Act violation.

Contact Judi Bowers at 909-866-3456, ext. 137 or by e-mail at jbowers@bigbeargrizzly.net.

San Bernardino lawman accused of assaulting women he arrested

A San Bernardino County sheriff's deputy was arrested Friday on suspicion of taking bribes and sexually assaulting five women he arrested between April and July, investigators said.

Matthew Linderman, 30, of Victorville, was booked into West Valley Detention Center. He is scheduled to be arraigned Monday in Superior Court in Victorville, although that could be postponed if he posts $500,000 bail.

The first of the alleged assaults was reported early last month, said Sgt. Rick Ells, a sheriff's department spokesman.

The deputy, who had patrol duties at the Mall of Victor Valley in Victorville, was initially put on administrative leave. As of Friday he was no longer with the sheriff's department, said Ells, who declined to provide details.

Ells would only say Linderman had been with the department for less than 10 years.

Detectives suspect that Linderman engaged in "inappropriate, illegal" sexual conduct with women he arrested, Ells said, adding: "We don't have a place for that in our department."

Sheriff Gary Penrod was out of the office and unavailable for comment Friday. Linderman could not be reached for comment.

According to the criminal complaint filed in court, Linderman is accused of soliciting four bribes on April 18, May 2 and July 30, soliciting another to engage in lewd conduct on April 18, oral copulation under the color of authority on May 2 and sexual battery by restraint on July 30.

Six of the eight counts are felonies.

The five women named as victims in the complaint are identified only by their first name and last initial.

The complaint against Linderman says one woman was touched while unlawfully restrained, two were forced to commit lewd acts with each other, and one was made to perform oral sex on Linderman by threat of arrest.

The sheriff's department declined to release Linderman's booking photograph.

Such photos are often released by authorities in the hope that other victims may recognize their attacker and come forward.

Ells said no additional victims are expected.

"At this point," he said, "we think we've located everybody."

Reach Paul LaRocco at 909-806-3064 or plarocco@PE.com

Victorville deputy arrested on sex-crime charges

A sheriff's deputy has been arrested on suspicion of sex crimes and soliciting bribes from women while on duty.

Deputy Matthew Linderman was taken into custody about 9 a.m. Friday at sheriff's headquarters in San Bernardino, according to sheriff's spokeswoman Arden Wiltshire. He posted bail.

Linderman, who has been with the department since 1998 and was assigned to the Victorville station, was charged with seven counts in a felony complaint filed Friday in Victorville Superior Court.

The deputy was a part of a two-man team in the Retail Theft Unit. The team's duties included handling thefts, shoplifting and other crimes in the city's stores.

Sheriff's deputies began an investigation after receiving a complaint about Linderman, Wiltshire said. All of the victims were adults.

"We take these complaints very seriously," Wiltshire said. "A thorough investigation was conducted, and the report was submitted to the district attorney."

Wiltshire would not discuss specific details of the case.

Prosecutors charged Linderman with sexual battery by restraint, soliciting another to engage in lewd conduct, oral copulation under color of authority and four counts of soliciting a
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bribe.

If convicted, the deputy could face more than 30 years in state prison.

Linderman, 30, was booked into West Valley Detention Center in Rancho Cucamonga and was being held on $500,000 bail.

Prosecutors in Victorville said Linderman could be arraigned as early as Monday.

The crimes are alleged to have occurred between April and July, according to the complaint reviewed by Gary Roth, chief deputy district attorney in Victorville.

But Roth said he could not elaborate.

"I really can't go into the facts," Roth said. "That will all be presented in court."

The case has been assigned to Deputy District Attorney Steve Sinfield for prosecution.

Contact writer Mike Cruz at (909) 386-3880 or via e-mail at mike.cruz@sbsun.com.

Administrative Proceeding Release No. 33-8838, In the Matter of MARTIN S. DUFFIELD and RAUL A. JORDAN,

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 8838 / September 5, 2007
SECURITIES EXCHANGE ACT OF 1934
Release No. 56353 / September 5, 2007
ADMINISTRATIVE PROCEEDING
File No. 3-12745
In the Matter of
MARTIN S. DUFFIELD
and RAUL A. JORDAN,
Respondent.
ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTIONS 15(b) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”) and Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against Martin S. Duffield and Raul A. Jordan (“Respondents”).
II.
In anticipation of the institution of these proceedings, the Respondents have each submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are admitted, Respondents consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial
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Sanctions and a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934, as set forth below.
III.
On the basis of this Order and Respondents’ Offers, the Commission finds that:
Summary
These proceedings arise out of the offer and sale of promissory notes as part of a fraudulent scheme orchestrated by Daniel W. Heath through his company, D.W. Heath & Associates, Inc. (“Heath & Associates”). From 1996 until late April 2004, Heath & Associates, through sales agents such as Respondents Martin S. Duffield and Raul A. Jordan, raised over $138 million from more than 1,400 investors nationwide, most of whom were senior citizens, in an unregistered notes offering in two Heath-controlled entities, Private Capital Management, Inc. (“PCM”) and the PCM Fixed Income Fund I, LLC (“PCM Fund”) (collectively “PCM Notes”). Respondents offered and sold more than $6 million in PCM Notes to approximately 80 investors. Respondents made material misstatements and omitted material facts in selling the notes. First, Respondents falsely represented that the PCM Notes were “safe” and “secured” because they were “backed by assets” owned by companies that borrowed funds from PCM, and that returns were “guaranteed.” Second, they failed to disclose that they were paid a sales commission by Heath & Associates, or falsely claimed that they received no commission at all or misled prospective investors about the sources of the funds used to pay their commissions. Third, Respondents failed to disclose that in March 1998, the California Department of Corporations (“DOC”) had issued two desist-and-refrain orders against Heath, Heath & Associates, PCM, and the PCM Fund for the unregistered sale of securities and for acting as unregistered broker-dealers (“D&R Orders”). During the relevant period, Respondents were associated with registered broker-dealers and sold the PCM Notes without notice to or approval from those firms, and thereby engaged in the practice of selling away.
Respondents
1. Martin S. Duffield (“Duffield”) was a senior financial consultant with Heath & Associates from July 2001 to April 2004. From January 2000 to June 2004, Duffield was also a registered representative associated with broker-dealers registered with the Commission. Duffield, 51 years old, is a resident of West Covina, California.
2. Raul A. Jordan (“Jordan”) was a senior financial consultant with Heath & Associates from July 2001 to April 2004. From January 2000 to December 2002, Jordan was also a registered representative associated with broker-dealers registered with the Commission. Jordan, 51 years old, is a resident of Pasadena, California.
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Relevant Entities
3. Heath & Associates, incorporated in California in 1998, purported to be a financial services company that provided investment advice and estate planning services to senior citizens. Heath & Associates’ principal places of business were Brea, California and Hemet, California. It was the servicing agent and marketing agent for PCM and the placement and service agent for the PCM Fund. On March 30, 1998, the DOC issued two desist-and-refrain orders against Heath & Associates, Heath, PCM, and the PCM Fund for the unregistered sale of securities and for acting as unregistered broker-dealers. Heath & Associates was not registered with the Commission. Heath & Associates was placed under a court-ordered receivership in SEC v. D.W. Heath & Associates, Inc., et al., Civil Action No. CV-04-02949 JFW (Ex) (C.D. Cal.), Litigation Release No. 18689 (May 3, 2004).
4. PCM, a business entity of unknown form, was a fictitious business name for Daniel W. Heath, who was its co-founder, president, chief executive officer, and chief financial officer. PCM was purportedly the general manager of the PCM Fund. PCM was not registered with the Commission, and no registration statement had been filed or was in effect with respect to the notes offered by PCM. PCM was placed under a court-ordered receivership in SEC v. D.W. Heath & Associates, Inc., et al.
5. PCM Fund, a business entity of unknown form, was another fictitious business name for Daniel W. Heath. The PCM Fund was not registered with the Commission, and no registration statement had been filed or was in effect with respect to the notes offered by the PCM Fund. The PCM Fund was placed under a court-ordered receivership in SEC v. D.W. Heath & Associates, Inc., et al.
Background
6. From July 2001 to April 2004, Duffield and Jordan offered and sold over $6 million in PCM Notes to approximately 80 elderly investors who had attended free lunch workshops sponsored by Heath & Associates. At the workshops, Duffield and Jordan explained the benefits of investing in corporate notes that were secured or backed by assets. They compared the notes to a home mortgage, where the lender can foreclose on the property if the borrower defaults. They told prospective investors that corporate notes were much safer than stocks and bonds, did not fluctuate in price, and paid a much higher rate of return than bank certificates of deposit. After the presentations, Duffield and Jordan encouraged the attendees to sign up for a complimentary one-on-one consultation.
7. During these one-on-one consultations, Duffield and Jordan met with prospective investors at an office opened under the name Heath & Associates in Pasadena, California, and they handed out business cards that said each was a Heath & Associates “senior financial consultant.” Although prospective investors expected to receive a free financial check-
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up at these consultations, the real purpose of the meetings was to solicit them to invest in the PCM Notes.
8. During the follow-up meetings, Duffield and Jordan represented that PCM pooled investor funds to make loans to small and medium-sized companies. They claimed that PCM was experienced in making these loans as well as managing the loan portfolio for the benefit of investors. They assured prospective investors that the notes were “safe” and “secured” because they were “backed by assets” owned by PCM’s borrowers. They represented that the notes paid “guaranteed” annual returns ranging from 4.5% to 9%. If a prospective investor did not have sufficient funds readily available, Duffield and Jordan encouraged the investor to liquidate other investments regardless of surrender fees and other charges in order to invest in the notes. They also encouraged investors to use funds held in Individual Retirements Accounts.
9. Duffield and Jordan did not provide prospective investors with offering materials consistently, even after investors asked for documentation on the notes. Although Jordan received copies of the PCM Fund private placement memorandum (“PPM”) from Heath & Associates, Jordan stopped giving them out because, when he did so, prospective investors declined to invest due to the lack of financial information in the PPM. Jordan admitted that he “didn’t feel comfortable” when he read the PPM because of the dearth of financial and other information. Rather than giving prospective investors a meaningful disclosure document, Duffield and Jordan often based their sales presentations on a 16-page glossy, color brochure from PCM, which provided no financial statements or other material information about the risks of the investment. Some prospects were not even given the brochure. Some investors received the brochure only after they invested. In short, the brochure contained statements about seniors’ fears of outliving their money: “Maintaining your standard of living is one concern. The other is how long your money will last….The danger of outliving your assets is real.” Duffield and Jordan often repeated these same themes in their one-on-one consultations, telling prospective investors that the notes provided a “guaranteed,” “steady flow” of additional income or were an “income producing investment.”
10. Duffield and Jordan did not conduct any due diligence on the notes, PCM, or its purported borrowers. Instead, they relied solely upon representations about the investment from Heath or other unlicensed sales agents.
11. Duffield and Jordan told prospective investors that the PCM Notes were “safe” and “secured” because they were “backed by assets” owned by PCM’s borrowers. These representations were false because neither PCM nor the PCM Fund filed the necessary documents to secure the loans to unaffiliated borrowers such as UCC-1 financing statements, mortgages, trust deeds, or liens. Consequently, the investors’ security interest in any such collateral was not perfected and their funds were at risk. In fact, the vast majority of funds PCM provided to borrowers was not documented in any way and was essentially unsecured cash advances by PCM. Duffield and Jordan had no basis to represent that the notes were safe, secured, and backed by assets.
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12. Duffield and Jordan received commissions from the sale of the PCM Notes. Duffield and Jordan failed to disclose to prospective investors that they received a commission on the sale of the PCM Notes. In some instances, when asked, Duffield and Jordan falsely told prospective investors that they received no commission at all or misled the investors about the sources of the funds used to pay their commissions. Duffield told at least one investor that he was paid a commission by the companies that borrowed money from PCM, assuring her that “You’ll never have to write me a check.” In fact, Duffield and Jordan received a 6% commission on every sale from Heath & Associates. In addition, Heath & Associates paid them a “bonus” of 1% to 2% if they persuaded the investor to accept a lower interest rate or a longer term of maturity, but they did not disclose this arrangement to investors. Duffield and Jordan were paid commissions of $264,040 and $270,337, respectively, from the sale of the PCM Notes.
13. Duffield and Jordan failed to disclose to potential investors the D&R Orders against Heath, Heath & Associates, PCM, and the PCM Fund after Duffield and Jordan found out about the orders in March 2003. Duffield and Jordan continued to offer and sell the notes even though they knew that Heath and his entities were cited for conducting an unregistered offering of the PCM Notes, and that none was a registered broker-dealer as was required. Moreover, they misled existing investors by minimizing the importance of the D&R Orders. Duffield and Jordan told existing investors that the D&R Orders no longer applied because either the “problem” had been resolved years ago or because they were not selling securities. In fact, as Duffield and Jordan well knew, Heath and his entities were engaged in precisely the same violative conduct at issue in the prior D&R Orders.
14. As a result of the conduct described above, Duffield and Jordan willfully violated Sections 5(a) and 5(c) of the Securities Act, which prohibit the unregistered offer and sale of securities in interstate commerce unless an exemption from registration applies.
15. As a result of the conduct described above, Duffield and Jordan willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer and sale of securities and in connection with the purchase or sale of securities.
16. As a result of the conduct described above, Duffield and Jordan willfully violated Section 15(a) of the Exchange Act, which requires brokers and dealers who effect securities transactions through interstate commerce to be registered with the Commission or, if the broker or dealer is a natural person, be associated with a registered broker or dealer that is not a natural person.
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Disgorgement and Civil Penalties
17. Respondent Jordan submitted a sworn Statement of Financial Condition dated December 8, 2006, amended July 27, 2007, and other evidence and has asserted his inability to pay disgorgement plus prejudgment interest and a civil penalty. Respondent Duffield submitted a sworn Statement of Financial Condition dated December 8, 2006, amended August 1, 2007, and other evidence and has asserted his inability to pay disgorgement plus prejudgment interest and a civil penalty.
IV.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondents’ Offers.
Accordingly, pursuant to Section 8A of the Securities Act and Sections 15(b)(6) and 21C of the Exchange Act, it is hereby ORDERED that:
A. Respondents shall cease and desist from committing or causing any violations and any future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder.
B. Respondent Duffield be, and hereby is barred from association with any broker or dealer.
C. Respondent Jordan be, and hereby is barred from association with any broker or dealer, with the right to reapply for association after five (5) years to the appropriate self-regulatory organization, or if there is none, to the Commission.
D. Any reapplication for association by Respondents Duffield and Jordan will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondents, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order.
E. IT IS FURTHERED ORDERED that Respondent Duffield shall pay disgorgement of $264,040 plus prejudgment interest, but that payment of all but $42,000 is waived based upon Respondent’s sworn representations in his Statement of Financial Condition dated December 8, 2006, amended August 1, 2007, and other documents submitted to the Commission. Respondent Duffield shall, within ten (10) days of the entry of the Order, pay disgorgement of $42,000 to Robb
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Evans & Associates, LLC, the court-appointed receiver for Heath & Associates, PCM, and the PCM Fund pursuant to Rule 1102 of the Commission’s Rules on Fair Fund and Disgorgement Plans [17. C.F.R. § 201.1102]. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier’s check or bank money order; (B) made payable to Robb Evans & Associates, LLC; (C) hand-delivered or mailed to Robb Evans & Associates, LLC, 11450 Sheldon Street, Sun Valley, CA 91352; and (D) submitted under cover letter that identifies Duffield as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to the Associate Regional Director, Division of Enforcement, Securities and Exchange Commission, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. Based upon Respondent Duffield’s sworn representations in his Statement of Financial Condition dated December 8, 2006, amended August 1, 2007, and other documents submitted to the Commission, the Commission is not imposing a penalty against Respondent Duffield.
F. IT IS FURTHERED ORDERED that Respondent Jordan shall pay disgorgement of $270,337 plus prejudgment interest, but that payment of all but $5,000 is waived based upon Respondent’s sworn representations in his Statement of Financial Condition dated December 8, 2006, amended July 27, 2007, and other documents submitted to the Commission. Respondent shall, within ten (10) days of the entry of the Order, pay disgorgement of $5,000 to Robb Evans & Associates, LLC, the court-appointed receiver for Heath & Associates, PCM, and the PCM Fund pursuant to Rule 1102 of the Commission’s Rules on Fair Fund and Disgorgement Plans [17. C.F.R. § 201.1102]. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier’s check or bank money order; (B) made payable to Robb Evans & Associates, LLC; (C) hand-delivered or mailed to Robb Evans & Associates, LLC, 11450 Sheldon Street, Sun Valley, CA 91352; and (D) submitted under cover letter that identifies Jordan as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to the Associate Regional Director, Division of Enforcement, Securities and Exchange Commission, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. Based upon Respondent Jordan’s sworn representations in his Statement of Financial Condition dated December 8, 2006, amended July 27, 2007, and other documents submitted to the Commission, the Commission is not imposing a penalty against Respondent Jordan.
G. The Division of Enforcement may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Respondents provided accurate and complete financial information at the time such representations were made; and (2) seek an order directing payment of disgorgement, prejudgment and postjudgment interest, and the maximum civil penalty allowable under the law. No other issue shall be considered in connection with this petition other than whether the financial information provided by Respondents was fraudulent, misleading, inaccurate, or incomplete in any material respect. Respondents may not, by way of defense to any such petition: (1) contest the findings in this Order; (2) assert that payment of disgorgement and interest should not be ordered; (3) contest the amount of disgorgement and interest to be ordered; or (4) assert any defense to liability or
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Schlarmann testifies at Heath investment-fraud trial

Larre Schlarmann, who pleaded guilty two years ago to 10 felonies related to investment fraud, took the witness stand today in Corona to testify against his former business partners at Daniel W. Heath & Associates.

Schlarmann, 52, is currently serving a 15-year sentence in state prison for his role in what authorities say was a $190 million Ponzi scheme that preyed on elderly investors.

His 2005 guilty plea left three defendants in the case, who are now on trial. They are Daniel W. Heath, 50; Heath’s father, John, 81; and Denis T. O’Brien, 53.

Schlarmann entered the courtroom of Judge Ronald Taylor at about 9:45 this morning, wearing a shirt and tie with his hands cuffed in front of him. A baliff removed the handcuffs before Schlarmann was sworn in by the court clerk.

Speaking before a courtroom gallery that was largely filled with people who had lost money in the alleged fraud, many of them from Orange County, Schlarmann, under questioning from prosecutor Mike Quesnel, explained the history of his business dealings with Daniel Heath.

The two met in the early 1980s, when both were living in Chino and attending the same church, Schlarmann said. At the time, Schlarmann said, he was working in the grocery business, while Heath was working for Arrowhead Water Co. as a delivery driver and salesman.

About 1985, Heath went to work selling insurance for the International Order of Foresters, a fraternal organization, Schlarmann said. At about the same time, Heath loaned Schlarmann roughly $1,500 to set up shop as a mortgage broker in Chino. Schlarmann later moved his business to Big Bear.

In Big Bear, Schlarmann found himself trying to arrange financing for the owner of a small resort who wanted to expand into an adjacent property. Heath helped Schlarmann raise the money by arranging for some of his Foresters clients to make loans to the project, Schlarmann said.

Later, the resort property went into foreclosure, leading one of the investors to sue Heath and Foresters, Schlarmann said. When Foresters found out that Heath had been directing its members into outside investments, Heath’s employment with Foresters ended, Schlarmann said.

Heath nevertheless continued to raise money for investors to finish work on the resort property and operate it after it was foreclosed on. The property became known as Big Bear Manor and was owned by Heath and Schlarmann.

Big Bear Manor lost money for virtually the entire time that Heath and Schlarmann owned it, which was about 13 years, Schlarmann said. Heath continued to raise money from investors to cover the operating losses of the resort, Schlarmann said.

In 2004, when Heath’s offices in Brea and Hemet were raided and shut down by state and federal investigators, the resort probably owed more than $3 million to Heath’s investors, much of which was in the form of unsecured loans, Schlarmann said. Those investments were never “safe and secure,” Schlarmann said.

Prosecutors have previously shown the jury marketing materials that Heath gave to investors, which promised safe and secure returns to senior citizens.

After Heath’s firm was shut down, a court appointed receiver sold Big Bear Manor for about $1.2 million to Schlarmann’s brother, Schlarmann said.

The trial, which is starting its second week, is expected to last eight to 12 weeks. Schlarmann will continue testifying this afternoon.

S.B. County deputies won't be charged in fatal shooting

Two San Bernardino County sheriff's deputies will not be charged in connection with the fatal shooting of a man who led them on a high-speed chase in a stolen car, then tried to escape a barricade, prosecutors said Thursday.

Deputies Jess Duran and Jason Hendrix were on patrol with the San Bernardino Police Department's Operation Phoenix crime-suppression plan Nov. 8 when they spotted a stolen 1994 Acura at a gas station.

After trailing the driver to a nearby Stater Bros. parking lot, they attempted to arrest him, according to a report by San Bernardino County Supervising Deputy District Attorney Vic Stull. But the man, later identified as 44-year-old Anthony Arteaga, hesitated to throw the keys outside as ordered. Instead he revved the car's engine to speed away, Stull's report said.

For a few minutes, the deputies followed the Acura as it ran traffic lights and stop signs and drove the wrong way on city streets. It entered Interstate 215 south and reached speeds of 140 mph before being forced into a spinout by pursuing officers, the report said.

When the Acura stopped, it was side by side with the sheriff's patrol car, and Arteaga was "shoulder to shoulder" with Hendrix, Stull wrote. With his hands hidden from the deputies' view, the suspect spun the tires and began to back up, Stull wrote.

When Duran saw Arteaga appear to "fumble for something," he fired four shots, Stull wrote.

Hendrix heard the pops, felt shards of glass breaking on his face and thought he was being shot at, the report states. Hendrix then fired his handgun three or four times.

Arteaga had been shot in the chest, neck and head.

An autopsy showed heroin and methamphetamine in his system, the report said.

The deputies had reasonable fear when Arteaga appeared to be reaching under the car seat while the car's wheels spun, Stull wrote

Police brutality charges leveled at council meeting

SAN BERNARDINO - A throng of angry residents and a distraught mother used Monday's City Council meeting as their megaphone to accuse police of brutality in breaking up a candlelight vigil the night before.

On Sunday night, community members said, more than a dozen police busted up a peaceful curbside service for Charles Marshall, 22, who was gunned down in a Westside apartment complex during the early morning hours of Saturday.

"It was a peaceful vigil," said Deiedra Marshall, the dead man's sister.

"The police came looking for trouble, they barged in people's houses, took people away, and were knocking down anybody who asked questions," Marshall said.

According to numerous speakers, including the dead man's mother, police parked their cars on an adjacent block before marching into the 1800 block of Bradley Court and using fists, nightsticks and pepper spray before hauling five or six people off to jail. One of the detained, said Marshall's mother, Judy Little, was the dead man's 16-year-old brother.

Other witnesses painted a generally consistent picture: 50 to 60 people gathered on the street in the predominately black neighborhood. Music was playing and candles marked where Marshall
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was killed. Police arrived, and tensions quickly escalated.

Police Chief Michael Billdt said an investigation into the incident would be conducted, and that he could not comment further because it was a personnel matter.

Council members listened as residents spoke in often impassioned, angry tones. They had differing reactions.

"There were a lot of allegations made," said Councilman Neil Derry after the meeting. "I don't know that any of them are true or false."

Councilman Rikke Van Johnson, whose 6th Ward encompasses the Westside enclave where the incident took place, said he was troubled by the testimony.

"You had a lot of people telling the same story," Johnson said after the meeting.

Residents were unanimous in lauding Marshall's character Monday. They said he was killed in a case of mistaken identity in front of his apartment. Moments before he was shot about 12:30 a.m. Saturday, other shots rang out in the neighborhood and Marshall took his young daughter inside to safety.

"He wasn't involved in gangs or drugs, he was just a peaceful boy," said his aunt Trina Newman.

After the meeting, Mayor Pat Morris approached Little and embraced her.

Morris told the grieving mother he was praying for her and that a thorough investigation into Sunday's incident would be conducted. Morris also told Little she was "courageous" for coming to the meeting and speaking.

"I'm deeply distressed by the reports you made today," Morris told Little before hugging her.

San Bernardino residents accuse officers of unprovoked attack

A gathering to mourn a San Bernardino man's death dissolved into a police melee Sunday evening, witnesses told the City Council on Monday.

Trina Newman, of Los Angeles, said the officers used foul language, punched and shoved bystanders, and used pepper spray indiscriminately.

About 25 residents of the Westside neighborhood where the clash occurred attended Monday's City Council meeting to describe what they called an unprovoked attack.

"We're not animals!" neighborhood resident Tommy Nelson Jr. told council members. "How would you guys feel if the police came when you were mourning a death? How would you feel?"

Police Chief Mike Billdt said police are investigating. Calling the case a confidential personnel matter, he declined to comment further.

Mayor Pat Morris said he was "deeply distressed" by neighborhood residents' reports.

Naenae McKenzie said the incident started about 7 p.m. Sunday, as 40 to 60 people were gathering for a candlelight vigil in memory of Charles Lawrence Marshall. Marshall, 22, was shot to death in the 1800 block of West Bradley Court shortly after midnight Saturday.

Nelson said he watched two phalanxes of police officers, with about 10 officers in each squad, stride toward the mourners and start to pick people out of the crowd.

"They were just snatching people up, with no questions, no nothing," he said.

He said he saw one officer speak briefly to a neighbor, McKenzie, then strike her in the face with his fist.

"He hit her twice like that: Bam! Bam! Just like she was a man," he said.

McKenzie confirmed the incident.

After the council meeting, Morris sought out Judith Little, Marshall's mother. Two of her sons were arrested Sunday.

"I'm deeply distressed by the reports that were made today by your neighbors and friends," Morris said.

"That was courageous and important, because these events are now well documented, and there will be a thorough investigation."

Reach Chris Richard at 909-806-3076 or crichard@PE.com

Police execute two aafter trapping them in shed

Men wielded yard tools before police took them down

ASSOCIATED PRESS

TORRANCE — An Adelanto man and his burglary accomplice were armed with “sharp yard tools” when they were shot to death by police during a confrontation, investigators said.

Reputed gang members Shaun McCoy, 22, of Adelanto and Charlie Wilson, 20, of Gardena were clutching garden tools and moving aggressively toward officers after the suspects were discovered in a shed Saturday, Lt. Rod Irvine said.

The men went into the shed during a four-hour manhunt for the burglary suspects. Two officers closed in when a police dog alerted officers there was someone inside.

“Officers began yelling for anyone inside to step out and give themselves up,” Irvine said. “Officers gave numerous commands from outside the shed, but they heard no responses from within.”

Officers then opened the shed’s door.

“They were immediately confronted by both Wilson and McCoy, who had armed themselves with sharp yard tools,” Irvine said. “The suspects moved aggressively toward the officers with the weapons in hand and the officers, in fear for their lives, fired multiple shots and stopped the suspects.”

Irvine wouldn’t describe the tools.

Police positively identified Wilson and McCoy as suspects in a home burglary.

The search that led to Saturday’s shooting began at about 10:30 a.m. when a neighbor called police to report that two suspicious men had hopped over a gate and entered the backyard of a home.

A new pretext for American militarism and domestic repression

A new National Intelligence Estimate (NIE), a report that synthesizes the findings of Washington’s 16 separate spy agencies, warns that the US faces a “heightened threat environment” for terrorist attacks. The Bush administration’s release of the report strongly suggests that the US government is seeking to justify new military interventions in both Pakistan and Iran, as well as stepped up domestic surveillance and other forms of state repression at home.

The unclassified summary of the report—formally titled “”The Terrorist Threat to the Homeland”—was released on Tuesday and consisted of little more than a page and a half of “key judgments.”

While the NIE’s publication was accompanied by a predictable media campaign to whip up a new terrorism scare, there was little new in terms of either information or analysis in the document, which repeated the well-worn theme that “the most serious threat” to the US—referred to ad nauseam in the NIE as “the Homeland”—is posed by “Islamic terrorist groups and cells, especially al-Qa’ida.”

Among the most significant sections of the document concerned the situation in Pakistan. It states that Al Qaeda has “protected or regenerated key elements of its Homeland attack capability, including a safehaven in the Pakistan Federally Administered Tribal Areas (FATA).”

This single line was the subject of extensive coverage in both the New York Times and Wall Street Journal Wednesday, both of which cited US officials suggesting that Washington is considering direct military intervention in Pakistan.

“US policy makers, under pressure to eradicate this haven with or without the cooperation of Islamabad, describe a vexing dilemma,” the Journal reported. “Any major unilateral effort by the Pentagon inside Pakistan, say US officials, could spark a local backlash strong enough to topple President Pervez Musharraf, a leader President Bush has called Washington’s strongest ally in the fight against al Qaeda.”

The Times, meanwhile, reported: “In weighing how to deal with the Qaeda threat in Pakistan, American officials have been meeting in recent weeks to discuss what some said was emerging as an aggressive new strategy, one that would include both public and covert elements. They said there was growing concern that pinprick attacks on Qaeda targets were not enough, but also said some new American measures might have to remain secret to avoid embarrassing General Musharraf.”

The document also cites Lebanon’s Shi’a-based political and paramilitary movement Hezbollah—whose electoral bloc won more than 80 percent of the vote in south Lebanon last year—as a potential terrorist threat to “the Homeland,” in the event that “it perceives the United States as posing a direct threat to the group or Iran.”

This suggests, under the Bush doctrine of preventive war against any and all such potential adversaries, that the US military-intelligence apparatus is preparing to intervene in Lebanon, either directly or using Israel once again as its proxy force.

In what the media has portrayed as a veiled criticism of the White House by the CIA and other intelligence agencies, the NIE points to the centrality of the Iraq war in generating a heightened threat of terrorist attack. The suggestion, which undermines the official claim that the war in Iraq has dealt a blow against terrorism, appears in only indirect and somewhat convoluted language.

The document states that “al-Qa’ida will probably seek to leverage the contacts and capabilities of al-Qa’ida in Iraq (AQI), its most visible and capable affiliate and the only one known to have expressed a desire to attack the Homeland. In addition, we assess that its association with AQI helps al-Qa’ida to energize the broader Sunni extremist community, raise resources and to recruit and indoctrinate operatives, including for Homeland attack.”

This language is considerably more diplomatic than that used in an April 2006 NIE, sections of which were leaked to the media in September of last year. That document stated more directly, “The Iraq conflict has become a cause célèbre for jihadists, breeding a deep resentment of US involvement in the Muslim world, and cultivating supporters for the global jihadist movement,” while apparently also referring to the revelations concerning torture and abuse at Abu Ghraib and Guantanamo.

The toned-down presentation and tortuous syntax no doubt reflect pressure from the White House, which has a well-documented history of manipulating intelligence reports for political purposes.

Bush took the release of the report as the occasion to repeat his imbecilic claims that the US military in Iraq is fighting the “same people who attacked us on September 11.”

In remarks to reporters in the Oval Office, Bush argued once again that the war in Iraq is essentially a battle against Al Qaeda. “These people have sworn allegiance to the very same man who ordered the attack on September the 11th, 2001: Osama bin Laden,” he said. “And they want us to leave parts of the world, like Iraq, so they can establish a safe haven from which to spread their poisonous ideology. And we are steadfast in our determination to not only protect the American people, but to protect these young democracies.”

In what appeared to be a remarkably fortuitous coincidence, the US command in Baghdad announced the day after the NIE’s release that it had captured Al Qaeda in Iraq’s highest-ranking Iraqi leader, claiming that he had provided information indicating that the Al Qaeda organization of Osama bin Laden exercises considerable influence over the Iraqi group.

In point of fact, the announcement of the capture may have been something less than a coincidence, given that the supposed AQI leader was in fact captured two weeks earlier.

The conspicuous flaw in the argument of the Bush White House is the fact that there was no Al Qaeda presence in Iraq before the US invasion in 2003. Moreover, the incessant claims by the administration that US troops are battling members of this terrorist organization is used to mask the broad support that exists within the Iraqi population for attacks on the American occupation forces and the involvement in these attacks of a wide spectrum of groups and individuals who have nothing to do with Al Qaeda.

For their part, the Democrats predictably seized upon the report to charge the Bush White House with mismanaging the “global war on terror” and to promote their case for a scaled-down US occupation in Iraq, combined with an intensified US intervention in Afghanistan and perhaps elsewhere.

Typical was the response of Illinois Democratic Senator and presidential candidate Barack Obama. “After almost six years, awesome sacrifices by our brave men and women in uniform, and hundreds of billions of dollars spent, we are no safer than we were on 9/11,” he said. “This is a consequence of waging a misguided war in Iraq that should never have been authorized, and failing to seize the opportunity to do lasting harm to the extremist networks that pose a direct threat to our homeland.”

Lee Hamilton, the former Democratic congressman who co-chaired the 9/11 Commission as well as the Iraq Study Group made the same essential case in somewhat more sober language.

Speaking to reporters Wednesday, he asserted that Washington, “lost an opportunity” to destroy Al Qaeda in Afghanistan when it shifted its military resources to the invasion of Iraq. “We were distracted when we went into Iraq,” he said.

He also took issue with the Bush administration’s attempt to portray the war in Iraq as merely a struggle against Al Qaeda. “I think the enemy is evolving, constantly changing, and multi-faceted,” he said. “It is very difficult to define the enemy in Iraq.”

ABC News quoted the US National Security Council’s former chief counter-terrorism adviser, Richard Clarke, as saying that the unclassified version of the NIE amounted to “pure pablum.”

Clarke went on to argue that more interesting than what the document said was what it left out. He noted that the 2006 NIE and earlier documents had stressed that US counter-terrorism efforts had “seriously damaged the leadership of al-Qaeda and disrupted its operations.”

“That is no longer the case in 2007, and you have to read between the lines to understand how we have lost ground,” Clarke continued. He added, “Given that there was no al-Qaeda in Iraq until we invaded there, it’s hard not to draw the conclusion that going to Iraq has created a further threat to the United States.”

Bush’s homeland security adviser, Frances Townsend, offered a curious rebuttal to these arguments, asserting that critics of the administration’s policy were viewing the “war on terror” as “a zero-sum game.”

“The fact is that we are harassing them in Afghanistan, we’re harassing them in Iraq, we’re harassing them in other ways, non-militarily, around the world,” she said. “And the answer is, every time you poke the hornet’s nest, they are bound to come back and push back on you.”

“Harassing” is an odd term to describe these operations—it is generally associated with attacks by smaller, irregular forces against a more powerful regular army. As for the analogy of poking a hornet’s nest, the reality is that the US war in Iraq, along with its use of torture, “extraordinary renditions” and other criminal methods have created intense hostility among millions upon millions of Muslims—as well as others—all over the world, in some cases giving rise to terrorist acts by people who have no connection to Al Qaeda.

This is suggested in the NIE itself, which declares that “the growing number of radical, self-generating cells in Western countries indicate that the radical and violent segment of the West’s Muslim population is expanding, including in the United States.”

This judgment will become the basis for even more intensive surveillance and repression, not only of immigrants in the United States from Arab and Muslim-populated countries, but also of all those who oppose such attacks on democratic rights and the ongoing US aggression in Iraq and Afghanistan.

The release of the latest National Intelligence Estimate has only underscored that Washington is intent on continuing to use terrorism as a weapon of political intimidation within the US itself. At the same time, the reaction of both Democrats and Republicans to the document makes it clear that, the bitter debate over strategy and tactics in Iraq notwithstanding, new acts of American militarism are being prepared, with the backing of both major parties.

Report: Gang Suppression Doesn't Work

By ANDREW GLAZER - Anti-gang legislation and police crackdowns are failing so badly that they are strengthening the criminal organizations and making U.S. cities more dangerous, according to a report being released Wednesday.

Mass arrests, stiff prison sentences often served with other gang members and other strategies that focus on law enforcement rather than intervention actually strengthen gang ties and further marginalize angry young men, according to the Justice Policy Institute, a Washington, D.C., think tank that advocates alternatives to incarceration.

'We're talking about 12-, 13-, 14-, 15-year-olds whose involvement in gangs is likely to be ephemeral unless they are pulled off the street and put in prison, where they will come out with much stronger gang allegiances,' said Judith Greene, co-author of 'Gang Wars: The Failure of Enforcement Tactics and the Need for Effective Public Safety Strategies.'

The report is based on interviews and analysis of hundreds of pages of previously published statistics and reports. And though it is valid and accurate, the ideas raised in it are not new, said Arthur Lurigio, a psychologist and criminal justice professor at Loyola University of Chicago.

'These approaches, although they sound novel, are just old wine in new bottles,' he said. 'Gang crime and violence in poor urban neighborhoods have been a problem since the latter parts of the 19th century.'

Lurigio, other academics and gang intervention workers have echoed elements of the report that found gangs need to be viewed as a symptom of other problems in poor communities, such as violence, teen pregnancy, drug abuse and unemployment.

The report says Los Angeles and Chicago are losing the war on gangs because they focus on law enforcement and are short on intervention.

It cites a report this year by civil rights attorney Connie Rice, who was hired by Los Angeles to evaluate its failing anti-gang programs. Her report called for an initiative to provide jobs and recreational programs in impoverished neighborhoods.

Mayor Antonio Villaraigosa and Police Chief William Bratton both commended Rice's report. But in February, they unveiled a strategy that focused on targeting the city's worst gangs with arrests and civil injunctions that prohibit known gang members from associating with one another in public. Rice describes the city's policy on arresting the city's estimated 39,000 gang members as 'stuck on stupid.'

Wes McBride, executive director of the California Gang Investigators Association, dismissed the findings of the report, which he said was written by 'thug-huggers.' The investigators association is a professional organization for police officers.

'Are they saying we can't put a thief in jail, we can't put a murderer in jail, that we should spank them, put a diaper on them, pat them on the bottom, hug them and let them go?' McBride said. 'It's obviously a think tank report, and they didn't leave their ivory tower and spend any time on the streets.'

'Gang Wars' also criticizes politicians who overstate the threat of criminal gangs and seek tougher sentences.

Greene specifically criticized a bill introduced by Sens. Dianne Feinstein, D-Calif., and Orrin Hatch, R-Utah, that would make it illegal to be a member of a criminal gang and would make it easier to prosecute some minors as adults.

But Feinstein spokesman Scott Gerber said the bill also calls for spending more than $400 million on gang prevention and intervention programs, which he said would be the largest single investment of its kind.

Former surgeon general Richard H. Carmona yesterday accused the Bush administration of muzzling him on sensitive public health issues, becoming the mo

WASHINGTON -- Nearly 12 percent of Army recruits who entered basic training this year needed a special waiver for those with criminal records, a dramatic increase over last year and 2 1/2 times the percentage four years ago, according to new Army statistics obtained by the Globe.

With less than three months left in the fiscal year, 11.6 percent of new active-duty and Army Reserve troops in 2007 have received a so-called "moral waiver," up from 7.9 percent in fiscal year 2006, according to figures from the US Army Recruiting Command. In fiscal 2003 and 2004, soldiers granted waivers accounted for 4.6 percent of new recruits; in 2005, it was 6.2 percent.

Army officials acknowledge privately that the increase in moral waivers reflects the difficulty of signing up sufficient numbers of recruits to sustain an increasingly unpopular war in Iraq; the Army fell short of its monthly recruiting goals in May and June.

Since Oct. 1, 2006, when the fiscal year began, more than 8,000 of the roughly 69,000 recruits have been granted waivers for offenses ranging in seriousness from misdemeanors such as vandalism to felonies such as burglary and aggravated assault.

Army officials say the majority of such recruits committed relatively minor offenses and have not been in prison. They point out that waivers are granted only after a careful review of each soldier's history -- and only when the applicant has shown remorse or changed behavior.

But former military officials and defense specialists said they fear that enlisting more soldiers with criminal backgrounds will increase the risk of disciplinary problems and criminal activity among soldiers in uniform.

"Somebody who has demonstrated themselves to be guilty of misbehavior in civilian life has a good chance of behaving in the same way in the military," said John Hutson , judge advocate general of the Navy until 2000 and now dean of the Franklin Pierce Law Center at the University of New Hampshire.

Hutson said he witnessed the consequences of allowing former criminal offenders to join the ranks in the 1970s, the last time the military enlisted high numbers of soldiers with criminal histories. The numbers of recruits with criminal pasts who were allowed to join in the 1970s is not available, according to the Army. But Hutson said such soldiers often showed up in military court for committing new offenses.

"There were all kinds of what I call 'frustration offenses,' " he said, citing drug use, burglary, and violent behavior. "Some people are incapable of coping with the regimen of military life so they act out in all kinds of ways."

Moral waivers must be approved by an officer of the rank of lieutenant colonel or higher and are required when an Army applicant has been found guilty of committing four or more minor offenses such as littering or disorderly conduct -- or two to four misdemeanors such as larceny, trespassing, or vandalism.

Applicants who have committed a single felony such as arson, burglary, aggravated assault, breaking and entering, or marijuana possession must also receive a moral waiver to join. Applicants with more than one felony -- or with a single conviction for a more serious crime such as homicide, sexual violence, or drug trafficking -- are not eligible.

"In most cases we see, the charges were from a period of time when the applicant was young and immature," said a two-page statement from the Army Recruiting Command, based in Fort Knox, Ky., provided in response to queries from the Globe.

"We look at the recent history such as employment, schooling, references, and signs of remorse and changed behavior since the incident occurred as part of the waiver process," the statement said. "The Army does not rehabilitate enlistees who receive waivers; they have already overcome their mistakes."

Allowing former criminals to fight for their country "is the right thing to do for those Americans who want to answer the call of duty," the statement said.

But other Defense Department officials maintain that the rise in criminal waivers is also a direct result of the Army's struggle to meet recruiting targets.

"There is terrific pressure put on the recruiters," said Alan Gropman , a professor at the Pentagon's National Defense University. "They have to meet their mission so they request more waivers. In order to make the numbers they have to lower the standards."

Since 2003 the Pentagon has taken unprecedented steps to try to meet its recruiting goals, including lowering education standards, raising the maximum age, and steadily increasing the amount of bonuses for new volunteers. But granting more waivers for criminals, specialists said, could end up backfiring.

One former senior Defense official, who remains a consultant to the Pentagon, said there is growing concern in the ranks that members of street gangs have been joining the military and then engaging in criminal activity.

A spokesman for the Army's Criminal Investigative Division said he was not aware of any formal investigation into gang activity in the Army.

But David Isenberg , a senior analyst at the British American Security Information Council, a nonpartisan Washington think tank, said studies from past decades indicate that soldiers with criminal histories were more likely to violate military regulations.

"The worse . . . moral background you came from, the lousier job you did, not only in terms of your personal performance but in dragging down unit cohesion," said Isenberg, a Navy veteran.

Even some of the staunchest supporters of the Iraq war believe the Army is signing up too many people with criminal histories.

"The military depends on good order and discipline and we should be seeking the type of recruits most likely to fill that profile," said Elaine Donnelly , president of the Center for Military Readiness, a conservative advocacy group in Washington.

Bryan Bender can be reached at bender@globe.com.