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Tue May 15, 2018, 06:18 AM

Parking Lot Operator Agrees to Plead Guilty- (Defrauding the VA of $13+ million)

https://www.justice.gov/usao-cdca/pr/parking-lot-operator-agrees-plead-guilty-scheme-pay-bribes-and-defraud-department

Department of Justice
U.S. Attorney’s Office
Central District of California

FOR IMMEDIATE RELEASE
Monday, May 14, 2018

Parking Lot Operator Agrees to Plead Guilty in Scheme to Pay Bribes and Defraud the Department of Veteran’s Affairs out of $13+ Million

LOS ANGELES – The owner of a business that operated parking lots has agreed to plead guilty in a 15-year bribery scheme that allowed him to defraud the U.S. Department of Veteran’s Affairs out of more than $13 million that should have been paid in relation to the operation of parking facilities on the VA’s Los Angeles medical campuses. In a plea agreement filed today in United States District Court, David Richard Scott, 58, the owner of Westside Services LLC (WSS), agreed to plead guilty to conspiracy and wire fraud. Scott, who has been in custody since his arrest in November, is expected to appear in court on Thursday to formally enter his guilty pleas.

The scheme, which resulted in the payment of nearly $300,000 in bribes to VA contracting officer Ralph Tillman, cost the VA more than $13 million it should have received under a contract with WSS to operate parking lots on the campuses of the VA Greater Los Angeles Healthcare System (VA GLAHS). The vast majority of the activity authorized under the contract took place at the West Los Angeles VA Medical Center near Westwood and included parking for UCLA baseball games, the Wadsworth and Brentwood theaters, and the PGA golf tournament at the Riviera Country Club.

For approximately 18 years, Scott had a contract to operate parking lots at VA GLAHS that required him to pay 60 percent of the gross revenues from the parking lots. Scott was required to submit annual reports detailing revenue generated by parking fees, as well as improvements and services his company provided that could be used to offset payments due to the VA.

Scott maintained at least two sets of financial books, according to the plea agreement filed today. The numbers reported to the VA contained false revenue and expense statements, while a second set of books maintained by Scott’s bookkeeper/tax preparer contained the actual revenues and expenditures, except for unreported cash. Scott “intentionally failed to satisfy obligations and services placed upon him by the contract, and intentionally underreported revenue and inflated expenses so that it would appear that the VA owed WSS significant payment,” according to the plea agreement. Scott’s “goal was to pay the VA as little as possible.”

As part of the scheme to defraud the VA, Scott began bribing Tillman in 2003 and continued to bribe him on a regular basis until Tillman abruptly retired in 2014 after he was confronted by federal agents. Scott continued making “hush money” payments to Tillman after his retirement to continue the scheme and attempt to avoid termination of his parking contract. Scott used cash collected at the parking lots – cash revenue he rarely reported to the VA – to pay Tillman at least $286,000 in bribes.
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Over the course of the scheme, Scott underreported at least $4.6 million in revenues and failed to report an unknown amount of cash collected at the parking lots, according to the plea agreement. Additionally, Scott avoided making payments to the VA by marking up expenses associated with the parking lots – in some cases, up to 600 percent – and claiming to have spent $11.6 million to improve and maintain the facilities. For example, Scott told the VA he spent nearly $5.97 million on repairs and maintenance, while his bookkeeper’s records showed he spent only $1.4 million for paving, fencing and other services associated with the parking lots.
(snip)

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