Consultant Pleads Guilty in Orange County Fraud Case : Scam: Laguna Niguel man received $175,600 in kickbacks from false bills on government contracts.
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LOS ANGELES — A Laguna Niguel construction consultant accused of masterminding a scheme that defrauded the U.S. Small Business Administration of $175,600 pleaded guilty Monday to submitting false claims and soliciting illegal kickbacks.
John R. Sevier III, 41, pleaded guilty to three counts of submitting false claims to the government and three counts of soliciting illegal kickbacks. In return for his guilty plea, prosecutors agreed to drop 18 other charges against him.
The scam is the largest involving surety bonds--posted to ensure the completion of projects--since the federal agency was formed in 1953, said Stephen N. Marica, the SBA’s assistant inspector general for investigations in Washington.
The prosecutor, Asst. U.S. Atty. Nathan J. Hochman, said the kickback scheme began in 1990, when Southern Specialty Co., a Nevada construction company, failed to complete three of 11 California projects for the U.S. Navy and Air Force.
The government hired Forcon International Inc., an Irvine construction consultant, to search for a new contractor. Forcon, in turn, hired Sevier to conduct the search.
Hochman said Sevier arranged for a Temecula company, Paragon Pacific Contractors Inc., to be awarded the projects. In return, the company was to inflate the bills far in excess of the legitimate cost of $171,800, he said. Sevier used the difference to pay personal debts, Hochman said.
No action has been taken against Paragon.
U.S. District Judge Edward Rafeedie in Los Angeles set a sentencing date of Oct. 19 for Sevier, who faces a maximum penalty of 45 years in prison and $1.5 million in fines.
Neither Sevier nor his attorney could be reached for comment Monday.
Richard E. Tasker, president of Forcon International, said he hopes that the sentencing will require Sevier to repay more than $200,000 fraudulently billed to Forcon and to Amwest Surety Co., the Woodland Hills surety bond company for the projects. Forcon and Amwest brought the case to the attention of the SBA office in Los Angeles.
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