Update: A candidate for Secretary of State calls on the legislature to expel Calderon so a special election to replace him can be held June 3. Story corrected to reflect Tom Calderon is one of those indicted, not Charles Calderon.
The political dynasty of Ron and Tom Calderon took a body blow as U.S. Attorney Andre Birotte Jr. today charged the brothers with criminal political corruption and painted a devastating picture of Ron Calderon as a man who drew his own son and daughter into his web. His brother, former state Assembly Tom Calderon, is already in custody for money laundering, and state Sen. Ron Calderon, accused of soliciting and taking $100,000 in bribes, has agreed to turn himself in on Monday, Birotte says.
According to Birotte, the Calderons greedily helped support “a massive health fraud'' as Ron Calderon pushed to preserve a California spinal surgery law that dramatically benefitted hospital owner Michael Drobot, who officials say “ripped off” 100 insurers. Separately, Ron Calderon agreed to push a California law to create tax credits for small films, in exchange for a bribe from “industry” people who turned out to be undercover FBI agents. The family, Birotte said, couldn't withstand the scrutiny of the FBI, IRS, U.S. Postal Service and California Department of Insurance.
The alleged bribes were largely in the form of phony jobs for Ron Calderon's son and daughter. Authorities say Calderon agreed to wear a wire after investigators confronted him in Las Vegas.
Several California politicians have declared they are not part of Birotte's probe, as fear of being tainted by the Calderons spreads among politicians statewide.
State officials called one of the two schemes “the largest insurance fraud in California history” involving former hospital owner Michael Drobot in Long Beach. An IRS executive at the press conference said Drobot bribed Calderon by hiring his son for a phony job paying $10,000 that was solicited by Ron Calderon, and that Calderon knew was fake. Then, authorites allege, Calderon helped to lie about the income on his son's tax return.
Bribery money flowed to lobbyist Tom Calderon's entity, Californians for Diversity, officials allege, and that money was ultimately laundered by being deposited in banks in a manner meant to cover up the original bribery, according to Birotte and the IRS.
The interlocking web of Calderon family members who hold powerful positions of influence is so complex that the Los Angeles Times recently made a valiant effort, via a flow chart, to help everyone understand how to follow the Calderon family's activities.
Here it is:
Investigators explained their actions this morning in a prepared statement that flew through Sacramento legislative offices “like a storm cloud” says one legislator:
Ronald S. Calderon, 56, of Montebello, is charged in a 24-count indictment that was returned late yesterday by a federal grand jury with mail fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering and aiding in the filing of false tax returns.
The indictment also charges Thomas M. Calderon, 59, also of Montebello, who is Ronald's brother and a former member of the California State Assembly. Along with his brother, Thomas Calderon is charged in the money laundering conspiracy and with seven substantive counts of money laundering.
Tom Calderon self-surrendered this morning after being informed of the indictment and is expected to be arraigned this afternoon in United States District Court.
Ron Calderon is travelling and has agreed to surrender Monday morning. Ron Calderon's arraignment will be Monday afternoon.
Birotte called the crackdown on the Calderons “an ongoing public corruption investigation.” Ron Calderon faces a 24-count indictment that essentially accuses him of selling legislation in exchange for money.
Interestingly, according to Birotte “Calderon convinced other public officials to do the same.”
In the alleged hospital scam, he said, the law Calderon fought to preserve in exchange for money “was often called the 'spinal pass-through,' and Drobot and his hospital profited handsomely from it.”
In addition, “Calderon also accepted bribes from a film studio” in downtown Los Angeles that was in fact a sting operation set up by, and run by, FBI agents. Birotte says about one-third of the bribery money ” came from a very well-paying job given to [Ron Calderon's] daughter to support legislation that would make it easier for the studio to qualify for tax credits.”
Drobot is also being charged, separately, in “a massive fraud scheme involving kickbacks and getting patients referred to his facility,” according to a top state insurance official at the press conference.
Although Drobot's Pacific Hospital of Long Beach was quite small, it performed hundreds of “spinal fusion” operations – “more than any hospital in California,” the official said, and reaped huge profits by cashing in on a loophole in California law that Ron Calderon allegedly used his substantial legislative powers to preserve.
“Drobot has admitted he paid bribes to Ron Calderon to prevent” an effort by other legislators to plug up that loophole, he said. Calderon then “had his son hired as a file clerk” for a job that amounted to virtually no work.
The U.S. Attorney stated:
In the first part of the bribery scheme, Ron Calderon allegedly took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, a major provider of spinal surgeries that were often paid by workers' compensation programs.
California law allowed the hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. In another case filed this morning, Drobot admitted that his hospital exploited this law, which was often called the “spinal pass-through,” by using hardware that had been purchased at highly inflated prices from companies that Drobot controlled and passing this cost along to insurance providers.
Drobot allegedly bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative health care fraud scheme.
UPDATED Feb. 24 at 5:12 pm: And in the “insult to injury” category, Derek Cressman, a candidate for California Secretary of State, issued a press release tonight demanding that the California state Senate vote to expel Ron Calderon “no later than Friday” so that a special election to replace Calderon can be held concurrent with the June 3 state primary election.
Last time we looked, there was still the issue of a trial to be dealt with, but Cressman argued that:
“The standard for remaining in the Senate should be higher than for remaining out of prison. Swift action will not only help repair the Senate's damaged reputation but also speed the process for voters to have honest representation in the legislature.”
Cressman writes that although powerful Senate leader Darrell Steinberg has vowed to call for a Senate vote to “suspend” Calderon if he refuses to resign, a mere suspension “would not trigger a special election to replace Senator Calderon, leaving voters in his district without representation.”
Steinberg has long been a close ally of Ron Calderon's, and elevated Calderon to numerous positions of power in Sacramento before this scandal broke.
Cressman is an activist and former vice president of Common Cause who has promised to tamp down the political influence of big-money donors in Sacramento and modernize California's voting infrastructure.
NOTE: A correction has been made to this story. An earlier version erroneously identified Charles Calderon as one of the brothers who has been indicted.The correct name is Tom Calderon. He is now in custody.