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Real estate mogul Michael Lyon faces 16 new felony counts of eavesdropping

Mike Lyon, who was expected to cut plea deal, had his case continued in Sacramento Superior Court on Monday.
Mike Lyon, who was expected to cut plea deal, had his case continued in Sacramento Superior Court on Monday. rpench@sacbee.com

Disgraced real estate executive Michael Lyon was hit with a new legal challenge late Wednesday as he was booked on 16 new felony counts charging him with electronic eavesdropping, the same charge that sent him to jail four years ago.

Lyon, 59, was booked on the new charges at the Sacramento County Jail, where he has been held without bail since October on drug charges and allegations that he violated his probation from the earlier case. That case involved his secret videotaping of his interactions with prostitutes, as well as surreptitious recording of family friends and employees in household bathrooms and elsewhere.

A formal criminal complaint in the case is expected to be filed in Sacramento Superior Court on Thursday, and Lyon’s next court appearance is scheduled for Friday morning.

No details on the new charges were available Wednesday, but they stem from months of investigation that began after Lyon’s arrest last October on the probation violation. During that arrest, prosecutors allege, investigators discovered methamphetamine and other drugs in his home and seized electronic equipment that they analyzed in preparing the latest eavesdropping charges.

“We know that there is a substantial amount of physical evidence that was removed from Mike’s house six months ago,” his longtime defense attorney, William J. Portanova, said Wednesday night. “The government has apparently spent its time on that evidence and now has these charges.

“We won’t have a right to that evidence until after Friday, and until we see that evidence we can’t comment on what the charges are because we don’t have the specifics... If there’s any plea entered on Friday it will be ‘not guilty.’”

Lyon, the former chief executive officer of Lyon Real Estate, was a major business leader, philanthropist and Boy Scout leader. Virtually overnight, his 2010 arrest ended his esteemed civic profile, and he found notoriety in the criminal justice system.

Lyon’s life began to unravel in 2009, as his 24-year marriage to Kimarie “Kim” Lyon collapsed.

In the course of what became an extraordinarily nasty divorce, Kim Lyon told federal investigators that her husband “had spent approximately $300,000 in one or two months on hookers, drugs and pornography,” according to a confidential law enforcement document reviewed by The Bee.

The FBI opened an investigation into allegations that he secretly was recording houseguests, prostitutes and others, but after 16 months federal officials did not file charges because the statute of limitations had run out.

However, then-District Attorney Jan Scully’s office continued to pursue the case as family members of alleged victims pressed for action. In August 2010, her office announced Lyon was facing a criminal probe tied to allegations that he had outfitted his 4,000-square-foot Arden Oaks home with a sophisticated array of hidden video cameras used to secretly record visitors in private moments in bathrooms and elsewhere.

Even after that public announcement, Lyon did not stop. Court records show one of the women he eventually pleaded guilty to recording was taped on Sept. 13, 2010.

Lyon agreed to a deal in which he pleaded guilty in March 2011 to four counts of electronic eavesdropping, which stemmed from his admission that he had taped his activities with four prostitutes.

His tearful confession before Sacramento Superior Court Judge Gary E. Ransom earned him a two-year prison sentence that Ransom suspended and replaced with a one-year jail term and five years of probation. Ransom scolded Lyon at the time with a warning that, if he tripped up again, “I’m sending you to prison.”

Lyon spent a month in the Rio Cosumnes Correctional Center and another five months under house arrest. He then was able to move about freely as long as he made regular appointments with his probation officer.

By then, Lyon had cut his public ties with Lyon Real Estate, the mammoth company his father founded and that Lyon had run as chief executive officer. He left his post as a Boy Scout leader for a Carmichael troop, and moved into rental properties in the Arden area after his ex-wife won possession of the Arden Oaks home.

He also settled a civil suit filed by former nannies, babysitters and family friends who said he had secretly recorded them in his homes. That settlement called for him to pay $2.5 million and apologize to the eight plaintiffs.

Last July, Portanova petitioned the court to end Lyon’s probation early. That matter was pending when Lyon failed to show up for a scheduled Sept. 12 meeting with probation officers.

Sacramento County probation officers went to his rented Arden Park home in early October and arrested him after discovering methamphetamine, marijuana and morphine pills in his master bedroom. Investigators also began poring over computer files and cameras from his home to determine whether he had continued his surreptitious taping of women.

Lyon has been in the Sacramento County Jail in the months since. The time he has spent in custody, plus his previous detention and house arrest would allow his release on the probation violation by April 1. He faces the possibility of going to state prison if convicted on the drug counts and new video charges. Each eavesdropping count could net up to three years.

Call The Bee’s Sam Stanton, (916) 321-1091.

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