Bail Reduction Refused for Two in Laundering and Drug Case

A Harbor Municipal judge Wednesday refused to lower bail below $1 million for an Edison High School science teacher and his boating friend who are charged with a million-dollar money-laundering scheme. The judge said there is too great a risk that the two are tied to major drug dealers.

“They might not want to disappear, but the people they are dealing with might want them to disappear,” Judge Selim H. Franklin said.

James R. Hoyland, 42, who faces possible suspension from teaching duties while his case is pending. John F. Ford, 41, a self-employed boat maker, were arrested Dec. 22 after police seized nearly $1 million in cash and close to $30,000 in gold in three safety deposit boxes.

“Those boxes were jammed with $20s and $50s and $100s, jammed so tight you couldn’t have gotten another dollar in there,” Deputy Dist. Atty. Carl W. Armbrust said.

Police say traces of cocaine were found on Hoyland’s 53-foot yacht, which Ford captained for him in several yacht races.

The prosecution contends that the money was connected with drugs.

“Absolutely,” Armbrust said. “There’s no other way to explain having that much in unreported cash.”

Plans were made to serve search warrants on the two several days before their Dec. 22 arrest, Armbrust said, after their boat made a return trip from Cabo San Lucas in Baja California.

“But we lost the boat somewhere along the line,” Armbrust said. “It was supposed to be stopped in customs, but somehow the boat got through, and we didn’t find out until it was too late.”

Hoyland, who lives in a Dana Point apartment, and Ford, who lives in the Belmont Shores section of Long Beach, have been in Orange County Jail since their arrest. Neither has offered an explanation for the money, Armbrust said.

The two are scheduled to return to Franklin’s court Tuesday for another bail hearing. They are scheduled to enter pleas to six money-laundering counts each on Jan. 19.

Bail for the two was set at $2 million each after their arrest. Judge Franklin dropped that to $1 million each. But defense lawyers said that figure was so high that the judge was essentially holding them on no bail.

Ford’s attorney, Barry T. Simons, argued that police officials had expected to find drug contraband on the boat and didn’t. He also argued that there was any number of ways that the suspects could have come up with that kind of money without being involved in drugs.

“Oh, really?” Franklin asked dryly. “I don’t know of that many ways that kind of unreported cash gets accumulated.”

The judge also discounted defense arguments that Hoyland had strong ties to the community and is not a threat to flee.

Hoyland has lived in Orange County for 22 years and has been an Edison High teacher in Huntington Beach for 18 years. He owns a home in Sunset Beach, where his estranged wife is apparently living.

Judge Franklin said the teaching job appeared to him to be “merely an ancillary aspect of (Hoyland’s) life.” The judge added that his experience in the law tells him that people who have access to a million dollars in cash sometimes have access to money elsewhere, such as in Swiss bank accounts.

“The motivation to stay is very slight if one has the means to leave and the money to enjoy it,” the judge said.

Hoyland bought the boat, called the Zamazaan and reportedly worth $250,000, from Ford. The two were often seen by police together working on the boat.

They were placed under investigation by Newport Beach police nearly a year ago after officials from the Bank of Newport reported Hoyland making deposits of $7,000 and $8,242 in different branches on the same day without filing the proper forms. Newport police were later joined by Long Beach police and the Justice Department’s Bureau of Narcotic Enforcement.

Prosecution documents filed in court Wednesday showed some of Hoyland’s banking activity in support of one of the felony counts:

- Jan. 14, 1987, Hoyland deposited $4,000 in cash into his checking account, and the next day took out $2,500.

- Feb. 6, 1987, Hoyland made two cash deposits into his checking account at separate branches of the Bank of Newport, $7,000 and $8,242.

- Feb. 9, 1987, Hoyland withdrew $5,000 from his account.

- Feb. 11, 1987, Hoyland withdrew another $5,000.

- Feb. 24, 1987, Hoyland exchanged $3,500 in “narcotic-contaminated” $20s for $3,500 in $100 bills.

- March 2 through March 10, 1987, Hoyland made a total of $11,000 in deposits.

- April 27, 1987, Hoyland exchanged $3,000 in $20 bills for $3,000 in $100 bills.

- Aug. 10 and 11, 1987, Hoyland exchanged $5,000 in $20 bills for $5,000 in $100 bills.

- Oct. 6, 1987, Hoyland deposited $5,000 in “narcotics-contaminated” $20 bills into his checking account.

- Oct. 8, 1987, Hoyland made the same deposit, again in “narcotics-contaminated” $20 bills.

- Oct. 8, 1987, Hoyland refused to be helped by the same teller who helped him on Oct. 6, and instead deliberately waited for a different teller, prosecution papers allege.

- Nov. 3, 1987, After a discussion with Ford, Hoyland deposited $8,000 in $20 bills into his checking account.

- Nov. 5, 1987, Hoyland deposited $2,000 in $20 into his checking account.

- Nov. 16, 1987, Hoyland exchanged $5,000 in $20 bills for $5,000 in $100 bills. He made that exact same transaction again two days later.

- Nov. 24, 1987, Hoyland deposited $3,000 in $20 bills and also exchanged $2,000 in $20 bills for $2,000 in $100 bills. Then he went to another branch and wrote a check for cash for $3,000, which he received in $100 bills.

The charges were not specific about what narcotics were detected on the bills that Hoyland deposited in the banks, but Armbrust said a narcotic residue was detected on the money by a police dog.

“Maybe Mr. Hoyland was in some business where they only paid off in $20 bills,” Armbrust said.

Armbrust, who has specialized in drug cases for many years, said that laundering money is a significant part of most drug operations. Drug dealers want to make sure that money that might be contaminated with drugs is exchanged for “clean” money from a bank, he said.

Laundering money in the past has been only a federal offense. But a new California law, effective last January, also makes it a state crime, Armbrust said.

Each of the defendants faces up to six years in prison and also a fine that could amount to $1.5 million each, the prosecutor said.

Hoyland told the court through an attorney that he was anxious to make bail because he wanted to return to Edison to resume his teaching duties as soon as possible.

But Armbrust told the court that attorneys representing the school had told him that Hoyland will be suspended until the case is resolved.

Should the two be found innocent of laundering, the money found in their safety deposit boxes--which both had access to--would not automatically revert back to them.

“I imagine the Internal Revenue Service is going to be mighty interested in finding out where this money came from, and why it wasn’t reported,” Armbrust said.