Ex-Candidate Admits Extortion Scheme Role

Revealing that he has secretly cooperated with investigators for the past few months, former Santa Ana City Council candidate Roman Palacios pleaded guilty Friday to one felony charge in an elaborate extortion and money-laundering scheme aimed at seizing control of the council.

As part of a plea bargain, Palacios, 37, acknowledged that he conspired to extort $31,000 in campaign money from a Santa Ana service station owner seeking favorable council votes on a liquor license request.

The plea agreement, federal authorities said, was reached before Palacios was indicted Tuesday along with Councilmen Ted R. Moreno and Tony Espinoza and former candidate Hector Olivares, who, like Palacios, ran on a Moreno-backed slate in 1996 and lost.

Palacios now becomes a key prosecution witness, especially against Moreno, who is running for mayor. The 24-count indictment portrays Moreno as the mastermind of a scheme to extort thousands of dollars from campaign contributors and launder the funds through the campaigns of his hand-picked City Council candidates.

The indictment itself hinted at a likely plea deal by naming Palacios on only one count but listing him as an unindicted co-conspirator on a dozen money-laundering charges.

Prosecutors are expected to seek leniency for Palacio at his sentencing, scheduled for Jan. 11, in return for his cooperation and early admission of guilt. He faces a maximum of 20 years in prison. Terms of the agreement were sealed.

Edward W. Hall, attorney for Palacios, said his client’s plea sprang from genuine remorse.

“He feels extremely badly that he’s disappointed his friends, family members and supporters and hopes they stand by him as he proves he can be trusted and that he’s a good person,” Hall said.

Subdued and silent after his brief appearance in a closed hearing before U.S. District Judge Linda McLaughlin, Palacios, the manager of a church-affiliated immigrant education organization, refused to comment. He stood next to Hall as the attorney spoke for him.

The remaining defendants are expected to be arraigned Monday in federal court in Santa Ana.

Moreno, 31, is named in all 24 counts, which accuse him of conspiracy to extort, conspiracy to launder money, extortion, money laundering and defrauding the public through false and misleading campaign reports and public statements.

Espinoza, 30, and Olivares, 31, are accused of conspiracy to extort. Olivares also is charged with conspiracy to launder money and 12 counts of money laundering.