Scientologists will face trial after judge cites ‘sophisticated fraud’ scheme

Once again, Jeffrey Augustine was on hand as the preliminary hearing continued yesterday in the case of Scientologist Hanan Islam and three of her children, accused of a scheme using a Scientology Narconon drug rehab clinic, corrupt local educators, and unwitting high school students to defraud the state’s Medi-Cal program of nearly $4 million between 2010 and 2013.

This was the third day of testimony in the preliminary hearing, which has the state presenting an outline of its evidence, and the judge, in this case Los Angeles Superior Court Judge Michael Pastor, determining whether there’s enough evidence to justify a trial.

In yesterday’s session, the state finished up its testimony, the defense attorneys argued that the case should be dismissed, but Judge Pastor found otherwise, and bound over all five defendants for trial. He set a date of October 22 for an arraignment, and then trial is supposed to begin within 60 days after that.

After the hearing, Hanan Islam, 60, and her son Ronnie “Rizza” Islam, 29, were taken back in their blue jail clothes to the county lockup. Judge Pastor set bail for Hanan at $250,000 and Rizza at $100,000. Hanan’s daughters Nimat, 43, and Zakiyyah, 37, remain released on their own recognizance. The fifth defendant, Bayon Beverly Washington, 46, failed to appear last week but she did appear yesterday morning, so she was taken into custody.

Here’s Jeffrey’s report of how the day went…

8:00 AM: I’m in the cafeteria at the Los Angeles Criminal Courts Building Downtown. I arrived early to get coffee and do e-mails. I see one of the deputies and ask if Hanan and Rizza were released on Sunday. He tells me no and that both were transported to the Court earlier in the morning and are in holding cells.

8:50 AM: Nimat and Zakiyyah Islam are present in the courtroom. Bayon Beverly Washington, the one defendant who is not a family member, enters the courtroom. A deputy advises her not to leave the courtroom as there is an arrest warrant for her. Washington had failed to appear the previous week for the preliminary hearing as ordered.

9:15 AM: Six deputies are in the courtroom. The bailiff orders the courtroom cleared and Bayon Beverly Washington is arrested and taken into custody.

9:20 Hanan and Rizza Islam are brought into the courtroom in handcuffs in their jail blues. Both are handcuffed by their left wrists to chairs.

9:25 Judge Michael Pastor enters the court. The court is called into session by the bailiff. Judge Pastor orders Bayon Beverly Washington to be held with no bail. Because of Washington’s failure to appear last week, she cannot participate in the preliminary with her co-defendants as the trial is already underway; the State will conduct a separate preliminary trial for Washington.

Judge Pastor notes that Hanan has exercised her right to be present. He demands that she state her name and acknowledge that she is the named defendant. After some minor protestations, Hanan does both. Gone are all pretenses of her sovereign citizen defense. She promises to comport herself in court.

9:30 Supervising Special Agent of the California Franchise Tax Board (FTB) Robert Olesniewcz is called to the witness stand by Prosecutor Vincent Bonotto. Olesniewcz testifies that AHEC was incorporated as an LLC partnership. In an LLC partnership, the partners divide the income according to an internally agreed upon formula.

AHEC LLC tax filings showed the following income:

2010: $293,102 with Hanan taking 90 percent of the net income. Hanan failed to file a personal income tax return and failed to report $263,792 in income.

2011: $525,233 with Hanan taking 90 percent of the net income. Hanan failed to file a personal income tax return and report $472,710 in income.

2012: $1,047,769 with Hanan taking 50 percent of the net income. Hanan failed to file a personal income tax return and report $523,880 in income.

2013: No LLC tax filing made. The FTB investigated AHEC bank records and found that LA County paid AHEC $1,398,639 in Medi-Cal payments. Hanan’s personal income was computed by the FTB at the previous year’s 50 percent partnership profit. By that measure, Hanan did not report $699,319 income.

On cross examination by defense, Hanan’s attorney asked about statute of limitations on examining tax returns. The statute of limitations is six years; the state began investigating in 2014. Therefore, this attempt by the defense to find something is without merit.

The state enters exhibits 1-19 and 21-37 as previously agreed to by all parties. The People rest.

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The four defense attorneys each make a motion to dismiss the charges against their respective clients: Rizza’s attorney argued that he merely conducted classes and was not part of any scheme. The tactic here was to argue that Rizza was in no way part of any financial crimes as alleged. All he did was to collect sign-in sheets from students and these were turned over to the ghost writers by others. Rizza’s attorney then suggested he was merely being loyal to his mother. This “good son” argument was advanced with the implication that Rizza was the victim of his Machiavellian mother. I personally look for this to be part of the strategy when Rizza goes to trial.

Hanan’s attorney argued that the State did not challenge the quality of services delivered by AHEC. He reasoned that although the classes may not have been a full three hours as required by the Medi-Cal billing code, the classes were nevertheless conducted. The implication seemed to be that AHEC actually performed services for which it billed the State and the only real issue was that the classes didn’t go for the specified duration. He acted as if this was a rather trivial matter and the charges should be dismissed. As for the income tax charges, he argued that Hanan thought filing an LLC return eliminated the need to file a personal return. It was a simple oversight on the part of a person who had no training in tax preparation. The Judge noted that the court did not know if this assertion was accurate. No evidence had been entered either way as to Hanan’s skill, or lack thereof, in tax preparation.

Nimat’s attorney argued she was a low-ranking staffer and not part of any scheme. The implication is that she had no knowledge of anything substantial. Nimat’s attorney followed in the same vein as Rizza’s attorney: Nimat was a victim of Hanan, her mother.

Zakiyyah’s attorney argued that she too was a victim of Hanan.

Hanan sat expressionless as the other defense attorneys essentially characterized her as callously using her children for her own personal financial gain. Hanan’s taking virtually all the profits of the scheme certainly reinforces this perception and I can see how this argument would play out in front of a jury.

The Prosecutor rebutted by stating that AHEC operated as a fraud scheme and that none of the beneficiaries, i.e. the high school students, received any benefits from what AHEC presented. Bonotto emphasized that Rizza conducted 45-55-minute classes and AHEC billed for three hours and that this was a serious matter that cost the taxpayers millions. Bonotto also pointed out that none of the high school students needed or wanted AHEC’s services. Rather, the students were compelled to attend AHEC classes by the principals and educators who were part of the fraud scheme.

Prosecutor Bonotto showed how all defendants were part of the scheme and had knowledge of the scheme. For example, Nimat had threatened WLC employees with being fired if they did not sign up for Medi-Cal and take the AHEC classes. He pointed out that Zakiyyah worked with time sheets and the ghost writers. She also knowingly submitted fraudulent billings.

Prosecutor Bonotto argued that Hanan was part of three separate frauds. First, she met with educators and agreed to pay them money in exchange for access to students. Second, Hanan managed the ghost writers. Third, Hanan hired WLC tutors and ordered them to sign up for Medi-Cal and take the AHEC program. In addition to this, Hanan engaged in income tax fraud.

The Judge asked Prosecutor Bonotto to rank the culpability of the defendants in a hierarchy beginning with who had the most culpability. This is Bonotto’s ranking:

1. Hanan Islam
2. Zakiyyah Islam
3. Ronnie “Rizza” Islam
4. Nimat Islam

The question of the bail status was next raised. Since being charged in 2015, the defendants have been free on their own recognizance.

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Before ruling on bail, Judge Pastor ruled that the People had met their burden to establish probable cause for the defendants to be bound over for trial on all counts. After four years of delaying tactics, the defendants will stand trial.

Judge Pastor cited the “dramatically changed circumstances” based upon the evidence presented at the prelimimary criminal trial. He allowed Nimat and Zakiyyah to remain free on their own recognizance as they have always appeared as ordered and have no prior convictions. Judge Pastor then turned his attention to Hanan Islam and said the evidence showed she had engaged in “an extremely aggravated fraud scheme” that involved educators and “innocent high school students.”

The Judge further stated that Hanan had played games with the court and engaged in nonsense. Here, he was clearly referring to Hanan’s time-wasting and contemptuous sovereign citizen defense that had gotten her five days in jail and a $1,000 fine. He further characterized her actions at AHEC as a “sophisticated fraud” in which she was “ripping off the taxpayers.” Accordingly, he set her bail at $250,000 and revoked her release on her own recognizance.

Judge Pastor set Rizza’s bail at $100,000 and revoked his release on his own recognizance. Judge Pastor upheld all special allegations made by the State.

Arraignment was set for October 22, 2019 at 8:30 in Department 100. According to California law calling for the right of defendants to a speedy trial, trial is to commence within 60 calendar days of arraignment. This means trial around Christmas time.

Rizza and Hanan were led away in handcuffs. Zakiyyah and Nimat left the courtroom.

Court was adjourned at 10:55 AM.

The pressure is now on the defendants to cut a deal before trial. In my view, the evidence presented was so thorough as to be insurmountable at trial. Further, the witnesses at trial will include the ghost writers, former WLC employees, and the educators who have already been convicted.

Thank you for being there for us, Jeffrey.

Ghost writers testifying at trial? Ah, this is going to something.

 
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Bonus items from our tipsters

Meanwhile, in Canada…

 
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Source Code

“These memory recordings aren’t passed along from cell to cell. They could be, but they are not stored as electrical energy. You start examining this any way you want to and you will find that there isn’t an energy in the physical universe — at least which we know about — which has a small enough wavelength to store memory recordings. Oddly enough, this was a discovery I made in 1932 when I was in atomic and molecular physics at George Washington University. I made an exhaustive study of the matter. There aren’t wavelengths small enough; physical scientists would know that. The boys fooling around in medicine would not know it because they don’t know the laws of energy, and as a consequence they have postulated, as the best postulates which they can offer, that memories are stored in punched protein molecules. That is cute!” — L. Ron Hubbard, October 8, 1951

 
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Overheard in the FreeZone

“Who thinks LRH is Donald Trump? I think Trump has come in and is derailing the new world order program, the program to ‘make happy slaves of us all’ that is mentioned in the truth revealed breifing. He said he would come back as a misunderstood politician to save the day. Trump is a big thetan like LRH was.”

 
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Random Howdy

“Not all of us are rich enough to afford cable and some of us think it’s a wasteland.”

 
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Scientology’s celebrities, ‘Ideal Orgs,’ and more!

We’ve been building landing pages about David Miscavige’s favorite playthings, including celebrities and ‘Ideal Orgs,’ and we’re hoping you’ll join in and help us gather as much information as we can about them. Head on over and help us with links and photos and comments.

Scientology’s celebrities, from A to Z! Find your favorite Hubbardite celeb at this index page — or suggest someone to add to the list!

Scientology’s ‘Ideal Orgs,’ from one end of the planet to the other! Help us build up pages about each these worldwide locations!

Scientology’s sneaky front groups, spreading the good news about L. Ron Hubbard while pretending to benefit society!

Scientology Lit: Books reviewed or excerpted in our weekly series. How many have you read?

 
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THE WHOLE TRACK

[ONE year ago] With Scientology TV premiering a new ‘season’ tonight, David Miscavige is having a moment
[TWO years ago] Guelph quest: Scientology sets up temporary shop in Canadian town and faces stiff opposition
[THREE years ago] Atack: The forgotten history of disproving Scientology’s status as a “religion”
[FOUR years ago] For some reason, news sites are keeping quiet about who found Cat White’s body. So here he is.
[FIVE years ago] EXCLUSIVE: Scientology didn’t want you to see this letter it sent to the San Francisco Chronicle
[SIX years ago] William S. Burroughs and Scientology: Setting the Record Straight
[SEVEN years ago] Your Thoughts on The Master: Who Was Freddie Quell?
[EIGHT years ago] Scientology Symposium: Commenters of the Week!
[ELEVEN years ago] Daniel Montalvo, 19, Leaves Scientology, Which Convinces LA Sheriff to Jail Him For It

 
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Posted by Tony Ortega on October 8, 2019 at 07:00

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