The Vicodin Thieves. Chip Jacobs

Young Republicans, said police were curious in learning about Ballreich’s gambling habits. For years, Ballreich had wagered on football games and prizefights. Williams, the former councilman, acknowledged remembering one of Ballreich’s bookies from the 1970s. So, could a new debt from a lingering vice have precipitated what transpired on Marguerita Avenue? There are tantalizing aspects to the idea. The Sheriff’s Department, Born said, located somebody who remembered seeing $5,000 in cash in Ballreich’s apartment not long before he left it a final time. “The Sheriff’s Department thought he was meeting someone the night” said Born. “Why [else] would he have $5,000 on the floor of his apartment? Why not keep it in the bank?”

      Which leads us back to the beginning—November 1991. If it was not an indiscriminate drive-by, and it was not something else random, then why was a once high-profile person drawn to his old neighborhood and effectively assassinated? Was it a violent exclamation point about an unforgivable sin or a warning to others? “[Sheriff detectives] had a particular interest in who might know he was running in that area on that street on that day at that time,” said Francis, his ex-business partner. “Who knew him well enough to know that? It narrows the circle of people who would be of primary interest.”

      The question may be unanswerable. When you sweep everything else aside, you realize that Stephen Ballreich died the same way he lived—spectacularly, disturbingly. It is symmetry not lost on longtime buddy Glenn Thornhill. “One of my friends ran into an Alhambra policeman, and the cop said, ‘We don’t know who did it. Steve Ballreich told so many different stories to so many different people we could be talking to the responsible person and we wouldn’t even have a clue.’”

Operation Bald-Headed Eagle

      Was a convicted smog-credit swindler also part of shady international money repatriation schemes with links to the CIA?

      —Pasadena Weekly, August 20th, 2009

      The remnants of Anne Sholtz’s old life are evident in the smaller things. They are visible in the GPS tracking bracelet—standard issue for felons in home detention—that looped around her ankle for a year, and in her idled passport. They are traceable in her pillow, which rests today in a leased home miles from the $5 million hillside estate that once broadcast her transformation from Caltech economist to business phenom.

      Yes, the wreckage from that existence—the economizing, the isolation from connected friends who now shun her—is graspable. Where the picture turns as murky as Southern California’s whiskey-brown smog is how Sholtz, as a then-thirtysomething go-getter, was able to deceive the very air pollution market that she helped to conceive, and the lessons it holds for keeping financial crooks out of the trillion-dollar greenhouse gas trading system that President Obama has trumpeted as a key to curbing global warming.

      Unless you are in the arcane field of emissions trading, chances are you have probably never heard of Sholtz before. Last April, the former Pasadena pollution broker was convicted in federal court for masterminding a fraudulent, multi-million dollar deal for credits in Southern California’s novel smog exchange. Despite pleas that she sock Sholtz with years behind bars, U.S. Central District Court Judge Audrey Collins gave her just a year in home confinement.

      Fortunate with a light sentence in that downtown L.A. courtroom, Sholtz, nonetheless, sustained heavy losses outside of it, squandering, among other potential, her chance to build a unique and lucrative pollution trading business, with access to President Obama or Governor Arnold Schwarzenegger as an industry confidante. Those opportunities gone, she now drives her mother’s car, not the Mercedes or SUV she previously did. Rather than expanding her patented ideas into climate change, she checks in with her probation officer.

      Blown prosperity for Sholtz; it has been no bonanza for others, either. Between criticism over its secretive, mixed-bag prosecution of her and evidence of Sholtz’s role in a scheme to extract millions in overseas U.S. aid with men purporting to be American intelligence and military operatives, the Department of Justice’s L.A. office probably wishes she would just fade away. Local smog regulators at the South Coast Air Quality Management District (AQMD), whose market-based regulation proved vulnerable to her deceptions, can relate. The trouble is, some events are just too big to disappear. And the Sholtz case, no matter its relative obscurity or connection to complex regulations, fits that mold because it underscores the need for vigorous oversight of emissions markets against seemingly inevitable Wall Street-style chicanery.

      Saying that she hopes to reconcile the events that dragged her from eco-visionary to convicted felon and industry pariah, Sholtz, forty-four, gave the Pasadena Weekly her first public comments in seven years. These days she is a freelance auditor examining white-collar fraud (ironically, for the federal court system that processed her case) and proclaims herself “happy” and “debt-free.” Just don’t mistake that resilience for satisfaction, or expect to hear weepy remorse from her about the ruins smoldering in her wake. Channeling other emotions, Sholtz said that she was “disappointed” in how prosecutors and bankruptcy officials treated her, and was perplexed over why the whistleblower tips she furnished them about bank money laundering and environmental corruption seemed to have fallen on tin ears.

      “Years ago, I was depressed I’d made bad decisions, which led to one disastrous deal and my companies unraveling,” Sholtz said over lunch at a location that she asked go undisclosed, fearing former associates she claimed have threatened her. “I’ve never said anything about this whole experience until now. The only reason I’m speaking is because I’m tired of the misperceptions.”

      BOUND TO HAPPEN

      If two Republican congressmen skeptical about President Obama’s carbon-cutting blueprint have their way, Sholtz’s story may yet capture national attention. This spring, Congressman Joe Barton (R-Texas) the ranking member of the House’s powerful Energy and Commerce Committee, and Congressman Greg Walden (R-Oregon), ranking member of the House’s Oversight and Investigations Subcommittee, demanded the U.S. Environmental Protection Agency provide a welter of information about Sholtz to them, based partly on the Pasadena Weekly’s coverage. “We believe this case has great relevance in the context of the pending legislation on climate change,” Barton and Walden wrote in a May statement. In it, they cited doubts that federal authorities have the money and legal punch to adequately police a national greenhouse gas market.

      All the same, those doubts may be road tested. An Obama-backed bill requiring industry and public utilities nationwide to buy and sell federally auctioned permits to discharge carbon dioxide and other greenhouse gases under a so-called “cap-and-trade” regimen narrowly passed the House in June. Formally titled The American Clean Energy and Security Act of 2009, the legislation, which includes numerous new energy efficiency standards and initiatives, represents the most seminal change in U.S. environmental policy since passage of 1970s Clean Air Act. The thirteen hundred-page bill, co-written by House Democrats Henry Waxman (California) and Edward Markey (Massachusetts), next goes to the Senate. The overriding objective is to reduce U.S. greenhouse gases from 2005 baseline levels so that by 2020 aggregate levels are down seventeen percent and by 2050 they have shrunk a colossal eighty-three percent. (Global warming is caused by the atmospheric buildup of carbon dioxide and other gases that reflect some of the Earth’s heat back towards the planet instead of dispersing it into space. Many scientists contend the phenomenon is imperiling the Arctic, biodiversity, food production, and weather patterns.)

      Hopeful as the White House is about cap-and-trade as a lever to reign in heat-trapping emissions, even enthusiasts acknowledge that the intricacies are jaw-dropping, if not for the sheer mechanics of it, then for the geographic lines, industrial sectors and differing populations it will transect. Roughly six billion tons of emissions could be traded yearly at first, estimated David Kreutzer, an economist at the conservative Heritage Foundation in Washington, D.C. Entities discharging more than twenty-five thousand tons of greenhouse gases annually—non-nuclear power makers, oil refiners, natural gas producers, coal-fired steel plants, among others—will participate.

      Detractors believe with the money at stake, white collar cheating is practically inevitable. Between now and 2035, greenhouse gas permits may reach $5.7 trillion in value, Kreutzer said. Some investment houses are already gearing up to act as trade middlemen. Oddly,