Attorney Bain Pleads Guilty to Fraud, Tax Charges

Attorney David Bain, former owner of a San Diego ship repair company and ex-campaign treasurer for Mayor Maureen O’Connor, pleaded guilty Thursday in federal court to single felony counts of fraud and filing a false corporate tax return.

Bain, 36, reached a plea bargain with the U.S. attorney’s office more than two years after FBI agents raided Pacific Ship Repair & Fabrication, removing several boxes of documents. The company did repair work for the Navy.

Federal prosecutors say Bain conspired to defraud the government when he cashed a Navy check for $926,397. The check was a duplicate payment the Navy mistakenly paid to Pacific Ship Repair.

Prosecutors said Bain also illegally diverted $1.4 million from a profit-sharing plan for employees. The money was used to pay bankruptcy creditors and the company’s operating expenses, said Assistant U.S. Atty. Robert J. Lauchlan Jr.

The tax conviction against Bain stemmed from his company’s failure to report the duplicate payment he received from the Navy, prosecutors said.

Bain could receive up to eight years in custody and a $500,000 fine when he returns for sentencing Jan. 13. However, in exchange for Bain’s guilty plea, prosecutors have agreed to recommend no more than a 21-month prison sentence. Attorney Michael Pancer, who represents Bain, said he will recommend a lesser sentence, “no more than 15 months.”

On Thursday, Pancer said the illegal acts Bain pleaded guilty to occurred before he took over the company.

“He realized that he should have reported that and did not,” Pancer said. “He was motivated by the fact that it was his company now and had 400 employees who he had an obligation to. He paid back all of the money due to the Navy for the overpayment. The profit sharing plan is almost totally reimbursed.”

Thursday’s court action was the second time in a week Bain has pleaded guilty to federal charges. Last Friday, he pleaded guilty to violating federal campaign election laws by devising a scheme to illegally contribute $30,000 to congressional campaigns.

Bain admitted that he used his employees to make individual political contributions of $2,000 with money he gave them. This conviction is punishable by up to five years in prison and a $250,000 fine.

However, as a result of a plea bargain, prosecutors agreed to recommend a fine of no more than $30,000 and to recommend the lowest possible prison sentence. Bain could not be reached for comment.