Twice bitten: White-collar crime victims mostly unpaid despite restitution orders

At the rate approved by a federal judge, it will take convicted swindler Tony Daniloo more than 10,000 years to repay what he stole from his victims.

One of them, owed $74,000, is 85 years old and fading with Alzheimer’s disease. The woman’s daughter and full-time caregiver, Linda Malone, says they lost everything in Daniloo’s scam, are too poor to buy a car, are hounded by creditors and have no hope of returning to a normal life.

“I’d rather shoot the son of a bitch,” Malone said, than wait for pennies representing their share of Daniloo’s repayment. A judge formally set it at $50 per month when Daniloo had trouble keeping a heating and air-conditioning job not long after his January 2013 release from federal prison.

Other victims of Stanislaus County’s more notorious white-collar criminals have similar stories.

“Nothing yet,” said Walt Kilby of the $80,000 he’s owed by Jim Lankford, former owner of Century 21 Apollo in Modesto, now doing time in a federal penitentiary in Oklahoma. “The man has no conscience at all,” Kilby said.

Lankford, 76, will be five days shy of 84 upon his release date in 2022; so far, he has repaid four-hundreths of 1 percent of what he bilked from elderly homeowners and banks, or $575 of his $1.3 million restitution order.

Several victims have died waiting.

Trellis Pyle, who called Lankford a “crooked devil” in a 2008 Modesto Bee interview for siphoning hundreds of thousands of dollars from her, died in 2010, four years before he was sentenced. Also succumbing that year was Paul Triller. By law, Lankford continues to owe Triller’s estate and survivors $337,500; a few weeks ago, a partial payment check arrived – for $82.

“It’s heart-wrenching,” said Modesto’s Janet Kenworthy of the humiliation suffered by her aunt, who lost $288,000 in a Stanislaus-area scheme advanced by John Michael Pappas. He was released two years ago after more than four years in federal prison and has repaid victims $6,606 of the $4.7 million he owes.

Joel Nathan Ward, Turlock’s “financial serial killer,” has the best track record among six white-collar criminals tracked by The Bee, all owing a minimum of $1 million. Ward, sentenced to a nine-year term, was released three weeks ago and has repaid $15,618; his restitution order came to $11.3 million.

Just before Ward was sentenced to federal prison in 2008, a judge rejected the former day trader’s request for home detention so he could try to pay back victims by speculating in the foreign currency market.

None of the six offenders analyzed by The Bee has paid more than 1 percent of the money ordered by judges when sentenced; combined, they owe nearly $33 million, and have coughed up less than $29,000, or nine-tenths of a cent for each $100 ordered in restitution.

Too often, such restitution orders amount to little more than “pretty pieces of paper,” acknowledged Barbara Roehrick, whose job is creating them. As Stanislaus’ restitution paralegal, she paves the way for judges to formally put a price on victims’ damages – as required by law, although collecting the money is another story.

“It’s not working as well as it should,” agreed her boss, Stanislaus County District Attorney Birgit Fladager.

“There is no way to force them to pay restitution,” said Peggy Vargas, staff attorney at the McGeorge School of Law’s Victim Resource Center. “You can’t force them to work because that would be slavery. If they have no assets, there’s nothing to seize.”

The Bee was unable to reach those in the analysis who have been released: Daniloo, Pappas and Ward. In addition to Lankford, The Bee’s review includes Alan David Tikal, whose more than 1,000 victims here and far beyond blamed him for divorces, miscarriages, death and financial disaster; he has paid nothing toward his $3.7 million restitution order since being sentenced in March.

Also included is Jewel Hinkles, also known as Cydney Sanchez, who swindled $5.1 million with the help of accomplices, including a Modesto man, in a scheme with more than 1,000 victims that first was detected in Modesto.

Meanwhile, Tony Huy Havens runs a store on Modesto’s McHenry Avenue called Emperor Electronics while awaiting two separate fraud trials in federal court, scheduled for November and January. In a court document, authorities say they could seek a restitution order exceeding $6 million, representing what he allegedly duped from investors.

In a telephone call Wednesday, Havens chuckled and said, “Obviously, I didn’t take that much money.” Asked how he might repay it if convicted, Havens said, “It’s like bleeding a rock.”

In 2008, Havens was sentenced to five years in prison for swindling $208,000 from victims in another Stanislaus fraud scheme, and in 2003 was convicted of impersonating a notary public.

Xue Heu of Modesto, alias Michael Chan, is scheduled to be sentenced next week in federal court after pleading guilty in April to two fraud counts, and authorities say his investors were cheated out of $1.3 million. But he was rearrested in May and charged with bilking $6,000 from a new victim in Modesto using a similar ruse, casting uncertainty on his plea deal, and he was excluded from The Bee’s analysis.

Nor does the review include Aruna Kumari Chopra, whose fraud trial in federal court scheduled for August was postponed on Thursday until February. Alleged victims said they lost $12.4 million in Chopra’s dream of building Modesto’s first Imax theater on Dale Road across from Kaiser Modesto Medical Center; her lawyer said in a court briefing that investors since “have been fully compensated for the losses” after foreclosing on the land.

Her case is complicated by a Stanislaus lawsuit, her ongoing bankruptcy and the new arrest late last year of Chopra and her husband on charges that they cheated other investors in a 26-year-old Danville land deal using a similar ruse involving forged signatures on property documents.

Also missing from The Bee’s review is Bounthavy Tyler Manivong, whose $2.1 million restitution order upon his conviction in 2010 was among the highest for white-collar cases brought in recent years by Stanislaus prosecutors, as opposed to being elevated to federal courts. He had spent money entrusted to him by property investors, and was sentenced to five years in state prison.

That put the California Department of Corrections and Rehabilitation in charge of collecting Manivong’s debt for victims. Deputy press secretary Terry Thornton granted an interview about restitution but could not say how much money Manivong has repaid.

“I’ve never had anybody ask the question – how much someone was ordered to pay and how much has been paid – and I’ve worked here since 1998,” Thornton said. Only inmates and victims, not the public, can learn individual payment histories, said the department’s Dana Simas.

The office released general numbers, such as total restitution owed by 131,310 state prison inmates – $4.5 billion – and how much the state collects each year: $19.2 million, on average, for each of the past five years. The largest individual restitution order is $306 million, and the average is $34,350.

Experts praise the state system for being more effective than collections on the county or federal level. The state Corrections Department skims half the money that appears in an inmate’s account while he or she is behind bars, whether deposited by loved ones or earned at prison jobs paying as little as 38 cents an hour. Upon parole, the state Franchise Tax Board can garnish wages and place liens on inheritance, bank accounts and lottery winnings.

Restitution orders on any judicial level don’t expire and can’t be erased in bankruptcy. Some victims hire attorneys to pursue civil remedies, or lawsuits that can result in judgments and liens. And some victims are eligible for immediate relief through the California Crime Victim Compensation Program, if involved in a violent crime.

But state prisons hold far fewer inmates these days, and county jails more, thanks to a shift in custodial responsibility enacted a few years ago.

Although none of the offenders in The Bee’s analysis ended up in local custody, Natascha Roof and Karen Curci of the Stanislaus County Probation Department discussed how their officers pressure those released to make good on financial commitments. Last year, the office collected $419,458 for victims, up from $331,382 in 2013 and $345,391 in 2012.

“Part of rehabilitation is holding them accountable, including reimbursing victims,” Roof said.

Curci said, “One of the biggest misconceptions people have is when victims are entitled to restitution. I get calls all the time: ‘I was granted $5,000 in restitution; where can I pick that up?’ It comes as a shock to victims that you don’t get it unless (offenders) pay it. Some of them do. Many don’t.”

Authorities can threaten to extend probation for failure to pay restitution, or raise the specter of more jail time. “But it’s challenging because often, they don’t have gainful and consistent employment,” Roof said.

The county probation office doesn’t have authority to garnish wages or place liens. The county has had some luck threatening to intercept money heading to probationers in annual tax return refunds. Big accounts are turned over to the county’s revenue recovery division, which sends 20,000 bills each month to people owing money for all sorts of reasons.

Fladager said she would love to establish a restitution court to clamp down on scofflaws, where offenders are required to appear regularly and account for progress. But only two have sprung up in California – in Alameda and Santa Clara counties – both requiring a commitment from overworked judges and staff.

Steve Dippert provided much of the muscle behind Santa Clara’s experiment before retiring in February, helping to collect millions of dollars each year for victims.

“I can’t tell you how it warmed the cockles of my heart when I could find money,” Dippert said, sometimes for people who had given up years before. But even Santa Clara’s effort has waned because of scarce resources, he said.

“Victims are getting screwed every day, and I just don’t think there are enough people who care,” Dippert said. “Everyone would love to have a restitution court but nobody can get their courts to do it. The courts have this feeling that it isn’t important enough to assign a judge to it. You would think a judge would see this as a public relations bonus, helping victims, but they just don’t see that as their role.”

Malone, 62, said that after all these years, she has no faith in getting much from Daniloo. Malone’s mother did receive $6,100 from Daniloo’s ex-wife, who faced jail time but cut her own plea deal with prosecutors, sold some jewelry and divorced him in early 2008, at the time telling The Bee she had been blinded to her husband’s corruption.

“It’s been rough. He took everything,” said Malone, whose grandfather milked cows upon emigrating from Portugal several decades ago. He scrimped, eventually established his own dairy and built several houses and office buildings in Newark; almost all were lost in Daniloo’s scam.

Daniloo had ripped off his parents, his wife’s parents, his friends and neighbors, according to legal documents, while posing as a wealthy philanthropist, pledging millions of dollars to California State University, Stanislaus, and Turlock’s Emanuel Medical Center. Daniloo had enriched himself with luxury cars and jewelry and was a finalist in naming rights to the San Francisco 49ers stadium before his house of cards tumbled.

Now Daniloo is a free man, “and we’re suffering,” said Malone, who depends on her mother’s meager Social Security and pension payments. “We weren’t ‘rich’ rich, but we never wanted for anything. Now we’re living day to day. When it gets to the point where you’re having a hell of a time paying bills, that hurts.”

Daniloo apparently has lived up to expectations since his minimum monthly payment was fixed at $50 19 months ago; he has paid $1,160 since, for a monthly average of $61, bringing the total he has repaid in nearly eight years to $5,624.

That $6.7 million federal restitution order, by the way, is on top of the $1.3 million Daniloo was ordered to repay victims in a separate 2006 fraud conviction in Alameda County, toward which he has paid nothing.

“That man made me see red,” continued Malone, whose friend of 30 years, Theresa Lund, committed suicide after losing nearly $1 million of a family trust in Daniloo’s scheme; that story was documented by Lund’s twin sister, Anita Vitti, in The Bee just before Daniloo’s sentencing in April 2007.

“Everything my grandparents had worked for, he got,” Malone said. “It will never be buried, not with me.”

This story was originally published July 11, 2015 at 4:13 PM with the headline "Twice bitten: White-collar crime victims mostly unpaid despite restitution orders."