Lawsuit Claims Former LA Sheriff Lee Baca Helped Pal in Investment Scheme

Ronald Reagan Federal Courthouse in Santa Ana: Where crime autopsies occur
Ronald Reagan Federal Courthouse in Santa Ana: Where crime autopsies occur
R. Scott Moxley/OC Weekly

In my world--one overloaded with journalists, politicians, cops, bureaucrats, lawyers and judges--a sales pitch that, say, a $3 million personal investment will swell into $100 million in weeks is a knee-slapping, cry-laughing joke. That's one of numerous reasons why the case of Stanley Toy Jr. stands out. A Los Angeles County medical doctor, veteran investor, political appointee and major Democrat donor with connections to President Barack Obama, Toy claimed con artists asserting secret, high-level banking-world connections and the ability to deliver rapid returns of more than 3,300 percent suckered him.

Sophisticated financial crimes are, of course, an everyday occurrence in Southern California, but Toy's mess is unique. From 2006 to 2007, he counted among his pals then-LA Sheriff Lee Baca and Undersheriff Larry Waldie, who made him a reserve lieutenant sheriff after taking his regular campaign contributions. Orange County experienced a similar unseemly pay-to-play scenario in which, before his FBI arrest and six-year prison trip, Sheriff Mike Carona routinely gave guns and official badges to wealthy businessmen seeking law-enforcement influence.

Toy used his own connections in hopes of buying a hospital that would nab lucrative government contracts for indigent patients, an idea he pitched to Arlene Shih, a senior vice president at Chinatrust Bank. Toy didn't know Shih's job served as front for her real occupation, which a California Court of Appeal later characterized as a serial embezzler with ties to men skillful at luring gullible investors into scams with intricate enticements heavy on mystery and big on promises.

Shih said Chinatrust Bank wasn't interested in the hospital deal, but she put Toy in touch with Emmanual Waters, who suggested the use of Gary Koval, a Monterey-area man claiming to represent the World Bank on humanitarian projects in which ultra-wealthy individuals could secretly participate in a private placement program and make astonishing, near-overnight windfalls on their investments. Koval told Toy he could convert his $3 million into $100 million "within four to six weeks" by using European banks and off-the-books maneuverings, according to court records. As part of the deal, however, Toy--who attended a 2011 White House state dinner for Chinese leader Hu Jintao--was prohibited from asking questions about the transactions or telling anyone about the arrangement, and Shih wanted a $1 million fee for herself.

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Toy hadn't just fallen off the turnip truck, but he insisted he dismissed the noisily flapping red flags because, he later testified, Koval assured him he was a "God-fearing Christian." Borrowing money from a fellow doctor and a corporation, Toy sent him $3 million. After a July 2007 meeting at the swank, oceanfront Montage resort in Laguna Beach, Koval allegedly used Flavio Rodriguez in an attempt to facilitate a $100 million bank note in Zurich. Rodriguez claims he performed his contractual obligations--including conducting meetings overseas with potential partners--and took the agreed-upon $780,000 fee from Koval. But the deal nonetheless fell apart, and Toy lost his entire investment. In 2014, California appellate justices felt no sympathy for him in his negligent supervision lawsuit against Chinatrust Bank, noting he should have known investing carried the risk of loss.

But here's where this story takes a steep roller-coaster dip.  Toy, who anxiously needed to repay his loan, asked his police colleagues for help. A March 2008 internal Los Angeles Sheriff's Department (LASD) document with a "High" priority stamp reads, "The victim is a friend of the sheriff. Please provide detailed information on exactly how this should be handled. We need to make absolutely sure there will not be a problem when it comes time to reimburse the victim."

LA deputy James Corbin launched a criminal investigation, leading to felony grand-theft charges against Rodriguez. In 2012, a jury found him not guilty. But, oddly, the sheriff's department hadn't waited for that legal conclusion.

In 2008, Baca's agency confiscated the $780,000 from Rodriguez's bank account and gave it to Toy. When Rodriquez, who'd never met Toy, complained after his court victory, sheriff's officials said they couldn't return what they didn't possess. He sued Baca, Waldie, Toy, Corbin, Shih, Waters and Chinatrust Bank.

In a wild 2013 case that landed at Orange County's Ronald Reagan Federal Courthouse with U.S. District Court Judge Andrew J. Guilford, Rodriguez's lawyer, Alexandria C. Phillips of Laguna Beach, argued that Toy received illegal favors from the sheriff's department. Phillips claimed Corbin falsely told the judge, who'd allowed the $780,000 seizure, that Rodriguez couldn't be located. During that period, however, he was represented by two prominent lawyers--neither of whom the deputy contacted about the pending seizure, she declared in court records. Phillips also said she has evidence Rodriguez's prosecutor, Deputy District Attorney Sandra Olivera, told Corbin to not grab the money.

"Toy's [LA Sheriff's] case file had been marked as a 'Friend of the Sheriff' case," Phillips told Guilford. "LASD spokesperson Steve Witmore admitted to the existence of the Friends of the Sheriff program to the general public and indicated that Undersheriff Waldie operated the program."

Indeed, Los Angeles Magazine published a 1999 article, "Play Cops," which identified Toy's coziness with Baca after making contributions. That was followed by a series of investigative reports by the undefeatable Robert Faturechi at the Los Angeles Times. Faturechi is the authority on Baca's reign, publishing numerous articles about how the sheriff used his perch to favor contributors, friends and relatives. (For example, see his stories in 2010, 2011 and 2013.) Baca at the time plotted a fifth term over the powerful agency with a $2.55 billion annual budget. Since then, the FBI has arrested members of Baca's leadership team for corruption and hinted the ex-sheriff, who retired, is a potential target of a federal grand jury.

Meanwhile, Rodriguez's lawsuit has produced varying results. Last year, Chinatrust Bank gave him $150,000 to drop out of the case without conceding wrongdoing. Attorneys for the sheriff's department remained opposed to any concessions, claiming law-enforcement officers enjoy legal immunity for their official actions. Settlement negotiations went nowhere, and in September, Guilford--the judge who presided over Carona's historic conviction--agreed to hand the sheriff's department defendants, as well as the other defendents, summary judgment. He opined that the plaintiff's case was technically sloppy and factually unconvincing.

"Plaintiff tries to support his [case] with citations to supporting exhibits, but numerous times, plaintiff cited to nonexistent evidence," Guilford wrote on Sept. 4. "For example, plaintiff cites to exhibit 24 on page 15 of his opposition [to summary judgment brief], but there is no exhibit 24. Also, on page 15 of his opposition, plaintiff cites to page 416 of exhibit 7, but page 416 is not included in exhibit 7."

The sloppiness didn't delight the meticulous judge, who took this terse shot: "Judges are not like pigs, hunting for truffles buried in the briefs."

The matter may not be settled, however. Rodriguez still believes he was wronged. He's now seeking relief from Guilford's stance at the Ninth Circuit Court of Appeals.

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Email: Twitter: @RScottMoxley.

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