A backyard nuclear shelter? Yes, paranoia does sell

One sterling quality of American businesses is that they'll try to make money from anything.

Paranoia, for instance. So say hello to Ron Hubbard, the owner of Montebello-based Atlas Survival Shelters, which converts huge corrugated metal tubes up to 50 feet long into fully equipped, all-the-comforts-of-home underground shelters at a price of up to about $78,000 each, not including shipping and interment.

You may have spotted the Atlas shop from the 5 Freeway as you're heading into downtown. There's a corrugated tube out front, painted bright yellow and looking like a tipped-over corn silo. High on the exterior wall facing the road is a banner declaring that the shelters offer protection from nuclear blasts, nuclear fallout, EMP (that's electromagnetic pulses, which can foul electrical systems), solar flares, mobs, looters, earthquakes and chemical warfare. If there's anything left off that list, it's probably not worth worrying about.

"People who buy my shelters are not radical crazy people," Hubbard told me recently as he guided me around the Montebello shop. "I get maybe three crazy calls a year. They're practical people."

Hubbard, 50, is a big Texan with a toothy grin and the friendly enthusiasm of someone trying to sell you something. He'll expound cheerily on the basic practicality, not to mention the sheer joy, of having a 40-foot corrugated steel drum buried 20 feet deep in your yard and tricking it out with a big-screen TV and Internet connection for those long days and nights hunkered down against nuclear blasts, the Chinese army or domestic looters. His shelters also offer such necessities as microwave ovens, space for a year's worth of provisions and high-grade air filtration.

"We don't know where our country will go," he said. "If we're going to be attacked, my shelters will protect you from Sarin gas or super flu. If we go bankrupt and we don't pay China, that could be the start of World War III. We could attack Iran or back Israel, and that could start a war. This is insurance. Why do we carry insurance on our homes? Just. In. Case."

Hubbard doesn't describe these dystopias as though he actually believes in them, but rather with the air of a salesman trying out any buzzword that might trigger a deal. During the couple of hours we were together, he described his products serially as underground condos, second homes, combination second homes and bomb shelters, man caves, man caves that happen to be bombproof, weekend cabins and hunting cabins.

Atlas Survival Shelters hasn't turned a significant profit yet. Hubbard said it made no money in the start-up year of 2011, was modestly in the black last year and may show a profit for 2013. But the business is unusual enough that it has won featured spots on several reality shows. An episode on A&E Network's "Shipping Wars" shows a team of moving experts trying to figure out how to transport a 32-foot shelter on their flatbed truck. During the episode Hubbard regales them with the virtues of the unit's escape-hatch feature, a second portal that opens only from the inside, in case of an attack.

"Somebody sees you going down; while they're trying to smoke you out, you're going to the back tunnel, you're gonna come up through an escape hatch that's hidden underground, you can shoot 'em in the back. Pretty cool, huh?" (Remarked one of the show's plainly creeped-out female cast members, "Remind me to never pay him a visit.")

More recently, Atlas was featured on an episode of the National Geographic Channel series "Doomsday Preppers," which chronicles the lifestyles of the scared and nervous. Hubbard's customer is described in network publicity as Brian Smith, a father of 12 "preparing for a total collapse of the U.S. monetary system."

Hubbard got into the underground shelter business a little more than a year ago after years of selling wrought-iron doors from the same location, operating as Hubbard Iron Doors. That business was brought low by the poor economy and cheap Chinese knockoffs, Hubbard says. It filed for bankruptcy in 2011; Hubbard says it's now owned and run by his brother, though the two companies share space with each other.

While he was casting about for a new business, Hubbard said, he happened across a brochure for Radius Engineering International, a Texas company that manufacturers fiberglass shelters mostly for business, government and military buyers. But the Radius products were expensive — they run from $150,000 up to millions, depending on the design and capacity. Hubbard thought he could do better on price while turning out a more appealing hideaway.

He's still trying to get a feel for the market, however. With his six or seven full-time workers, he can turn out one shelter a week. Orders, he said, come in at somewhere between one a month and one a week, more in periods of publicity-driven paranoia — during the run-up to the supposed Mayan apocalypse at the end of December, he said, calls jumped up to one a day.

The joke was on the callers, however, because Hubbard's six-week lead time meant that no one who called because they had just seen a Mayan feature on TV could get a shelter built, much less on site and in the ground, in time to beat the end of the world. Luckily, the apocalypse was a bust.

And for all that he plays up Armageddon in all its possible varieties in his sales pitch, doomsday may not be that great a marketing tool. "If I just sold bomb shelters, there would be about this big of a market." Hubbard holds his thumb and forefinger a half-inch apart. "But if I say, 'man cave,' 'wine cellar,' 'getaway,' then I get the recreational shelter owner too."

He says most of his calls come from retired military men, doctors, lawyers and business owners — possibly because the latter are among the few categories of buyers with the wherewithal to plunk down $60,000 or $70,000 for a man cave/bomb shelter, plus installation.

The size of the overall shelter market is unclear, in part because its promoters make a point of secrecy about whom they sell to and where. Privately held Radius has claimed to sell more than $30 million worth of shelters a year, but you have to take their word for it.

Then there are firms like Vivos Group, a Del Mar, Calif., company that claims to have started survivalist communities in three states — but they appear to be sort of co-op arrangements in which you have to apply to be considered for "co-ownership" of your refuge community. Once you're chosen, they'll let you know where to go when the end times come.

"This is just the threshold of something that's going to become common," Hubbard said, putting a hopeful spin on his words as though aware that paranoia may be peaking today, but gone tomorrow. "So I say, don't buy a bomb shelter. Buy an underground cabin, and enjoy it."

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

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Undercover FBI agent's conduct denounced at arms trafficking hearing

Sergio Santiago Syjuco said he looked up to Richard Han, who was older, wealthy and clearly important.

When Han went into karaoke clubs in the Philippines — which were widely known to double as brothels — he always got the biggest private rooms and the best service, Syjuco said.

Managers would offer dozens of young women as paid companions for Han and members of his party, Syjuco said.

Han boasted that he was an international arms dealer and he picked up the tab for all the booze and sex, Syjuco said.

Han, however, was not wealthy. Nor was he a criminal. His name wasn't even Han. It's Charles Ro and he's an FBI agent who went undercover to ensnare Syjuco and two other men in a weapons-trafficking scheme.

But on Thursday, it was Ro's conduct that was on trial in downtown Los Angeles.

Syjuco, a Filipino national, testified as part of a defense motion seeking to throw out the criminal charges against the defendants, alleging that Ro committed “outrageous government misconduct” while investigating the case.

Deputy Federal Public Defender John Littrell, who represents Syjuco, has accused Ro of using public funds to pay for prostitutes, possibly including minors, for the defendants to induce them to participate in the smuggling scheme.

The “government's actions in this case, if committed by a private citizen, would be serious federal crimes,” Littrell said in court documents.

Government attorneys and Ro dispute the allegations. Prosecutors are expected to present evidence rebutting the allegations Friday.

Federal prosecutors have acknowledged in court filings, however, that the government reimbursed Ro for $14,500 worth of entertainment, cocktails and tips over a period of less than a year in 2010 and 2011 in connection with the case.

The expenses included $1,600 at a club known as Area 51, which was later raided by Filipino authorities for employing 19 underage girls. In a news release, the Philippines National Bureau of Investigation wrote that the minors danced in the nude and provided “sex services” for pay.

Syjuco, Cesar Ubaldo and Filipino customs official Arjyl Revereza were charged with smuggling assault rifles, grenade launchers and mortar launchers from the Philippines to Long Beach in June 2011 in containers labeled “Used Personal Effects.”

They have pleaded not guilty and face up to 20 years in prison if convicted, authorities said.

In a sworn declaration, Ro said he met with the suspects three times at Area 51 and three times at another club, Air Force One. During each meeting, undercover agents and local investigators were present, providing security.

Ro's undercover persona was that of an arms broker for wealthy Mexican drug cartels that wanted to import illegal weapons into the United States, according to his declaration.

“I never saw any defendant engage in any sexual act,” the agent wrote. “I was never told by any manager that the bill included prostitution, nor did I ever see prostitution, in any term, listed on any bill.”

Ro said customers in the clubs were expected to buy drinks and food for female hostesses who sat near them and to pay a sitting fee.

Syjuco, who was at ease on the witness stand and smiling during his testimony, said it is common knowledge that the karaoke clubs they visited offered prostitution.

At both clubs, there were areas called the “aquarium,” where young women sat behind glass in rows and awaited selection by male customers, he said. The women, known as “guest relations officers,” were scantily clad and wore numbers to make selecting them easier, Syjuco said.

Syjuco described Ro as a “very persuasive person,” who invited him and the others to the clubs. He said Ro pressured them to drink alcohol and have sex with the women in private rooms.

Ubaldo also testified that he had sex with prostitutes paid for by Ro. Syjuco and Ubaldo said Ro had the female hostesses drink shots of alcohol. He would line up the shots for the women to drink, and whoever drank the most would be his companion for the evening, they testified.

In his declaration, Ro denied he did so. Prosecutors said Thursday that Ro held the meetings at the clubs to discuss weapons deals.

hailey.branson@latimes.com

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Bolshoi's artistic director attacked in Moscow

MOSCOW (AP) — Russian police say the artistic director at the legendary Bolshoi Theater has been attacked with acid in Moscow.

The Moscow police said Friday that Sergei Filin was attacked Thursday night by a man who splashed acid onto his face as the 43-year-old former dancer came out of his car outside his home in central Moscow.

The theater's press office told Russian television that Filin's eyesight is threatened.

Bolshoi spokeswoman Katerina Novikova told Channel One that Filin had received threats before and that they suspect that that he fell victim to the notorious infighting and rows between different groups of dancers and managers at the theater.

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The Neediest Cases: Medical Bills Crush Brooklyn Man’s Hope of Retiring

Andrea Mohin/The New York Times

John Concepcion and his wife, Maria, in their home in Sheepshead Bay, Brooklyn. They are awaiting even more medical bills.

Retirement was just about a year away, or so John Concepcion thought, when a sudden health crisis put his plans in doubt.

For the past 100 years, The New York Times Neediest Cases Fund has provided direct assistance to children, families and the elderly in New York. To celebrate the 101st campaign, an article will appear daily through Jan. 25. Each profile will illustrate the difference that even a modest amount of money can make in easing the struggles of the poor.

Last year donors contributed $7,003,854, which was distributed to those in need through seven New York charities.

2012-13 Campaign

Previously recorded:

$6,865,501

Recorded Wed.:

16,711

*Total:

$6,882,212

Last year to date:

$6,118,740

*Includes $1,511,814 contributed to the Hurricane Sandy relief efforts.

“I get paralyzed, I can’t breathe,” he said of the muscle spasms he now has regularly. “It feels like something’s going to bust out of me.”

Severe abdominal pain is not the only, or even the worst, reminder of the major surgery Mr. Concepcion, 62, of Sheepshead Bay, Brooklyn, underwent in June. He and his wife of 36 years, Maria, are now faced with medical bills that are so high, Ms. Concepcion said she felt faint when she saw them.

Mr. Concepcion, who is superintendent of the apartment building where he lives, began having back pain last January that doctors first believed was the result of gallstones. In March, an endoscopy showed that tumors had grown throughout his digestive system. The tumors were not malignant, but an operation was required to remove them, and surgeons had to essentially reroute Mr. Concepcion’s entire digestive tract. They removed his gall bladder, as well as parts of his pancreas, bile ducts, intestines and stomach, he said.

The operation was a success, but then came the bills.

“I told my friend: are you aware that if you have a major operation, you’re going to lose your house?” Ms. Concepcion said.

The couple has since received doctors’ bills of more than $250,000, which does not include the cost of his seven-day stay at Beth Israel Medical Center in Manhattan. Mr. Concepcion has worked in the apartment building since 1993 and has been insured through his union.

The couple are in an anxious holding pattern as they wait to find out just what, depending on their policy’s limits, will be covered. Even with financial assistance from Beth Israel, which approved a 70 percent discount for the Concepcions on the hospital charges, the couple has no idea how the doctors’ and surgical fees will be covered.

“My son said, boy he saved your life, Dad, but look at the bill he sent to you,” Ms.  Concepcion said in reference to the surgeon’s statements. “You’ll be dead before you pay it off.”

When the Concepcions first acquired their insurance, they were in good health, but now both have serious medical issues — Ms. Concepcion, 54, has emphysema and chronic obstructive pulmonary disease, and Mr. Concepcion has diabetes. They now spend close to $800 a month on prescriptions.

Mr. Concepcion, the family’s primary wage earner, makes $866 a week at his job. The couple had planned for Mr. Concepcion to retire sometime this year, begin collecting a pension and, after getting their finances in order, leave the superintendent’s apartment, as required by the landlord, and try to find a new home. “That’s all out of the question now,” Ms. Concepcion said. Mr. Concepcion said he now planned to continue working indefinitely.

Ms. Concepcion has organized every bill and medical statement into bulging folders, and said she had spent hours on the phone trying to negotiate with providers. She is still awaiting the rest of the bills.

On one of those bills, Ms. Concepcion said, she spotted a telephone number for people seeking help with medical costs. The number was for Community Health Advocates, a health insurance consumer assistance program and a unit of Community Service Society, one of the organizations supported by The New York Times Neediest Cases Fund. The society drew $2,120 from the fund so the Concepcions could pay some of their medical bills, and the health advocates helped them obtain the discount from the hospital.

Neither one knows what the next step will be, however, and the stress has been eating at them.

“How do we get out of this?” Mr. Concepcion asked. “There is no way out. Here I am trying to save to retire. They’re going to put me in the street.”

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Herbalife says fourth-quarter profit will exceed expectations

Herbalife Ltd. forecast that fourth-quarter earnings will come in higher than expected but said expenses could rise as the nutritional supplement distributor ramps up its fight with activist hedge-fund manager William Ackman.

The Los Angeles company said Thursday it also plans to buy back shares, a sign that management believes the stock is undervalued. It's a much-needed boost for a company that's been mired in a battle with an investor who says the company is on its way downhill.

"Herbalife is a financially strong and successful company, having created significant opportunities for distributors and positively impact the lives and health of our consumers over our history," company Chief Executive Michael Johnson said in a statement.

Herbalife said it expected fourth-quarter earnings of $1.02 to $1.05 a share, higher than Wall Street's expectation of $1.01 a share. Sales for the fourth quarter are expected to rise 19.9%, the company said, and its taxes will be lower than projected. The company plans to begin repurchasing shares Tuesday.

The company also said it expected expenses to be temporarily higher "because of recent events."

Herbalife has been battling allegations by Ackman, who said in a December presentation that the company is a glorified pyramid scheme. He's sold short about 20 million shares of the stock, expecting the company to tank. Herbalife is also reportedly being investigated by the Securities and Exchange Commission.

A week ago in Manhattan, Johnson and other Herbalife executives rebutted Ackman's points one by one, proving, they said, that Herbalife has a stable business model and is not scamming anyone. Shares of the company, which had been slumping, began rising again after Johnson's presentation.

Ackman foe Carl Icahn stepped into the controversy this week, taking a stake in Herbalife, according to reports. Icahn could not be reached for comment.

Investors showed mixed reaction to Herbalife's preliminary earnings Thursday. The stock initially shot up in morning trading but leveled off in the afternoon and closed down $1.54, or 3.4%, at $43.52.

Herbalife will release its final fourth quarter results Feb. 19.

Analysts such as Timothy Ramey, of D.A. Davidson & Co., say they're optimistic about the company's future. Ramey also adjusted his expectations of the company's earnings.

In 2013, earnings will be $4.85 a share, up from his previous estimate of $4.55, he said in a note. He also adjusted his forecast for 2012 earnings to $4.05 a share from $4.03.

Ramey said he expects Herbalife stock to thrive once it emerges from the current controversy, which he expects will happen in 2013. In five years, the stock could hit $180, he said.

"There has never been a period of greater scrutiny for Herbalife," he wrote.

alana.semuels@latimes.com

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Robert L. Citron dies at 87; central figure in O.C. bankruptcy

Robert L. Citron, the Orange County treasurer whose bad bets on exotic Wall Street investments resulted in what at the time was the largest municipal bankruptcy in U.S. history, died Wednesday. He was 87.

Citron died at St. Joseph Hospital in Orange of complications from a heart attack, said his wife, Terry Citron.

Until the 1994 financial collapse, Citron was a low-key bureaucrat who won praise from Orange County supervisors for earning much higher yields from the county's complex array of investments than many other government agencies. His investment pools attracted funds from governments around the country as well as from schools, cities and public agencies.

The county declared bankruptcy Dec. 6, 1994, buffeted by losses that, when the final count was tallied, amounted to $1.64 billion. The county was forced to postpone repayments on bonds it had sold, ruining its credit rating, but eventually repaid its creditors in full. The bankruptcy sent shock waves through Wall Street and the municipal bond markets. It also made national headlines, with some asking how such a prosperous county could become insolvent.

A grand jury investigation would later find that the treasurer who over the years won so much praise for his investment skills relied upon a mail order astrologer and a psychic for interest rate predictions as the county's treasury began to falter.

Citron pleaded guilty to six felony counts, including filing false statements to participants in the Orange County Treasury Investment Pool. His lawyer, David Wiechert, submitted medical testimony indicating that Citron was in the early stages of dementia.

Citron was sentenced to work in the county jail, sorting inmates' requests for personal items by day before returning to his home in Santa Ana. He never spent a night behind bars but worked for months in the jail's commissary. He remained on probation until 2002.

In a 1997 interview with The Times, Citron insisted that he was duped into making rashly imprudent investments by Merrill Lynch. He became a key witness in Orange County's $2-billion lawsuit against the investment giant. The suit said that Citron was a "pigeon" for greedy brokers at the investment house.

Merrill Lynch maintained that the bankruptcy was Citron's fault. It later settled the case with the county, paying $400 million.

A third-generation Californian, Citron was born in Los Angeles on April 14, 1925, according to public records, and grew up in Burbank. Because he had asthma as a child, his family moved out to the town of Hemet in the foothills of the San Jacinto Mountains. His father, Jesse, was a doctor who earned a measure of fame for being liquor-loving W.C. Fields' doctor and weaning him off Scotch.

Citron rose through the ranks of the county's treasury department to become county treasurer-tax collector, a post he held for 24 years. He was one of the few Democrats to hold countywide elected office in a region dominated by Republicans. He lived in Santa Ana, just a few miles from work, and was famous for his long hours. In a 1994 interview, his wife told The Times that the weekends were hardest for her husband because he could not go to work.

"He can barely stand the weekend at home," she said. "He can't wait to get back. I think he'd go crazy without that job."

The bankruptcy tarnished Citron's name as well as the county's. County government slashed hundreds of jobs and cut budgets. Orange County's repayment plan siphoned money from four county departments every year, affecting projects big and small.

Citron's assistant, Matthew Raabe, was convicted of fraud and misappropriation and served 41 days in jail before the verdict was overturned. Taxpayers spent $1 million on his defense. The county's financial director, Ronald S. Rubino, was tried on fraud and misappropriation charges, but a jury deadlocked in favor of acquittal. He pleaded no contest to one record-keeping violation under a deal that allowed his record to be erased after a year. County Supervisors Roger R. Stanton and William G. Steiner were indicted by a grand jury on grounds of failing to safeguard public funds. The indictment was later dismissed by an appeals court ruling that said failing to do their jobs wasn't a crime.

Citron is survived by his wife of 57 years.

scott.reckard@latimes.com

Times staff writers Shelby Grad and Robert J. Lopez contributed to this report.

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Mysterious Samsung smartphone pictured with Verizon branding

Earlier this week, a mysterious Samsung (005930) smartphone appeared on GLBenchmark’s database with the model number SCH-I425. The number fell in line with previous Verizon (VZ) devices, leading us to speculate that it could be the Stratosphere III. New images posted by Engadget on Wednesday confirmed that the handset is real, however it does not feature earlier Stratosphere devices’ signature QWERTY keyboard. The device resembles the Galaxy S III mini, although the smartphone includes four capacitive buttons rather than Samsung’s physical home key. As the benchmarks revealed, the SCH-I425 is also equipped with a 720p display, a 1.4GHz dual-core Snapdragon S4 processor, 4G LTE and Android 4.1.2. While the actual screen size is unknown, it appears to be in the 4-inch range. A second image of the unannounced phone follows below.

[More from BGR: The true genius of Facebook’s Graph Search]

This article was originally published on BGR.com

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Obama calls for research on media in gun violence

NEW YORK (AP) — Hollywood and the video game industry received scant attention Wednesday when President Barack Obama unveiled sweeping proposals for curbing gun violence in the wake of the Newtown, Conn., school shooting.

The White House pressed most forcefully for a reluctant Congress to pass universal background checks and bans on military-style assault weapons and high-capacity ammunition magazines like the ones used in the Sandy Hook Elementary massacre.

No connection was suggested between bloody entertainment fictions and real-life violence. Instead, the White House is calling on research on the effect of media and video games on gun violence.

Among the 23 executive measures signed Wednesday by Obama is a directive to the Centers for Disease Control and Prevention and scientific agencies to conduct research into the causes and prevention of gun violence. The order specifically cited "investigating the relationship between video games, media images and violence."

The measure meant that media would not be exempt from conversations about violence, but it also suggested the White House would not make Hollywood, television networks and video game makers a central part of the discussion. It's a relative footnote in the White House's broad, multi-point plan, and Obama did not mention violence in entertainment in his remarks Wednesday.

The White House plan did mention media, but suggested that any effort would be related to ratings systems or technology: "The entertainment and video game industries have a responsibility to give parents tools and choices about the movies and programs their children watch and the games their children play."

The administration is calling on Congress to provide $10 million for the CDC research.

The CDC has been barred by Congress to use funds to "advocate or promote gun control," but the White House order claims that "research on gun violence is not advocacy" and that providing information to Americans on the issue is "critical public health research."

Since 26 were killed by a gunman at Sandy Hook in December, some have called for changes in the entertainment industry, which regularly churns out first-person shooter video games, grisly primetime dramas and casually violent blockbusters.

The Motion Picture Association of America, the National Association of Broadcasters, National Cable & Telecommunications Association and the Independent Film & Television Alliance responded to Wednesday's proposal in a joint statement:

"We support the president's goal of reducing gun violence in this country. It is a complex problem, and as we have said, we stand ready to be a part of the conversation and welcome further academic examination and consideration on these issues as the president has proposed."

After the Newtown massacre, Wayne Pierre, vice-president of the National Rifle Association, attacked the entertainment industry, calling it "a callous, corrupt and corrupting shadow industry that sells and sows violence against its own people." He cited a number of video games and films, most of them many years old, like the movies "American Psycho" and "Natural Born Killers," and the video games "Mortal Kombat" and "Grand Theft Auto."

President Obama's adviser, David Axelrod, had tweeted that he's in favor of gun control, "but shouldn't we also question marketing murder as a game?"

Others have countered that the same video games and movies are played and watched around the world, but that the tragedies of gun violence are for other reasons endemic to the U.S.

The Entertainment Software Association, which represents video game publishers, referenced that argument Wednesday in a statement that embraced Obama's proposal.

"The same entertainment is enjoyed across all cultures and nations, but tragic levels of gun violence remain unique to our country," said the ESA. "Scientific research an international and domestic crime data point toward the same conclusion: Entertainment does not cause violent behavior in the real world."

Several R-rated films released after Newton have been swept into the debate. Arnold Schwarzenegger, the former California governor and action film star, recently told USA Today in discussing his new shoot-em-up film "The Last Stand": "It's entertainment. People know the difference."

Quentin Tarantino, whose new film "Django Unchained" is a cartoonish, bloody spaghetti western set in the slavery-era South, has often grown testy when questioned about movie violence and real-life violence. Speaking to NPR, Tarantino said it was disrespectful to the memory of the victims to talk about movies: "I don't think one has to do with the other."

In 2011, the Supreme Court rejected a California law banning the sale of violent video games to children. The decision claimed that video games, like other media, are protected by the First Amendment. In dissent, Justice Stephen G. Breyer claimed previous studies showed the link between violence and video games, concluding "the video games in question are particularly likely to harm children."

In the majority, Justice Antonin Scalia wrote that the government can't regulate depictions of violence, which he said were age-old, anyway: "Grimm's Fairy Tales, for example, are grim indeed."

___

AP Entertainment Writer Derrik J. Lang contributed to this report from Los Angeles

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Some With Autism Diagnosis Can Recover, Study Finds

Doctors have long believed that disabling autistic disorders last a lifetime, but a new study has found that some children who exhibit signature symptoms of the disorder recover completely.

The study, posted online on Wednesday by the Journal of Child Psychology and Psychiatry, is the largest to date of such extraordinary cases and is likely to alter the way that scientists and parents think and talk about autism, experts said.

Researchers on Wednesday cautioned against false hope. The findings suggest that the so-called autism spectrum contains a small but significant group who make big improvements in behavioral therapy for unknown, perhaps biological reasons, but that most children show much smaller gains. Doctors have no way to predict which children will do well.

Researchers have long known that between 1 and 20 percent of children given an autism diagnosis no longer qualify for one a few years or more later. They have suspected that in most cases the diagnosis was mistaken; the rate of autism diagnosis has ballooned over the past two decades, and some research suggests that it has been loosely applied.

The new study should put some of that skepticism to rest.

“This is the first solid science to address this question of possible recovery, and I think it has big implications,” said Sally Ozonoff of the MIND Institute at the University of California, Davis, who was not involved in the research. “I know many of us as would rather have had our tooth pulled than use the word ‘recover,’ it was so unscientific. Now we can use it, though I think we need to stress that it’s rare.”

She and other experts said the findings strongly supported the value of early diagnosis and treatment.

In the study, a team led by Deborah Fein of the University of Connecticut at Storrs recruited 34 people who had been diagnosed before the age of 5 and no longer had any symptoms. They ranged in age from 8 to 21 years old and early in their development were in the higher-than-average range of the autism spectrum. The team conducted extensive testing of its own, including interviews with parents in some cases, to gauge current social and communication skills.

The debate over whether recovery is possible has simmered for decades and peaked in 1987, when the pioneering autism researcher O. Ivar Lovaas reported that 47 percent of children with the diagnosis showed full recovery after undergoing a therapy he had devised. This therapy, a behavioral approach in which increments of learned skills garner small rewards, is the basis for the most effective approach used today; still, many were skeptical and questioned his definition of recovery.

Dr. Fein and her team used standardized, widely used measures and found no differences between the group of 34 formerly diagnosed people and a group of 34 matched control subjects who had never had a diagnosis.

“They no longer qualified for the diagnosis,” said Dr. Fein, whose co-authors include researchers from Queens University in Kingston, Ontario; Children’s Hospital of Philadelphia; the Institute of Living in Hartford; and the Child Mind Institute in New York. “I want to stress to parents that it’s a minority of kids who are able to do this, and no one should think they somehow missed the boat if they don’t get this outcome.”

On measures of social and communication skills, the recovered group scored significantly better than 44 peers who had a diagnosis of high-functioning autism or Asperger’s syndrome.

Dr. Fein emphasized the importance of behavioral therapy. “These people did not just grow out of their autism,” she said. “I have been treating children for 40 years and never seen improvements like this unless therapists and parents put in years of work.”

The team plans further research to learn more about those who are able to recover. No one knows which ingredients or therapies are most effective, if any, or if there are patterns of behavior or biological markers that predict such success.

“Some children who do well become quite independent as adults but have significant anxiety and depression and are sometimes suicidal,” said Dr. Fred Volkmar, the director of the Child Study Center at the Yale University School of Medicine. There are no studies of this group, he said.

That, because of the new study, is about to change.

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U.S. finalizes rules for financial firms to avoid foreclosures

In a major effort to heal the $10-trillion U.S. mortgage market, the Consumer Financial Protection Bureau has finalized rules designed to ensure financial firms offer every available option to keep delinquent borrowers in their homes.

The regulations, to be announced Thursday, address widespread complaints that loan servicers — the companies that collect mortgage payments and repossess homes — were woefully unprepared to help borrowers during the tsunami of foreclosures after the housing bust.

They are designed to complement previous settlements by major banks over allegations of widespread servicing and foreclosure abuses. But unlike earlier settlements, they will apply to all large mortgage servicers, not just banks, in all states.

Still, the rules drew immediate criticism from a prominent consumer group, which said they don't do enough to force servicers to consider easing the terms of mortgages and expressed fears that the rules might preempt stronger existing provisions.

"While the establishment of industrywide standards is important, the failure to require meaningful loan modification protections is a retreat from current safeguards under the soon-to-expire [Obama administration] loan modification program," said Alys Cohen, an attorney with the National Consumer Law Center.

The consumer bureau was created when Congress passed the sweeping Dodd-Frank financial reform act in reaction to the mortgage meltdown and the global economic crisis that ensued. The law also required lenders to ensure that they only make loans that borrowers can reasonably be expected to repay.

Last week, the bureau issued major regulations providing a "safe harbor" from lawsuits under that new requirement for lenders who make certain types of presumably sound home loans. A key requirement is that total debt payments for borrowers — including principal, interest, taxes and insurance on home loans — be no more than 43% of gross income.

The rules to be released Thursday, which take effect in a year, bar lenders from pursuing foreclosure proceedings against borrowers while applications for loan modifications are pending — the much-criticized practice of "dual tracking."

The consumer bureau said banks also must provide "direct, easy, ongoing access" to employees who are required to alert borrowers to missing information, provide status reports on modification requests and ensure documents don't get lost.

Banks also are required to inform borrowers who miss two monthly payments about options to avoid foreclosure and to wait until loans go 120 days delinquent before beginning a foreclosure — a provision that would preempt a 90-day requirement under California law.

Richard Cordray, the consumer bureau's director, said distressed borrowers had not gotten the help and support they deserved, such as "timely and accurate information about their options for saving their homes."

"Servicers failed to answer phone calls, routinely lost paperwork and mishandled accounts," Cordray said in remarks to be delivered at an industry conference Thursday.

"Communication and coordination were poor, leading many to think they were on their way to a solution, only to find that their homes had been foreclosed on and sold," he said. "At times, people arrived home to find they had been unexpectedly locked out."

The new rules don't apply to most small banks and credit unions. Bureau officials said they have had few complaints about these small institutions, which are more likely to keep loans on their books, rather than sell them, and generally devote more attention to individual customers.

Servicers often are collecting payments on behalf of loan owners, who may be the banks themselves but more often are trusts created on behalf of mortgage investors. The investors have mandated a wide range of relief programs for troubled borrowers in addition to government-sponsored programs such as the Obama administration's Home Affordable Modification Program.

In the past, servicers would sometimes not inform troubled borrowers about all the options, instead steering them into foreclosure or programs that provided the servicers with greater financial rewards, bureau officials said.

The servicers are now supposed to clearly explain all alternatives to borrowers so they can pick the best one. The new rules also establish clearer opportunities for borrowers to appeal servicers' denials of loan modifications.

In addition to worries that the bureau has not cracked down hard enough on servicers, consumer advocates expressed concern that the new rules will not take effect for a year.

"While we understand that servicers need time to implement complex procedures, we're still in the middle of a foreclosure crisis," Cohen said. "Many people will unnecessarily lose their homes if we wait a year."

scott.reckard@latimes.com

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