CALIFORNIA―Senator Ron Calderon was indicted on multiple counts of public corruption on February 21. Calderon, and his brother Tom Calderon, were both charged with 24 counts of corruption which included allegations of wire fraud, mail fraud, honest services fraud and money laundering. Ron Calderon was arraigned in a U.S. District Court on February 24, where he pleaded not guilty on all counts.
“Senator Calderon is accused of accepting tens of thousands of dollars in bribes and using the powers of his elected office to enrich himself and his brother Tom, rather than for the benefit of the public he was sworn to serve,” said U.S. Attorney André Birotte Jr. in a public statement.
The indictment stems from two different schemes. The first involved 69-year-old Michael Drobot, who used to be the President and CEO of Pacific Hospital ofLong Beachfrom 1997 to around 2013. After a separate indictment, Drobot pleaded guilty to two counts of corruption on February 21, according to the U.S Attorney’s Office. He faces 10 years in prison.
Drobot reportedly managed to receive tens of millions of dollars by billing workers’ compensation for spinal surgeries performed on patients referred to his clinic by doctors who were generously paid by Drobot. These kickbacks could range between $10,000 and $15,000 depending on the type of surgery referred. Even when some of the patients lived hundreds of miles away from Drobot’s clinic inLong Beach, they would be sent to Pacific Hospital for the surgery nonetheless.
A loophole in workers’ compensation law called “spinal pass-through” allowed hospitals to be able to bill the hardware used for spinal surgeries separately from the cost of other costs involving surgery. The billing for this hardware was limited to $250 over the cost of the machinery used. Drobot would use shell companies he created to sell the machinery to himself and then bill workers’ compensation for the cost of those devices, but at a much higher, inflated price, according to a statement from the U.S. Attorney’s Office.
Calderon, according to the 24-page indictment against the senator, was then bribed by Drobot through payments to either the Calderon Group or to his non-profit, Californians for Diversity. Drobot also agreed to hire Calderon’s son to work during the summers of 2010, 2011 and 2012. Calderon’s son would be paid $10,000 per summer, even though he only worked 15 days each season.
This was all done so that Caldron could allegedly exploit his connection as senator to preserve the spinal pass-through, going so far as to convince other unnamed state officials to find ways of keeping the loophole despite the desire by other lawmakers to close it to save taxpayers an estimated $60 million. Calderon would also accept money, trips and expensive dinners for his efforts.
The second scheme that Calderon was involved in was centered on a film tax credit that helped indie films and other specific movie productions by giving them state tax credits for certain costs provided that their budgets were between $1 million and $10 million. Undercover FBI agents posed as studio executives were sought by Calderon, who agreed to help do his part in softening the criteria of qualifying for the tax credit in exchange for a number of different bribes, including the employment of his daughter at their studio at the rate of $3,000 a month for work she was never expected to complete. In addition, Calderon agreed to hire the girlfriend of one of the false executives, who was also an FBI agent, as a staff member to a public official.
Calderon even requested Secretary of State Debra Bowen to hire the undercover federal agent in exchange for signing an official letter that promised to lower the threshold for qualifying film productions from $1 million to $750,000 and speaking with other senators to introduce new legislation that would sneak in a separate tax credit for films with budgets below $1 million.
Other bribes Calderon would take included an additional $3,000 for his son’s college tuition and $25,000 for his Californians for Diversity non-profit. All told, Calderon is alleged to have received about $100,000 in bribes from both schemes.
Ron Calderon faces a maximum sentence of 396 years in prison if he is convicted on all 24 counts. His brother, Tom, faces 160 years in prison for his part in the money laundering allegations. Ron Calderon is due back in court on March 2.
Joel P. Garland, Acting Special Agent in Charge for IRS Criminal Investigation’s L.A. Filed Office said in a statement, “Public officials hold a position of trust and those who commit bribery, tax fraud and other crimes take note.”
By Alex Nochez