18 indicted in Central Valley marijuana, mortgage scheme
Oct 25, 2009 Online Issue
Federal prosecutors announced 18 indictments Thursday in a pot cultivation and mortgage fraud scheme that purchased homes in Elk Grove 
and Sacramento and converted them into bustling “grow houses” for tens of thousands of marijuana plants.
Nine people are in custody. Authorities are searching for other indicted suspects who may have fled from the Bay Area to China.
The individuals were charged with orchestrating bogus real estate transactions to buy 51 houses in the Central Valley, then establish indoor pot-growing operations using sophisticated lighting and irrigation and stealing thousands of dollars’ worth of electricity.
“They came into our cookie-cutter residential neighborhoods and created cookie-cutter marijuana factories,” said Gordon Taylor, assistant special agent for the U.S. Drug Enforcement Administration in Sacramento.
The indictments stemmed from the discovery of massive indoor growing operations in 2006 and 2007 in Elk Grove, Sacramento, Stockton, Lathrop, Tracy, Modesto and the Alameda County town of Mountain House.
Three people were indicted on charges of conspiracy to manufacture marijuana, in connection with pot operations at 15 houses in Elk Grove and six in Sacramento.
One suspect in the local grows, Guo Ying “Ivan” Lu, 29, of Milpitas is in custody. Two others, Siming Zhu, 32, and Dennis Hou Huan Yang, 28, both of San Francisco, remain at large.
This crop of indictments follows 17 previous actions in the pot-growing case. Fifteen people pleaded guilty in those earlier indictments and two fled after authorities seized 24,200 marijuana plants from the indoor growing operations. The high-grade pot was worth $96 million and its potency “was the highest we’ve ever seen in this area,” Taylor said.
With the new sealed indictments, authorities said they climbed the ladder of an intricate organized crime operation based in San Francisco.
One of the newly indicted suspects being sought in the case, Dickson Wing Kei Hung, 35, is a real estate agent from San Francisco. He was indicted on charges of marijuana conspiracy and mail fraud for allegedly setting up phony mortgage loans to buy houses for the operations.
Sacramento U.S. Attorney Larry Brown said the scheme began to unravel in late 2006 when neighbors started noticing unkempt lawns and strange activity at houses where no one was living.
“They chose to set up their operations in the Central Valley due to lower housing costs,” Brown said. “They chose unwisely. What they failed to anticipate were residents who keep a watchful eye on their neighborhoods.”
Scott O’Briant, a special agent in charge of criminal investigations for the Internal Revenue Service, said the organization defrauded mortgage lenders to obtain $15 million in residential loans based on “straw buyers” and false credit information.
He said Hung and associates recruited “individuals with good credit ratings” to sign mortgage loan applications for homes they never intended to occupy. But he said the loan applications were augmented with bogus employment and exaggerated salary information.
He said some buyers “knew they were being used to grow marijuana. But others had no idea.” None of the people who posed as buyers have been charged to date, O’Briant said.
Three people indicted for allegedly orchestrating the mortgage fraud scheme were in custody Thursday. They are Ngai Chung Hung, 28, of San Francisco, Wayne Rong Zhi Feng, 29, of Oakland and Wing Chou Chan, 27, of San Francisco.
Dickson Wing Kei Hung and Karen N. Lee, 29, of San Francisco were still at large.
Authorities said they believe that as many as nine of the latest indicted suspects have fled to China.
Since 2006, authorities in the Sacramento region have arrested dozens of suspects in indoor marijuana growing operations, including unrelated raids in Auburn, Foresthill, Placerville, El Dorado Hills, Cameron Park and Galt.
Along the way, they discovered homes totally retrofitted for marijuana production.
In the latest case, Taylor said, suspects cut into main electrical lines in Sacramento and Elk Grove, “bypassed the electric meter and created their own circuit boxes” to steal some $4,000 in electricity a month.
When some pot houses were discovered after neighbors reported chronically unmowed lawns, growers hired gardeners.
“One gardener said he was cultivating lawns for eight homes” in the pot operation, Gordon said.
Ultimately, the growers abandoned the houses. Fifty of the 51 went into foreclosure.
“This organization just walked away … leaving the loan companies and the communities holding the bag,” Taylor said.
SOURCE: THE SACRAMENTO BEE
Tags: Elk Grove, Sacramento
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