Photograph courtesy of the city of Saratoga
Local law enforcement agents say Michael Costa's home site on Quito Road was to become a massive underground marijuana grow site, with extensive ventilation and drainage systems to be installed in the large excavated space.
House on stilts was really to be a drug center say officials
Saratoga is asking court to bring building down
Complaint names Costa
By Oakley Brooks
Neighbors and passersby around the infamous suspended house on Quito Road have gawked at the site and worried about it falling. They might have even suspected there was more to the story.
There was a whole lot more, if two court complaints filed by local authorities last week are true.
As city officials asked the Santa Clara County Superior Court last week to order the house at 12623 Quito Road off its perch, local and federal law enforcement agents were wrapping up an 18-month investigation that placed property owner Michael S. Costa at the center of a nationwide drug-smuggling network.
Agents believe Costa, who lived on Sterling Oak Court, directed marijuana growth at houses in San Jose, Campbell and Calaveras County, and used young drug couriers to transport up to 1,000 pounds of marijuana a month from California and supply points in El Paso, Texas, to the Boston, Mass., area.
They also suspect, based in part on information supplied by Saratoga city officials, that more than 4,000 square feet of underground space planned for the Costa's 12623 Quito Road house was to be used as another indoor marijuana growing center.
A bail hearing for Costa and others arrested was scheduled for this week.
"That's specifically why it was being built," said Dean Ackemann, an agent with the Santa Clara County Specialized Enforcement Team.
On April 10, Ackemann joined agents from five other agencies, including the Internal Revenue Service, in arresting nine people in connection with the alleged Costa ring. Costa's father, Edward, and Michael's wife, Jessica, were among those arrested.
The U.S. District Attorney's office served the criminal complaint to Michael Costa in the Santa Clara County main jail, where he is awaiting trial on other state charges, including illegal possession of firearms. With two prior felony convictions, Costa is vulnerable to the state's "three strikes" law and could face a sentence of life in prison, regardless of the outcome of federal drug and related charges, for which the maximum sentence is life.
Agents also searched 10 properties on April 10, including four in Saratoga: Michael Costa's home at 13409 Sterling Oak Court, Edward Costa's house on Emerald Hills Court, another Costa property at 14900 Sobey Road, and a fourth house on Paseo Tierra.
Ackemann says he expects evidence collected in Saratoga last week will corroborate the case he and other law enforcement agents have been building since September 2000, linking local surveillance with traffic stops and drug arrests throughout the country.
According to a 54-page complaint filed in federal court in San Jose on April 10, agents believe that Costa attracted young runners to carry his drugs to the Northeast by impressing them with ample drugs, bundles of cash and his extensive gun and car collection.
The life was apparently nightmarish for some couriers, however. Among the four federal counts brought against Costa and 13 others last week, one alleges kidnapping last summer, when he is said to have held a young Boston courier and his girlfriend captive for three weeks in San Jose because a Boston distributor had failed to pay Costa $500,000. The complaint goes on to allege that, according to the runner, several of Costa's lieutenants beat and sexually assaulted the couriers.
"This man gave our kids drugs, money, cars and threatened to kill them if they didn't do what he said--they were his mules," said one relative of a defendant named last week along with Costa. The source asked not to be identified.
Costa ran a South Bay prostitution ring, along with his drug business, according to the federal complaint.
He also owned and served as the vice president of the Santa Clara-based Powerspec Electronics, a manufacturing company, which the complaint alleges Costa used as a front for his drug business. Edward Costa served as Powerspec's president, and he and Michael Costa also used a fictitious building company called Power Development to launder money. The two allegedly bought, redeveloped and sold property to convert drug money into legitimate value.
Plans for Quito
It was under the guise of a developer that Costa began a touch-and-go relationship with the city of Saratoga in mid-2000, according to recent court documents filed by the city over the 12623 Quito Road property.
In mid-2000, after twice beginning construction on a basement and a fence at the site without building permits, Costa sought approval for significant additions. He wished to add a kitchen, a garage, an underground bedroom and an underground tunnel to connect the basement area to the bedroom. According to the city, he received approval only for the kitchen, garage and a new roof.
Then in January 2001 Costa proposed expanding basement excavation to 4,067 square feet--which the city eventually approved, according to its court complaint.
But in March 2001, Costa was issued a stop work order for stockpiling dirt--which the city believes came from the Quito Road site--at his Sobey Road property. The city also issued another stop work order for encroaching on and threatening the neighboring property of Tanya Tran and her husband Hai Luong as a result of basement excavation. The work wiped out a portion of Tran-Luong's fence.
Costa had also demolished the entire first floor of the existing home on his property and suspended the second floor on beams, leading to the last stop work order on April 2, 2001.
"The city did not issue a permit to demolish the first floor of the preexisting residence and suspend the second story in midair," Community Development Director Tom Sullivan said last week.
It was around that time that Saratoga City Manager Dave Anderson alerted local sheriff's deputies that Costa's proposed construction on Quito Road contained plans for "unusual ventilation and drainage" in the broad basement area, according to the federal complaint.
Ackemann, the county special agent, says that the "sophistication" of the plans were an attempt to allow the indoor growing facility to remain concealed in the heart of a busy residential neighborhood.
"Normally, you convert one room," says Ackemann.
Ackemann says that in searches last week, he and other agents uncovered plans for Costa's ring to put indoor grow sites at eight homes in the region.
In the spring of 2001, a friend of Costa's, Michael Sprague, purchased the Quito Road property adjacent to the excavated site. Michael Costa had also bought the house on the other side of the excavated property, at 12639 Quito Road.
Tran says Costa told her he had plans to develop the other sites as well.
Out of the air
But for the last year not much remodeling has been going on at the Quito Road properties. And the house behind Tran and Luong remains suspended; she stares over her back fence into a deep hole.
"We've thought about that house a lot--that it's going to collapse," said Tran, who's lived for two years behind Costa's property. "If they don't get rid of it soon it's going to become a landmark of Saratoga."
Tran said other neighbors around her have also expressed concern and circulated petitions protesting the building site.
In August 2001, negotiations between Costa, Sullivan and Saratoga building official Brad Lind about the property broke down, and the house remains suspended.
Finally, in January of this year, Costa allowed a city engineer to assess his property.
The engineer found that the suspended structure would topple in a moderate earthquake, potentially sending it into Tran and Luong's yard or onto the Quito Road sidewalk.
Anderson, the city manager, issued abatement orders in March to have the structure removed and the excavated basement filled. But by then Costa was in jail on weapons charges and did not respond. That led to the April 10 filing by the city in the county court, the very day federal charges were brought against Costa.
In addition to allowing a city-hired contractor to take the house out of the air and fill in the site, Saratoga is also asking the court to award Saratoga costs for the removal of the house and the excavation fill-in.
Saratoga would like the court to assess penalties against Costa for violating city code, although Parkin said he did not know how much the penalties would be. "The main thing we're concerned with is getting the public safety issue solved," he said.
City attorneys asked a Superior Court judge last week to set a hearing date as quickly as possible, to allow Saratoga officials to clear the Costa site.
Neither Costa nor his attorney, Bob Lyons, commented on the case last week. Phil Pennypacker, tentatively assigned to defend Costa during his federal case, said he would "know more next week."
Saratoga, California Since 1955
