State Sen. Ron Calderon and his brother Thomas, a former assemblyman, were indicted late Thursday in a massive bribery and insurance fraud case that could send them to prison for the rest of their lives.

A 24-count criminal complaint made public Friday revealed that Ron Calderon, D-Montebello, solicited and accepted approximately $30,000 in cash bribes to push through legislation that helped a hospital owner who was engaged in workers compensation insurance fraud. Another $70,000 was solicited from undercover FBI agents posing as movie executives to create legislation to benefit the movie industry.

The crimes occurred between 2010 and 2013 and also involved Michael D. Drobot, former owner of the now-defunct Pacific Hospital in Long Beach, who was charged with submitting inflated insurance claims and paying the bribes to curtail legislation aimed at stopping such behavior.

“Sen. Calderon is accused of accepting tens of thousands of dollars in bribes and using the powers of his elected office to enrich himself and his brother Tom, rather than for the benefit of the public he was sworn to serve,” U.S. Attorney Andre Birotte Jr. said in a statement.

The Calderon brothers were notified of the charges through their attorneys on Friday. Thomas appeared in court at the end of the day and pleaded not guilty. He was released on a $25,000 bond and ordered to stand trial on April 15. Ron is scheduled to turn himself in on Monday. If convicted of all 24 counts, Ron faces a maximum prison sentence of 396 years in prison.

Laundering allegedly done via nonprofit group

Thomas, who is charged with seven counts of money laundering, could receive a maximum of 160 years. The indictment said he conspired with Ron to launder the bribery funds through a nonprofit that the brothers controlled called Californians for Diversity. Funds were then diverted from the nonprofit to either Thomas Calderon’s personal bank account or his consulting business, The Calderon Group.

Last April, FBI agents had tapped telephone lines and recorded the pair discussing the money laundering. On one occasion, Ron told Thomas that he had “closed the deal” with the movie executive who had agreed to send “future bribe payments through defendant Thomas M. Calderon’s company,” the indictment said.

The federal investigation was no secret to Ron Calderon, who learned about it on May 4, 2013. On that date, he flew to Las Vegas to meet with the purported owner of an independent film studio he had allegedly been receiving bribes from as payment for introducing legislation granting tax breaks for low-budget filmmakers. A ruse was set up to receive the funds: Calderon’s daughter had a job with the studio and began receiving a series of payments even though she did no work.

True to his word, Calderon introduced legislation lowering the threshold for a filmmaker’s tax break from $1 million to $750,000.

But Calderon’s plans went awry when he arrived at the Bellagio resort and discovered that the filmmaker and an assistant were actually undercover FBI agents from the Public Corruption Squad who disclosed that he had been under investigation “for quite some time,” a U.S. Attorney’s Office court document said.

Calderon was not arrested and told that he could leave the meeting or cooperate with the investigation. He chose the latter and spoke to the agents for three hours, implicating other senators in his discussion. Then he agreed to another meeting the following day and on four other occasions within the next week.

Calderon agreed to roll over — but not on his family

“Calderon made it clear from his first meeting with the FBI agents that he was willing to wear a wire and record his conversations with other public officials,” the court document said. “The only people Calderon said he was not willing to record were his family members.”

Calderon actually did record two conversations with an unnamed person who has not been charged. He then stopped communicating with agents, so on June 4, 2013, a search warrant was served on his Capitol offices, an event that was covered by the media.

Pacific Hospital was the go-to place for spinal surgeries and several thousand were performed between 2008 and April 2013. During this time, Drobot owned the hospital and he gave doctors kickbacks of $15,000 for performing such surgeries at his hospital and utilizing implantable devices supplied by a company that he owned. That company, International Implants, overcharged the hospital by at least double and the hospital would submit the bills to insurance carriers through the mail – also creating mail fraud, the indictment said.

Beginning in January 2010, the California Senate and the Division of Workers’ Compensation decided to revamp the billing procedures to curtail excessive spending and fraud. Rather than letting hospitals bill separately for hardware, the amount was to be folded into the total cost of the surgery which had a set fee schedule.

Allegedly fought to preserve hospital scam

Calderon met with two other senators and emailed a third in order to quell this overhaul. He also arranged to have his son work at International Implants as a file clerk during the summers of 2010, 2011 and 2012. The younger Calderon was paid a total of $30,000 – money that went toward his college tuition — even though he only worked 15 days per summer. Then he filed tax returns showing a write-off of most of the money, the indictment said.

Drobot also showered Calderon with other gifts like vacations with usage of a private jet, rounds of golf at high-end resorts and meals at pricey restaurants. None of this was disclosed on Calderon’s conflict of interest forms, the indictment said.

Eventually this was for naught, because the law overhauling the medical hardware passed in January 2013. By that time, Drobot had billed insurance companies approximately $500,000 for spinal surgeries and had paid upwards of $50 million in kickbacks to doctors. Other professionals such as chiropractors and marketers would receive kickbacks as well for their referrals for other types of surgeries. The kickback amount was just folded into the contract for services.

“In some cases, the patients lived dozens or hundreds of miles from Pacific Hospital and closer to other qualified medical facilities,” Drobot’s plea agreement said.

When he is sentenced, Drobot faces a maximum of 10 years in prison, an order of restitution and a fine that could equal twice victims’ loss.

This led to dozens of stories in the Los Angeles Times that described a series of similar cases involving Toyota and alleged a coverup of the accidents and serious problems with Toyota’s engineering and vehicle design. But there’s a gigantic problem with this story.

The case of the death of the CHP officer involved a misplaced floor mat pinning down the accelerator — not Toyota’s fault. The Prius case by all evidence appears to be a fraud by a con artist — not Toyota’s fault. And as some iconoclastic journalists pointed out as the case was unfolding, nearly all the cases involved elderly drivers who are far more prone to driver error such as hitting the wrong foot pedal.

In the L.A. Times’ first huge takeout on the controversy, here are the ages of the drivers involved in the incidents the newspaper cited (for some incidents, it didn’t offer any ages): 60, 61, 63, 68, 71, 72, 72, 77, 79, 83, 85, 89.

How odd — Toyotas are prejudiced against older drivers!

When government regulators use trial-lawyer dirty tricks

Forbes treats this scandal with the brisk contempt it deserves:

“The evidence strongly suggests [driver error is] what’s behind most cases of unintended acceleration involving Toyota vehicles. … the government has failed to find any evidence of an electronic or mechanical problem to explain why Toyota vehicles have accelerated out of control. There is a politically incorrect explanation: Age. The gremlin inside Toyota’s electronics seems designed to attack people over the age of 60, including the 76-year-old woman who convinced an Oklahoma jury to hit Toyota for $3 million over an accident that killed her 70-year-old passenger.

“Now the Wall Street Journal reports Toyota is close to paying $1 billion to settle a federal criminal investigation into its alleged failure to report the alleged incidents of unintended acceleration that federal authorities have already concluded mostly resulted from operator error. This comes after Toyota agreed to pay more than $1 billion to settle private suits based on the novel theory that Toyota owners had suffered economic damages because their cars were worth less after plaintiff lawyers spread reports of an electronic defect that caused unintended acceleration. Which the government failed to find.

“If this all sounds a little crazy, get used to it. We are now firmly in the era of regulation by legal intimidation … . Regulators, prosecutors and attorneys general have learned a valuable lesson from their private counterparts, class-action attorneys. Build a big enough case, and the target company will settle. The alternative can be fiduciary suicide: Risking the entire net worth of the company on a jury’s whim.

“The Oklahoma jury that determined it was Toyota’s fault that a 76-year-old woman crashed her car exiting the highway demonstrates the stakes. That verdict, if upheld to judgment, might have provided the precedent requiring Toyota to admit fault in thousands of other cases.”

The L.A. Times abets a dishonest scam

While the Times, to its credit, has acknowledged those who doubt Toyota is to blame for these problems, most of its reporting skips over the lack of hard evidence that Toyota is at fault. Nor do LATers acknowledge that if Toyota is not to blame, the automaker can’t be accused of a coverup of these accidents.

Anti-business business columnist Michael Hiltzik is typical.

What’s unfortunate about this is that one of last year’s Pulitzer awards hinted we could finally be seeing journalists appreciating and using the scientific method to ferret out scoops. The Sun Sentinel of South Florida used records from toll stops to document outrageous behavior by local law-enforcement officers:

“A three-month … investigation found almost 800 cops from a dozen agencies speeding 90 to 130 mph on our highways.

“Many weren’t even on-duty — they were commuting to and from work in their take-home patrol cars.”

If the Times had relied on such hard evidence instead of trusting anecdotes shaped by remora-like lawyers peddling oh-the-humanity horror-story myths about malfunctioning Toyotas, its coverage would have been a lot different.

Remember, modern vehicles are festooned with gadgets and gauges measuring their performance. Federal regulators looking at the Toyotas involved in these sudden-acceleration cases closely scrutinized these gadgets and gauges — and found no evidence Toyota was at fault in even one case.

If that’s not the lede of any story about this mess, it’s a comment on journalists’ innumeracy and love of a splashy scandal. Pathetic.

The first is the fact that many Golden State public agencies routinely act in ways that would yield criminal and civil legal action and shareholder lawsuits if the same shenanigans took place in the business world.

The second is that in special districts — exemplified by the Metropolitan Water District but seen in water, transit and other agencies around California — there is a disincentive for top officials to play tough in salary negotiations because they personally benefit from overly generous pay and compensation practices. If such practices lead to higher bills sent to ratepayers or to poorer services, so be it.

Take it away, Dan:

“… what the district calls ‘perhaps the most significant change agreed to by unions’ … amends a decades-old contract provision that required union approval before BART managers could alter past work practices.

“That provision has impeded attempts to improve technology, reduce paperwork and increase efficiencies. BART leaders made its elimination a top negotiation priority; they got an alteration instead. Nevertheless, they claim the new language will enable them to improve technology and switch equipment without union approval.

“In fact, changes must still be negotiated with the unions. Unresolved disputes will be subjected to binding arbitration. And the arbitrator may provide relief, including ‘additional compensation.’

“That means unions will demand, and likely receive, more money in exchange for modernization, thereby eroding cost-savings BART desperately needs.”

This part is particularly rich: The concession-that-didn’t-happen was treated as if it happened.

“BART officials cite the contract modification as a key reason for agreeing to the financial terms. But they also misrepresent the monetary aspects.

“For starters, they claim employees, already some of the best paid transit workers in the nation, will net a 9.4 percent increase over the four-year contract. That counts salary increases offset by increased contributions to pensions and health care. In fact, the net benefit to workers is 11.7 percent.”

Will BART bosses pay for their perfidy?

Wait, there’s much more — a list of BART’s financial deceptions:

“First, officials claim the deal will save $2.7 million due to retiree health care changes. New employees will now be required to work 15 years before vesting in the plan, rather than the current five years.

“But most of the savings will materialize decades from now. Nevertheless, BART calculated the savings for 30 years and then credited half of that during just the next four years, thereby grossly inflating the contract savings. It’s fictional accounting.

“Second, BART claims it will save $5 million by encouraging employees with spouses who have health coverage to opt out of the transit district’s insurance. Employees will be offered $350 a month to do so. The question is how many people will take the deal. BART estimates 150 employees will, but they really don’t know.

“Third, the district left a $16 million retirement item out of its accounting.”

“The transit system not only provides traditional pensions, it also funds retirement savings accounts similar to 401(k)s. The district currently contributes $1,869 per year. And until 1991 it also kicked in 1.627 percent of salary.”

So as bad a deal as it looked when it was first reported, it was actually far worse. Will top BART officials face any repercussions for their dishonesty and profligacy?

In a just world, of course. But not in California.

By Chris Reed

The pro-gay marriage movement continues to gather momentum, and I fully expect the Supreme Court to get aboard, with a 5-4 opinion written by Justice Anthony Kennedy upholding a lower federal-court ruling scrapping California’s Proposition 8 and its ban on same-sex marriage. I generally don’t like courts overturning ballot measures, but as a libertarian, gay marriage is fine by me.

But however one feels on the issue, it’s utter media malpractice that one of the married gay protagonists in the case, plaintiff Kris Perry, has a scandalous history that no one ever brings up. Here’s the background from a 2010 blog item I wrote:

“Last week I wrote at my amazement at how Kris Perry was being touted as the perfect plaintiff in the fight over gay marriage. Why? Because she played a central role in a brutal assault on California taxpayers: First 5’s decision to use $23 million in taxpayer funds in winter 2005-06 to pay for ‘preschool for all’ TV ads as First 5 founder/overlord Rob Reiner gathered signatures for his ‘preschool for all’ initiative. … [She refused] to testify at the March 8, 2006, hearing in Sacramento of the Joint Legislative Audit Committee that looked into this ripoff … .

Kris Perry: Ducking questions, responsibility

This is from the L.A. Times’ story of March 9, 2006, about the hearing:

“A committee of state senators and Assembly members directed the Bureau of State Audits to perform the fiscal review of the commission. First 5 ‘s executive director declined to answer the legislators’ questions, ‘at the advice of counsel.’ ….

“[Sen. Dave] Cox likened Reiner’s activities to those of former Insurance Commissioner Chuck Quackenbush and Secretary of State Kevin Shelley, both of whom resigned amid investigations into whether they used tax money to further their political goals. ….

“The audit also would ‘determine, if possible, whether there was coordination between the commission and the Proposition 82 campaign in the media purchases by the commission or expenditure of other public funds,’ Howle said. ….

“First 5 Director Kris Perry appeared at Wednesday’s hearing of the Joint Legislative Audit Committee and said the commission welcomed the inquiry, but added that she would not answer lawmakers’ questions ‘at the advice of counsel.’

“Sen. Chuck Poochigian (R-Fresno), a member of the audit committee …, said Perry’s refusal “elevates my concern about charges of wrongdoing.”

First 5 emails were also deleted; media don’t care

As I wrote back in 2010:

“Perry and Reiner aren’t just ripoff artists. They’re sanctimonious ripoff artists who think they hold the high ground even though they used $23 million in taxpayer money for a political campaign. Pathetic.”

And the coverup didn’t just involve Perry’s refusal to testify. Emails of key officials were also deleted, as I wrote about in 2010. Nexis indicates I’m the only one who ever wrote about this possibly criminal activity. WTG, Sacramento media.

Kris Perry is a hero to some. To me, she’s just another shady public official — as well as a symbol of how poorly California journalists cover scandals when they sympathize with the alleged good intentions of the scandalous officials.

By Chris Reed

This Orange County Register story about top executives at the giant Metropolitan Water District of Southern California figuring out a way to game Gov. Jerry Brown’s pension reform by joining a union is only going to be one of dozens, even hundreds, that we see in coming years. Public employee unions are going to leave a dime on the table if at all possible.

“Today, the water district paysboth a 7 percent employer contribution and a 7 percent employee contribution for unrepresented employees’ retirement plans. The perk benefits the employees in two ways. First, they don’t have to contribute to the plans from their own paychecks. Second, the setup boosts their final retirement payout.

“The governor’s pension law pushes public agenciesto eliminate this same kind of retirement spiking. It requires agencies including the water district to end the practice before 2018 and have employees contribute to their own retirements.

“By shifting to a union right now, the executives can delay the water district’s board of directors from ending the retirement spiking practice for several years. Courts have found a union’s existing labor contract generally supersedes new state law.

“The union’s president, Rick Lynds, said their pay and benefits will now fall under the protection of the union’s existing contract, which expires in 2015.”

This trickery by the upper ranks of MWD should come as no surprise to those who remember how the water wholesaler tried to assault its 19 million customers in 2009 by sneaking through a 25 percent retroactive pension hike for all 2,000 MWD employees even though its pension fund had a $400 million unfunded liability and water rates had been soaring for years. This is one government agency where the worst conniving is done by management — not by rank-and-file unions.