Parking Lot Operator (Failed) to Pay VA at least $11 Million while Paying Bribes to VA Official

[nitpicker]

https://www.justice.gov/usao-cdca/pr/parking-lot-operator-arrested-allegedly-failing-pay-dept-veteran-s-affairs-least-11

Department of Justice
U.S. Attorney’s Office
Central District of California

FOR IMMEDIATE RELEASE
Wednesday, November 8, 2017

Parking Lot Operator Arrested for Allegedly Failing to Pay Dept. of Veteran’s Affairs at least $11 Million while Paying Bribes to VA Official

LOS ANGELES – The owner of a business that operated parking lots was arrested this morning after being charged with bilking the U.S. Department of Veteran’s Affairs out of more than $11 million that should have been paid in relation to a contract to operate parking facilities on the VA’s Los Angeles medical campuses. Richard Scott, 58, the owner of Westside Services LLC (WSS), was arrested without incident this morning at his Santa Monica residence. The arrest was made pursuant to a criminal complaint filed on November that charges Scott with major fraud against the United States. Scott is expected to make his first court appearance this afternoon in United States District Court in downtown Los Angeles.

An FBI agent described the fraud in a 103-page affidavit filed in support of the criminal complaint. As outlined in the affidavit, Scott obtained a contract to operate parking lots on the campuses of the VA Greater Los Angeles Healthcare System (VA GLAHS) and soon after began defrauding the VA by failing to properly report income and expenses. The vast majority of the activity authorized under the contract took place at the West Los Angeles VA Medical Center near Westwood. For approximately the past 15 years, Scott has had a contract with the VA that required him to provide the VA with 60 percent of the gross revenues from the parking lots, according to the affidavit. In order to determine these amounts, Scott was required to submit annual reports detailing revenue generated by parking fees, as well as improvements and services his company provided that could be used to offset payments due to the VA.

The investigation determined that Scott maintained at least two sets of financial books, according to the affidavit. The numbers reported to the VA contained false revenue and expense statements, while a second set of books maintained by Scott’s bookkeeper/tax preparer contained the actual revenues and expenditures, except for unreported cash. “The investigation has revealed that Scott underreported revenue to the VA by a minimum of $4,689,081 and over-reported expenses to the VA by a minimum of $8,219,762, which caused a direct loss to the VA of $11,397,779,” according to the affidavit. The court document notes that the amount of unreported revenue is likely greater because cash generated from parking during UCLA baseball games and other events – which potentially totals more than $1 million – also was not reported to the VA.

As part of the scheme to defraud the VA, Scott allegedly began bribing the VA contracting official responsible for overseeing the contract in 2003 and continued to bribe him on a regular basis until the official abruptly retired in 2014 after he was confronted by federal agents. According to the affidavit, Scott continued making payments to the retired VA official to continue the scheme and attempt to avoid termination of his parking contract. As a result of the long-running scheme to defraud the VA, Scott amassed considerable wealth, including three $2.5 million condominiums in Santa Monica, numerous high-end collectible cars, a Cigarette Top Gun racing boat that is docked in Miami, and brokerage accounts, according to the affidavit. Between 2003 and 2016, Scott allegedly used WSS business bank accounts to pay for approximately $740,000 in travel, $413,000 in meals and entertainment, his salary of $3.1 million, and numerous personal expenses and owner’s draws. The affidavit states, “The travel and meal/entertainment expenses are especially suspicious because the business of WSS consisted of overseeing parking lots at the VA GLAHS, only two of which were regularly staffed, which did not require any travel beyond the few mile area” around the VA’s West Los Angeles campus.
(snip)

The former VA contracting official began cooperating with the federal investigation in May, according to the affidavit, which states that the retired VA official admitted he participated in the bribery scheme and knew Scott was underreporting revenue and inflating expenses reported to the VA. Furthermore, the former VA official said that Scott used proceeds from cash parking events to pay the official. During an interview earlier this year recounted in the affidavit, the former official said, “He [Scott] was definitely bribing me and I was definitely looking the other way.”
(snip)

The VA contract with WSS was terminated early this year after the VA settled a lawsuit that challenged the VA’s use of its West Los Angeles campus for any purposes not specifically related to the care and housing of veterans. However, pursuant to the agreement, WSS will continue to operate the parking lots until January.
(snip)

[Stuart G]

1. Quite a haul...stealing 11 million from the VA...thanks for posting.

I am really glad that they caught him, hope he spends some time in the slammer.