Sacramento Probe Continues” Millionaire Tapings may go back years…..

“He was not sure what had happened to the surveillance equipment, he told agents, and did not know what recordings were made using it.”

For nearly 18 months, Sacramento businessman Michael LyonView Image has faced the twin crises of a bitter divorce and a criminal probe.

The fallout escalates as the 54-year-old executive, who has stepped aside as CEO of Lyon Real Estate, resigned this week as a Boy Scout leader and remains out of town.

Lyon learned two weeks ago that a federal probe would be closed without charges being filed. But the Sacramento County sheriff and district attorney since have launched their own investigation into whether he secretly videotaped guests and family members in bedrooms and bathrooms in his Sacramento and Lake Tahoe homes.

That probe continues this week, as local investigators pore over the federal evidence to determine whether state charges are warranted against one of  Sacramento’s best known real estate executives, whose name appears on red-and-white yard signs throughout the region.

Lyon’s attorney,William Portanova, maintains his client has committed no crimes and said the entire episode is the product of divorce proceedings between Lyon and his wife of 24 years, Kimarie “Kim” Lyon.

Kim Lyon did go to the FBI with her allegations as their marriage was crumbling, according to confidential law enforcement documents reviewed by The Bee, as well as interviews with sources.

But those documents also indicate the FBI evidence reaches well beyond Kim Lyon’s  assertions, detailing a series of interviews with close family friends and at least one former employee who confirmed they had been taped without their knowledge in episodes that span two decades.

Lyon temporarily stepped down last week as CEO of Lyon Real Estate and has stayed out of view since word of the investigations became public.

Kim Lyon also has refrained from discussing the matter.

“It is a very sensitive and emotional situation, and I have children, so I think I have to stick to a ‘no comment’ for now,” she said, reached by The Bee this week at her Arden Oaks home. “I’m especially trying to protect my younger son from all this.”

The Lyons have two sons, ages 15 and 22.

Michael Lyon has been a fixture in Sacramento’s philanthropic circles and a leader in a Carmichael Boy Scout troop for years. He voluntarily stepped down from his Boy Scout position after word of the probes became public. There was no evidence of any video activity involving Scouts, sources said.

An interview with the FBI

The documents reviewed by The Bee indicate the FBI first came knocking at Lyon’s real estate office on American River Drive in June 2009, two months after he had filed for divorce.

When agents arrived, the documents state, Lyon initially indicated that he would answer their questions.

Kim Lyon had told agents her husband had surveillance cameras hidden inside bathrooms and bedrooms of their 4,000-square-foot Arden Oaks home – tucked into clock radios and vents – and that the cameras had recorded images of house guests, family friends and others.

The documents indicate that at some point, Kim Lyon turned those tapes and electronic recordings over to investigators.

When Michael Lyon was asked about the recordings, his answers remained vague, one document states. He told agents he didn’t remember employing a 15-year-old girl recorded years ago taking a shower in the Lyon family vacation home at Lake Tahoe, the document states. He denied making that tape.

He was not sure what had happened to the surveillance equipment, he told agents, and did not know what recordings were made using it.

“Lyon was unresponsive to the question as to whether he installed hidden surveillance equipment devices in his children’s bathroom and the guest bathroom and bedroom of his Fox Hollow Lane residence,” federal agents reported. “Lyon’s response was, ‘I do not want to impugn my wife.’ ”

Problems involving Lyon and hidden cameras surfaced early in his marriage to Kim Lyon, according to interviews she had with the FBI in April 2009 and again in April of this year.

“The first problems with the marriage started ‘when the camera thing came out of the blue,’ ” law enforcement documents quote Kim Lyon as telling agents.

The “camera thing” referred to an incident near the July Fourth holiday in 1992, when a newly married couple visited the Lyon family in their Sacramento home, the law enforcement documents state. As the husband and wife were showering in the guest bathroom, the man “noticed a hole in the ceiling of the shower behind the vent,” he told agents last May.

The man told them he “looked up and saw a lens in the hole” and that “the lens was for a small portable camera.”

“The fan had been removed from the vent, so when (he) looked at the hole he was able to see the attic,” the documents state.

The couple confronted Michael and Kim Lyon in the den, and Micheal Lyon “expressed that he was sorry” and agreed to give the couple the tape, according to the documents reviewed by The Bee.

“During the confrontation with Michael, (the man) observed Kim becoming very upset,” the documents state. “Kim was saying that Michael would have to go into therapy.”

The couple left with the tape, pulling their car over after leaving the home, smashing it and pulling the magnetic tape out of the cassette. “I just wanted to get out of there,” the man told agents last May.

He recently declined to speak with The Bee. “I feel funny about saying anything …” said the man, who does not live in Sacramento and is not being named by The Bee because he is an alleged victim. “I don’t know what he’s gotten himself into.”

A discovery in the attic

In her interview with investigators last April, Kim Lyon said it was another event, just after Christmas in 2005, that deepened the rift in their marriage.

A family friend and the friend’s son had come to the Fox Hollow Lane home to spend New Year’s there, law enforcement documents state. After they left, Kim Lyon began taking down the Christmas decoration and went to the attic to store ornaments, she told investigators.

“Kim located a monitor, and recognized the guest bathroom and guest bedroom as being displayed on the monitor,” law enforcement documents state. “Kim confirmed the location of the cameras by repositioning the clock radios and confirming the change on the monitor. The monitor displayed both live and recorded feeds.”

Kim Lyon confronted her husband, then summoned a housekeeper to help her collect “the computers, clock radios, and wires to remove them from the house,” the law enforcement documents state. “Michael stood in front of the car and said, ‘You don’t want to take that,’ repeatedly.”

The documents state that Kim Lyon drove the materials to a storage locker off Highway 50 in  Rancho Cordova, where she stored the materials for three years, returning annually and paying the rent in cash.

The couple continued to have problems and, on April 4, 2009, Kim lyon told her attorney there was “a lot of crazy stuff at my house” and walked her through the home, documents state. The attorney called in an electronics expert, who said the house “contained between $500,000 and $800,000 worth of production quality monitoring equipment.”

Either that night or the next, Michael Lyon came to the house and removed computer equipment from the home, “making multiple trips, filling up his Suburban several times,” the documents state.

Why federal probe ended

The federal investigation ended because of what officials say is a lack of evidence. However, numerous law enforcement sources told The Bee that the federal case hit other walls: The statute of limitations had expired in some instances involving possible federal crimes, the sources said, and some witnesses were deemed to lack credibility.

The Sacramento County district attorney’s and sheriff’s offices will not discuss their investigation or any possible charges. However, California’s wiretapping law makes it a crime to record or eavesdrop on any confidential communication without the consent of all parties. A California appellate court ruled that the statute applies to the use of hidden video cameras.

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

Lyon’s attorney says he is confident that no charges will be filed.

“The bottom line is that Michael Lyon has done nothing illegal,” Portanova said. “In 30 years of practicing law, I have never seen a systematic public campaign like this.

“In two years, we’ve been through family court, Child Protective Services, the U.S. attorney’s office and the FBI. And now, somehow, every uncorroborated and false statement is finding its way into print, and here I am shadow boxing.”

Portonova also said the estimated value of the equipment in Lyon’s home was “ludicrous.” He said the cameras in the homes were for standard home security systems and were clearly visible.

Lyon is well-known as a video buff and aficionado of the latest electronic gadgets, ranging from iPhones to portable generators powered by hydrogen. Basic Internet searches turn up video he has taken climbing an area peak or bicycle routes the veteran cyclist suggests others follow.

He runs a separate company that produces educational and training films for professional offices throughout the country. Portanova said none of that equipment was used in Lyon’s home.

Marriage breaks up

On April 5, 2009, Michael Lyon moved out of the home, law enforcement documents state, and Kim Lyon went to see Matt Jacobs, a former federal prosecutor and now a Sacramento attorney. Jacobs later told her there was material on the recordings from the equipment in the storage unit – a digital video recorder and an 8 mm movie camera – that had to be reported to the FBI and that “the matter was no longer about divorce,” the documents state.

Two weeks after Kim Lyon met with Jacobs, she was served with divorce papers filed by her husband, the documents state.

On April 22, 2009, Kim Lyon and Jacobs went to the offices of the Sacramento Valley Hi-Tech Crimes Task Force, a cyber crime agency located in a secure compound at McClellan Air Park that includes FBI and sheriff’s investigators. She told investigators about the recording equipment.

The FBI began talking to people who may have been recorded without their knowledge, interviewing the couple from the 1992 shower incident, as well as the young woman they believed had been recorded in the shower at the Lake Tahoe home.

They brought her to the McClellan compound where they showed her a video of a girl blow-drying her hair in the bathroom of the Lyons’ Lake Tahoe home. She said it was her, possibly from a 1992 visit when she was at most 16, law enforcement documents state.

Agents went to the home of another family friend and showed him a video image from a Lyon home bathroom. He confirmed the picture was of him and said he “had never considered the possibility that he would be filmed and was unaware of the cameras hidden in the bathroom or elsewhere in the house,” law enforcement documents state.

By then, agents also were working with information that came from another source: a 40-year-old woman Michael Lyon had been dating after his separation.

According to the documents, she called the FBI, sheriff’s officials and the Hi-Tech Crimes Task Force in September 2009 and told them she had seen sexually explicit material on Lyon’s computer while she was a part-time occupant of a Carmichael home he moved into after separating from his wife.

The woman took the hard drive from the computer and later turned it over to authorities, according to the documents.

Portonova has said none of the materials the woman turned over constitute criminal behavior.

Sam Stanton, Marjie Lundstrom and Denny Walsh: Sacramento Bee