LOS ANGELES – Former California State Senator Ron Calderon has agreed to plead guilty to a federal corruption charge and admits in a plea agreement filed Monday that he accepted tens of thousands of dollars in bribes in exchange for performing official acts as a legislator.
Calderon, 58, of Montebello, agreed to plead guilty to one count of mail fraud through the deprivation of honest services to resolve a case against him that was filed in 2014. The plea agreement comes several weeks before Ron Calderon was scheduled to go on trial on charges contained in a 24-count indictment.
In the plea agreement, Calderon admits accepting bribe payments from the owner of a Long Beach hospital who wanted a law to remain in effect so he could continue to reap millions of dollars in illicit profits from a separate fraud scheme and from undercover FBI agents who were posing as independent filmmakers who wanted changes to California’s Film Tax Credit program.
Calderon’s brother, Tom Calderon, 62, also of Montebello, a former member of the California State Assembly who became a political consultant, pleaded guilty last Monday to a federal money laundering charge for allowing bribe money earmarked for his brother to be funneled through his firm.
"Public officials who engage in corrupt behavior threaten the basic fabric of our democracy,” said United States Attorney Eileen M. Decker. “The Calderons have acknowledged their roles in a bribery scheme in which money for them and their families alone was driving legislation that would have benefited only a few individuals.”
“My office will not tolerate pay-to-play corruption by public officials and their associates,” added Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “While in office, Ron Calderon and others profited handsomely when bribe money was accepted and laundered, and I’m gratified that he has chosen to take responsibility for his actions.”
Ron Calderon is expected to plead guilty to the mail fraud charge this week before United States District Judge Christina A. Snyder.
In the plea agreement filed Monday, Calderon admitted participating in a bribery scheme involving two areas of legislation and the hiring of a staffer at the behest of those paying bribes.
In the first part of the bribery scheme, Calderon took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, which was a major provider of spinal surgeries that were often paid by workers’ compensation programs. (The spinal surgeries are at the center of a massive healthcare fraud scheme that Drobot orchestrated and to which he previously pleaded guilty. Calderon is not implicated in the healthcare fraud scheme.) Drobot was a client of Tom Calderon’s political consulting firm.
California law known as the “spinal pass-through” legislation allowed a hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. As Drobot admitted in court, his hospital exploited this law, typically by using hardware that had been purchased at highly-inflated prices from companies that Drobot controlled and passing this cost along to insurance providers.
Drobot bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative healthcare fraud scheme, which included Calderon asking a fellow senator to introduce legislation favorable to Drobot.
The payments from Drobot came in the form of summer employment for Calderon’s son, who was hired as a summer file clerk at Pacific Hospital and received a total of $30,000 over the course of three years, despite the son doing little actual work at the hospital.
In another part of the bribery scheme, Calderon accepted bribes from people he thought were associated with an independent film studio, but who were in fact undercover FBI agents. In exchange for the payments – including $3,000 monthly payments to Calderon’s daughter for services she never provided – Calderon agreed to support an expansion of a state law that gave tax credits to studios that produced independent films in California.
The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the plea agreement.
Calderon took several official actions with respect to reducing the threshold for the Film Tax Credit, prosecutors said. He signed a letter on his official Senate letterhead indicating that he would propose legislation lowering the threshold, introduced a “spot bill” he told an undercover agent would be used to propose such legislation, and promised that he would vote in favor of that proposed legislation.
In addition to the payments to his daughter for work she did not do, Calderon had one of the undercover agents make a $5,000 payment toward his son’s college tuition and a $25,000 payment to Californians for Diversity, a non-profit entity that Calderon and his brother used to improperly pay themselves.
As part of the agreement with the undercover agents, Calderon performed official acts that led to the hiring of another undercover agent as a staffer in his district office at an annual salary of $45,105.
Calderon “knowingly concealed his bribery scheme from the public by submitting a false Statement of Economic Interest, California Form 700, to the California Fair Political Practices Commission, which failed to disclose the money and other financial benefits defendant he had received from Drobot” and the undercover agents, Calderon admitted in his plea agreement.
As part of Calderon’s plea agreement, federal prosecutors have agreed not to seek a sentence of more than 70 months in federal prison, a term that is expected to be within the United States Sentencing Guidelines advisory range for this case.
However, Judge Snyder would not be bound by any sentencing recommendation and could sentence Calderon up to statutory maximum sentence of 20 years in federal prison.
Tom Calderon pleaded guilty last week to money laundering and admitted that he agreed to conceal bribe payments for his brother from the two undercover FBI agents by having the money go through his company, the Calderon Group. Tom Calderon allowed payments to be made to the Calderon Group “to conceal and disguise the fact that the money represented the proceeds of bribery,” according to his plea agreement.
Tom Calderon “deposited the $30,000 bribe payment from [the undercover agent] into the Calderon Group’s bank account and then wrote a check for $9,000 from the Calderon Group’s bank account to Ron Calderon’s daughter,” Tom Calderon admitted in his plea agreement.
“Tom Calderon provided a conduit for illicit bribery payments and played a key role in hiding corrupt activities from the voting public,” said United States Attorney Decker.
As part of Tom Calderon’s plea agreement, prosecutors have agreed to recommend a sentence of no more than one year in prison. However, when Judge Snyder sentences Tom Calderon on Sept. 12, she could impose a term of up to 20 years in prison, which is the statutory maximum penalty for the money laundering count.
“The Calderon brothers shamelessly defrauded the citizens of California to their right to honest services through an illicit bribery scheme," stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “IRS CI tirelessly untangled the web of fraudulent transactions that lead to these corrupt individuals being held accountable for their actions.”