Couple Sentenced in Fuel Fraud

An Anaheim Hills couple who operated a string of 200 Southern California service stations drew eight-year state prison terms Wednesday and were ordered to pay $162 million for selling adulterated gasoline and violating California pollution and tax laws.

The sentences of Gary and Divine Grace Lazar in Los Angeles County Superior Court end one of the most extensive state and local investigations ever of gasoline and cigarette tax fraud and of violations of laws covering air pollution and underground fuel tank inspection. The Lazars entered no-contest pleas last fall to 54 felony counts. Prosecutors asked Superior Court Judge Paul G. Flynn to send each defendant to prison for eight years and to assess fines and penalties of $652 million.

Lead prosecutor Anthony G. Patchett, a deputy district attorney in Los Angeles County’s environmental crimes division, had sought the higher fine to send a message to others in the retail gasoline business.

Authorities alleged that the couple doctored gasoline, faked tests on leaky underground fuel tanks and failed to pay nearly $25 million in state sales, gas and cigarette taxes.

In sentencing hearings that began Feb. 10 and lasted several days, the court-appointed trustee for the Lazars’ companies, which filed bankruptcy in 1992, testified that the couple apparently transferred millions of dollars to bank accounts in the Cayman Islands, the Isle of Jersey and Liechtenstein.

State and local officials are seeking the money to help pay for the cleanup of many of the Lazars’ Southern California service stations that have leaking underground fuel tanks.

Just $300,000 has been spent so far to clean up contaminated Lazar stations, “far less than needs to be spent,” testified the trustee, George E. Schulman, a Century City lawyer.

During the same hearing, Carl W. Sjoberg, who led the underground-tank investigation for the Los Angeles County Department of Public Works, testified that “of those stations we believe are still under their (the Lazars’) control” in Los Angeles County, none was yet complying with pollution laws.