The operator of parking lots at the Veterans Affairs Medical Center was arrested last Wednesday and charged with defrauding the government to the tune of $11.4 million over the last 10 years and bribing a federal official who later became a government informant.
Richard Scott, 58, of Westside Services LLC (WSS), is accused of keeping two sets of books to hide revenue from several parking lots and allegedly used the funds to buy three $2.5 million condominiums in Santa Monica, several high-end collectible cars and a racing boat docked in Miami.
Scott appeared in Los Angeles court on Friday and was denied bail after Assistant U.S. Attorney Ruth Pinkel told the judge that when FBI investigators served a search warrant on Scott’s home, they found about $200,000 in cash, including $25,000 and a passport in what she termed a “go bag,” which she suggested could be used for a quick departure. In addition, Pinkel said that an informant had claimed that Scott once spoke of a plan to flee to Costa Rica if authorities got too close, Southern California News Service reported.
According to an FBI affidavit, Scott underreported revenue to the VA by a minimum of $4,689,081 and over-reported expenses to the VA by a minimum of $8,219,762, which caused a direct loss to the VA of $11,397,779.
The charges in the 103-page affidavit allege Scott obtained a contract to operate parking lots on the campuses of the VA Greater Los Angeles Healthcare System (VAGLAHS) and began defrauding the government by failing to properly report income and expenses shortly thereafter.
The court documents also state that the amount of unreported revenue is probably larger because cash generated from parking during UCLA baseball games and other events – which potentially totals more than $1 million – was also not reported to the VA.
As part of the scheme, Scott began bribing then-VA contracting official Ralph Tillman, who was responsible for overseeing the contract in 2003, and continued to bribe him on a regular basis until Tillman abruptly retired in 2014 after he was confronted by federal agents, prosecutors allege.
The VA contract with WSS was terminated early this year after the VA settled a lawsuit that challenged the VA’s use of its West Los Angeles campus for any purposes not specifically related to the care and housing of veterans. However, pursuant to the agreement, WSS will continue to operate the parking lots until January.
Following court orders, federal authorities moved to seize Scott’s assets, including the boat, three Ferraris, a 1969 Corvette L88, two high-end Mercedes-Benzes and a Shelby Super Snake Mustang.
“I’m not confident we’ve found everything,” Pinkel said.
The case against Scott is part of an ongoing investigation being conducted by the United States Department of Veterans Affairs, Office of Inspector General; the Federal Bureau of Investigation; and IRS Criminal Investigation.
If convicted, Scott could face up to 10 years in prison.
