Kamala Harris | Nevada County

Kamala Harris Attorney General State of California

California Attorney General Kamala D. Harris today issued a consumer alert on reports of price gouging by businesses, namely hotels, during the devastating wildfires that have swept our state. The Attorney General also issued a warning that the California Department of Justice is prepared to investigate and prosecute those that attempt to wrongfully profit from the destructive fires that are driving Californians out of their homes.

“As first responders fight to save communities from raging wildfires and thousands of Californians face devastation and hardship, it is exploitative and also unlawful for businesses to engage in price gouging,” said Attorney General Harris.

California’s anti-price gouging statute, Penal Code Section 396, becomes effective immediately after the Governor or a local official declares a state of emergency. Governor Jerry Brown declared a state of emergency in Calaveras and Amador counties on September 11, 2015, and in Lake and Napa counties on September 13, 2015.

California law generally prohibits charging a price that exceeds, by more than 10%, the price of an item before the declaration of emergency. This law applies to those who sell food, emergency supplies, medical supplies, building materials, and gasoline. The law also applies to repair or reconstruction services, emergency cleanup services, transportation, freight and storage services, hotel accommodations, and rental housing. Exceptions to this prohibition exist if, for example, the price of labor, goods, or materials have increased for the business.

Violations of the price gouging statute are subject to criminal prosecution that can result in one-year imprisonment in county jail and/or a fine of up to $10,000. Violators are also subject to civil enforcement actions including civil penalties of up to $5,000 per violation, injunctive relief and mandatory restitution. The Attorney General and local district attorneys can enforce the statute.

Anyone who has been the victim of price gouging, or who has information regarding potential price gouging, is encouraged to immediately file a complaint with the Attorney General’s Office by going to theAttorney General’s website or by calling (800) 952-5225.

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1910 police mugshot of Charles Ponzi, the namesake of the scheme Photo credit http://en.wikipedia.org/wiki/Ponzi_scheme

Attorney General Kamala D. Harris announced a 42-year prison sentence for a Northern California man who ran a Ponzi scheme that defrauded more than 400 investors, most of them elderly, out of more than $90 million.

James Koenig, 60, of Redding, owned Assent Real Estate Corporation (AREI) from 1999 to 2008. The company specialized in the acquisition, management and resale of commercial property and elder care facilities. Most victims of his Ponzi scheme were elderly individuals from the Bay Area.

In May, Koenig was found guilty of 35 felony counts, including conspiracy, use of a scheme to defraud in connection with sales of securities, sales of securities by means of false statements, and residential burglary relating to the sales of fraudulent investments. The jury also found special enhancements for “great takings” because of the large amount of loss involved.

The company’s early losses were managed by using the funds of new investors to pay off the original investors. By 2007, AREI had accumulated $163 million in debt that was unsecured or significantly under-secured and required monthly payments of more than $1.8 million to maintain. In April 2007, AREI stopped making payments to investors, while continuing to solicit and sell securities to new investors. The Ponzi scheme finally failed in the spring of 2008.

The case was based on 32 of the more than 400 victims, whose losses exceeded $8 million – $3.8 million of which came from investments made after April 2007 – when AREI stopped paying its current investors. At the time of sentencing, the total losses by victims were reported to be in excess of $90 million.

Koenig was sentenced in Shasta County Superior Court on Friday. A restitution hearing will occur at a later date.

Source: California Attorney General