Prominent Millionaire Suspected of Video Taping Guest

Host said to Video Taping Guest in Bathroom and Bedrooms

The federal probe, which began in April 2009, was initiated amid acrimonious divorce proceedings between Lyon and his second wife, Kimarie, 54. The couple married in 1985 and have two sons, 15 and 22.

The initial criminal investigation was triggered by a stash of material Kimarie “Kim” Lyon reportedly had taken from her husband in 2006 – including electronic surveillance equipment in the attic that was monitoring the guest bedroom and bath, according to a law enforcement document reviewed by The Bee.

Kim Lyon kept the material in a rented storage locker for three years but turned it over to federal investigators after one of her attorneys, a former federal prosecutor, advised her that “the matter was no longer about divorce,” the document states.

Several months later, a woman who had been dating Michael Lyon turned over to investigators more video and images, including recorded sex acts with prostitutes and others, that purportedly came from Lyon’s computer, according to sources and a law enforcement document.

Lyon did not return a phone call Monday from The Bee. But he told a law enforcement investigator last year that his extensive cache of surveillance equipment was “for security purposes” and that he knew nothing about sexual images or videos that may have been captured on it, according to a document reviewed by The Bee. He added that “he had never downloaded, distributed and/or viewed child pornography.”

Lyon’s criminal attorney, Bill Portanova, said Monday that “these are definitely false allegations.” Portanova said that the divorce has been “long and painful” for the Lyons and that, for most families, such details remain private.

“Unfortunately, rich people’s divorces are sometimes considered newsworthy,” Portanova said. “This matter has been thoroughly investigated by the FBI and the U.S. attorney’s office, and they have cleared Mr. Lyon. There is no reason to believe there have been any criminal violations, either state or federal.” Matthew Jacobs, the former first assistant U.S. attorney in Sacramento who had been hired byKim Lyon, told The Bee that he would not talk about the Lyon family.

The U.S. attorney’s office did not act on some of the potentially damaging allegations because the statute of limitations had run out, according to sources familiar with the federal probe.

The federal investigation uncovered a collection of recordings that were taken by cameras hidden in Lyon family showers, bathrooms and bedrooms, law enforcement documents reveal. Some cameras allegedly were concealed behind vents or in clock radios, recording subjects of various ages and sexes.

The individuals who told investigators they were recorded without their knowledge included a newlywed couple in the shower of the Lyons’ guest bathroom, an 18-year-old family friend in the bathroom and a household employee getting out of the shower, a law enforcement document indicates.

The Bee spoke with two people who said they were recorded on video and with family members of two others. None agreed to be quoted.

The images under review by law enforcement were captured inside the Lyons’ 4,000-square-foot gated home in the Arden Oaks neighborhood, his Lake Tahoe vacation home and another property he recently occupied, law enforcement documents show. Some pictures and video date back at least 20 years, while other material examined by experts was as recent as 2009.

Rose of the District Attorney’s Office said that local law enforcement officials had been “on the periphery” while the FBI conducted its probe. With that case closed, the DA’s and sheriff’s office are taking their own close look.

As part of the federal investigation, agents had focused on establishing the ages of some subjects, and the time frame in which they were recorded, according to law enforcement sources and documents reviewed by The Bee.

In California, it is a crime to record or eavesdrop on any confidential communication without the consent of all parties. An appellate court has ruled that the use of hidden cameras without consent also violates the statute.

The crime can be charged as a misdemeanor or felony, and can be pursued by prosecutors up to three years after the alleged act.

In closing the federal investigation, Assistant U.S. Attorney Kyle Reardon e-mailed Portanova on Aug. 24 that “to date, there is insufficient evidence available that would justify the filing of federal criminal charges.” That followed 16 months of investigation that included authorities contacting Lyon family friends and informing them they may have been recorded secretly while in his home, law enforcement documents indicate.

Some alleged victims were shown images or video recordings and asked to identify themselves, law enforcement documents show.

The investigation began in April 2009, after Michael Lyon filed for divorce after 24 years of marriage. About that time, a computer expert for Kim Lyon visited their home and said the “production quality monitoring equipment” in the house was worth between $500,000 and $800,000, according to a law enforcement document.

Some of the divorce records have been sealed, but in a court-approved stipulation reached June 25, 2009, Michael Lyon was granted limited visitation with his younger son. Lyon agreed not to have any overnight visits or to “film or record” anyone during those visits without their knowledge and consent.

Word of the government’s scrutiny of Lyon and his influential family has rippled through the most elite circles of Sacramento as well as the business community. The Lyon family controls one of the nation’s largest real estate companies while also contributing to charitable causes.

Over the past 36 years, Michael Lyon steered the real estate company – founded by his late father, William – through the boom-and-bust years. He is frequently quoted in The Bee and national media outlets about real estate trends, and he and family members maintain a high profile in local organizations devoted to child welfare.

Lyon is a longtime Boy Scout leader in a Carmichael troop. Government documents reviewed by The Bee do not reveal any secret recordings of Boy Scouts.

Last Tuesday, Lyon Real Estate President Jean Li issued an e-mail to employees, referring to the divorce and stating that the couple “have endured baseless accusations, false rumors and malicious gossip which has saddened them.” Li told employees in her Aug. 24 e-mail that: “We are devoted to minimize the effect on our company now and in the future.” In her e-mail to employees, Li included a statement from Michael Lyon’s divorce attorney, Anthony S. Dick, stating that the matter “is the personal, private and confidential business of Mike, Kim and their children only.”

Sacramento County law enforcement officials are investigating a prominent real estate businessman in connection with allegations he made secret video recordings of houseguests and others in bedrooms and bathrooms through cameras concealed in clock radios and behind vents, The Bee has learned.

A criminal investigation of Michael Lyon, 54, chief executive officer of Lyon Real Estate, was headed by the FBI until last week. When the agency closed its 16-month investigation last Tuesday, citing a lack of evidence for federal charges, officials in the
Sacramento County district attorney’s and sheriff’s offices decided to move forward with their own investigation.

Assistant Chief Deputy District Attorney Jeff Rose and Sheriff John McGinness confirmed Monday that their offices are working jointly to determine if Lyon violated any state laws. Neither would discuss the nature of the allegations.

The federal probe, which began in April 2009, was initiated amid acrimonious divorce proceedings between Lyon and his second wife, Kimarie, 54. The couple married in 1985 and have two sons, 15 and 22.

The initial criminal investigation was triggered by a stash of material Kimarie “Kim” Lyon reportedly had taken from her husband in 2006 – including electronic surveillance equipment in the attic that was monitoring the guest bedroom and bath, according to a law enforcement document reviewed by The Bee.

Kim Lyon kept the material in a rented storage locker for three years but turned it over to federal investigators after one of her attorneys, a former federal prosecutor, advised her that “the matter was no longer about divorce,” the document states.

Several months later, a woman who had been dating Michael Lyon turned over to investigators more video and images, including recorded sex acts with prostitutes and others, that purportedly came from Lyon’s computer, according to sources and a law enforcement document.

Lyon did not return a phone call Monday from The Bee. But he told a law enforcement investigator last year that his extensive cache of surveillance equipment was “for security purposes” and that he knew nothing about sexual images or videos that may have been captured on it, according to a document reviewed by The Bee. He added that “he had never downloaded, distributed and/or viewed child pornography.”

Lyon’s criminal attorney, Bill Portanova, said Monday that “these are definitely false allegations.” Portanova said that the divorce has been “long and painful” for the Lyons and that, for most families, such details remain private.

“Unfortunately, rich people’s divorces are sometimes considered newsworthy,” Portanova said. “This matter has been thoroughly investigated by the FBI and the U.S. attorney’s office, and they have cleared Mr. Lyon. There is no reason to believe there have been any criminal violations, either state or federal.” Matthew Jacobs, the former first assistant U.S attorney in Sacramento who had been hired by Kim Lyon, told The Bee that he would not talk about the Lyon family.

The U.S. attorney’s office did not act on some of the potentially damaging allegations because the statute of limitations had run out, according to sources familiar with the federal probe.

The federal investigation uncovered a collection of recordings that were taken by cameras hidden in Lyon family showers, bathrooms and bedrooms, law enforcement documents reveal. Some cameras allegedly were concealed behind vents or in clock radios, recording subjects of various ages and sexes.

The individuals who told investigators they were recorded without their knowledge included a newlywed couple in the shower of the Lyons’ guest bathroom, an 18-year-old family friend in the bathroom and a household employee getting out of the shower, a law enforcement document indicates.

The Bee spoke with two people who said they were recorded on video and with family members of two others. None agreed to be quoted.

The images under review by law enforcement were captured inside the Lyons’ 4,000-square-foot gated home in the Arden Oaks neighborhood, his Lake Tahoe vacation home and another property he recently occupied, law enforcement documents show. Some pictures and video date back at least 20 years, while other material examined by experts was as recent as 2009.

Rose of the District Attorney’s Office said that local law enforcement officials had been “on the periphery” while the FBI conducted its probe. With that case closed, the DA’s and sheriff’s office are taking their own close look.

As part of the federal investigation, agents had focused on establishing the ages of some subjects, and the time frame in which they were recorded, according to law enforcement sources and documents reviewed by The Bee.

In California, it is a crime to record or eavesdrop on any confidential communication without the consent of all parties. An appellate court has ruled that the use of hidden cameras without consent also violates the statute.

The crime can be charged as a misdemeanor or felony, and can be pursued by prosecutors up to three years after the alleged act.

In closing the federal investigation, Assistant U. S Attorney Kyle Reardon e-mailed Portanova on Aug. 24 that “to date, there is insufficient evidence available that would justify the filing of federal criminal charges.” That followed 16 months of investigation that included authorities contacting Lyon family friends and informing them they may have been recorded secretly while in his home, law enforcement documents indicate.

Some alleged victims were shown images or video recordings and asked to identify themselves, law enforcement documents show.

The investigation began in April 2009, after Micheal Lyon filed for divorce after 24 years of marriage. About that time, a computer expert for Kim Lyon visited their home and said the “production quality monitoring equipment” in the house was worth between $500,000 and $800,000, according to a law enforcement document.

Some of the divorce records have been sealed, but in a court-approved stipulation reached June 25, 2009, Michael Lyon was granted limited visitation with his younger son. Lyon agreed not to have any overnight visits or to “film or record” anyone during those visits without their knowledge and consent.

Word of the government’s scrutiny of Lyon and his influential family has rippled through the most elite circles of Sacramento as well as the business community. The Lyon family controls one of the nation’s largest real estate companies while also contributing to charitable causes.

Over the past 36 years, Michael Lyon steered the real estate company – founded by his late father, William – through the boom-and-bust years. He is frequently quoted in The Bee and national media outlets about real estate trends, and he and family members maintain a high profile in local organizations devoted to child welfare.

Lyon is a longtime Boy Scout leader in a Carmichael troop. Government documents reviewed by The Bee do not reveal any secret recordings of Boy Scouts.

Last Tuesday, Lyon Real Estate President Jean Li issued an e-mail to employees, referring to the divorce and stating that the couple “have endured baseless accusations, false rumors and malicious gossip which has saddened them.” Li told employees in her Aug. 24 e-mail that: “We are devoted to minimize the effect on our company now and in the future.” In her e-mail to employees, Li included a statement from Michael Lyon’s divorce attorney, Anthony S. Dick, stating that the matter “is the personal, private and confidential business of Mike, Kim and their children only.”
By Marjie Lundstrom and Denny Walsh/Sacramento Bee