Pair Get Prison, $162-Million Fine in Gasoline Fraud : Environment: Anaheim Hills couple who operated 200 service stations sold adulterated fuel and violated state pollution, tax laws.

An Anaheim Hills couple who operated a string of 200 Southern California service stations drew eight-year state prison terms Wednesday and were ordered together to pay $162 million for selling adulterated gasoline and violating California pollution and tax laws.

The sentences of Gary and Divine Grace Lazar in Los Angeles Superior Court end one of the most extensive state and local investigations of gasoline and tax fraud as well as of violations of air- and ground-pollution laws.

The Lazars entered no-contest pleas last fall to 54 felony counts of fraud. Prosecutors asked Superior Court Judge Paul G. Flynn to send each defendant to state prison for eight years and to assess fines and penalties of $652 million.

Lead prosecutor Anthony G. Patchett, a deputy district attorney in Los Angeles County’s environmental crimes division, had sought a higher fine to send a message to others in the retail gasoline business. “The Lazar case is merely the tip of an iceberg,” he said Wednesday.

Authorities alleged the couple doctored gasoline, faked tests on leaky underground fuel tanks and failed to pay nearly $25 million in state sales, gas and cigarette taxes. The Lazars mixed gasoline with alcohol and “transmix”--a brew of kerosene, diesel and gas--apparently damaging thousands of cars that used the fuel.

In the 1980s, the Orange County couple operated service stations under the Unocal, Fast Fuel, Target, Quality Gas and Distrol brands in Los Angeles, Orange, San Bernardino and Riverside counties.

In sentencing hearings that began Feb. 10 and lasted several days, the court-appointed trustee for the Lazars’ companies, which filed bankruptcy in 1992, testified that the couple apparently transferred millions of dollars to bank accounts in the Cayman Islands, the Isle of Jersey and Liechtenstein.

State officials are seeking the money to help pay for the cleanup of many of the Lazars’ Southern California service stations that have leaking underground fuel tanks. Just $300,000 has been spent so far to clean up contaminated Lazar stations, “far less than needs to be spent,” testified the trustee, George E. Schulman, a Century City lawyer.

During the same hearing, Carl W. Sjoberg, who led the underground tank investigation for the Los Angeles County Department of Public Works, testified that “of those stations we believe are still under their (the Lazars’) control” in Los Angeles County, none was yet complying with pollution laws.

Sjoberg said outside the hearing that he estimates the average cost to clean up one of the more than 80 potentially contaminated stations in the county is about $200,000, though “some can run into the millions.”

The Lazars have remained in jail since 1993 and lost their Anaheim Hills home, along with other assets, in a bankruptcy liquidation, attorneys said.

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Times staff writer Chris Woodyard in Costa Mesa contributed to this report.