The U.S. attorney in Los Angeles on Friday painted a picture of government for sale as he announced that state Sen. Ron Calderon had been indicted on suspicion of taking roughly $100,000 in bribes, meals and trips in exchange for favorable legislation.
Calderon, a Montebello Democrat, who faces up to 395 years in prison, allegedly took kickbacks from former Long Beach hospital operator Michael Drobot, who perpetrated one of the largest healthcare fraud schemes in California history, U.S. Atty. Andre Birotte said Friday.
Drobot allegedly exploited state insurance law to the tune of hundreds of millions of dollars from spinal surgeries.
Calderon and his relatives also took money from people they believed were connected to a Hollywood studio that in fact was an FBI front.
While representing the public, Birotte said, Calderon was accepting meals, trips and vacations from those seeking legislation and getting his children onto their payrolls.
"Public corruption is a betrayal of the public trust that threatens the integrity of our democratic institutions," Birotte told reporters at a news conference Friday.
Calderon, 56, faces 24 counts of fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering and aiding in the filing of false tax returns.
His attorney, Mark Geragos, said the senator would surrender to federal authorities Monday.
"Nobody ever welcomes an indictment," Geragos said. "We welcome the opportunity to disprove these allegations in a courtroom."
Birotte said the state essentially sold his vote and worked to shape or block legislation for the benefit of Drobot, the one-time owner of Pacific Hospital in Long Beach.
In exchange, Drobot hired Ron Calderon's college-age son to work as a file clerk, paying him approximately $30,000 over the course of three summers, even though he showed up for only about two or three weeks, Birotte said.
Ron Calderon also allegedly accepted plane trips, golf outings and expensive dinners from Drobot. The senator allegedly arranged meetings between Drobot and other public officials in an attempt to persuade them to assist with favorable legislation.
Calderon's brother, Thomas Calderon, 59, faces one charge of conspiracy to commit money laundering and multiple counts of money laundering for his alleged role in the scheme.
The former assemblyman, who most recently served as a consultant for the Central Basin Water District, surrendered to federal authorities Friday. He could face 160 years in prison.
Ron and Thomas Calderon have denied any wrongdoing.
At the center of the scheme was Drobot's spinal surgery business, which federal authorities say exploited California’s insurance laws that allowed hospitals to charge insurers the full cost of medical tools and hardware used in surgeries, causing the cost of the procedures to skyrocket.
Drobot admitted to exploiting the so called "spinal pass-through" by using hardware that was purchased at deliberately inflated prices from companies he controlled. Drobot, according to the indictments, allegedly bribed Ron Calderon to ensure the law was not changed, thereby maintaining the lucrative scheme.
As part of the plea deal, Birotte said, Drobot must cooperate with prosecutors, and that includes testifying about others, including the Calderons. Drobot is not charged with acts related to the Calderons.
Prosecutors allege Drobot billed workers' compensation insurers hundreds of millions of dollars for spinal surgeries performed on patients who had been referred by dozens of doctors, chiropractors” and others who were paid illegal kickbacks.
For spinal surgery referrals, Drobot typically paid a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery -- even though some of the patients lived hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities.
Drobot, 59, of Corona Del Mar, said in a statement that he is cooperating with prosecutors. He agreed to plead guilty Friday to conspiracy and paying illegal kickbacks, Birotte said.
According to court documents, Drobot also admitted to two counts of paying illegal kickbacks to doctors and other medical professionals for referrals to his spinal surgery businesses. He faces up to 10 years in prison.
“Corruption victimizes each and every one of us. " said Bill Lewis, the assistant director in charge of the FBI’s Los Angeles field office. "In addition to robbing us of taxpayer money, corrupt practices rob us of trust in government.”
Ron Calderon is also accused of taking bribes from what turned out to be an undercover FBI agent posing as the operator of an independent studio in downtown L.A. In return, Birotte said Ron Calderon agreed to support legislation reducing the threshold for productions to be eligible for film tax credits from $1 million to $750,000.
According to the indictment, Ron Calderon agreed to help the undercover FBI agent in exchange for Calderon's daughter being paid $3,000 a month for job she never did. The daughter eventually received $40,000, prosecutors allege.
In addition, prosecutors say Ron Calderon got $5,000 for his son’s college tuition at Berklee School of Music and another $25,000 for a nonprofit run by his brother, Thomas Calderon.