$11-mil­lion VA fraud is al­leged

Los Angeles Times - - CALIFORNIA - By Gale Hol­land

A Santa Mon­ica park­ing lot mogul was ar­rested Wed­nes­day and charged with bilk­ing the U.S. Depart­ment of Vet­eran Af­fairs out of $11 mil­lion in a bribery scheme cen­tered on leases at its Los Angeles cam­puses.

Richard Scott, 58, owner of West­side Ser­vices, is ac­cused in a fed­eral com­plaint of keep­ing two sets of books to hide un­der-re­port­ing of rev­enue and over-re­port­ing of ex­penses at sev­eral lots he op­er­ated, pri­mar­ily at the VA’s 387-acre West Los Angeles campus. The al­leged scam al­lowed him to skim $11 mil­lion from the VA, au­thor­i­ties said Wed­nes­day.

Scott paid a VA con­tract ad­min­is­tra­tor, Ralph Till­man, $130,530 to over­look the fraud, FBI spe­cial agent Michael Tor­bic al­leged in an af­fi­davit. Till­man has not been charged; the in­ves­ti­ga­tion is on­go­ing.

Fed­eral agents on Wed­nes­day seized lux­ury prop­erty Scott al­legedly pur­chased with the fruits of the scheme, in­clud­ing a Cig­a­rette rac­ing boat he kept in Mi­ami and lux­ury ve­hi­cles that in­cluded three Fer­raris, a 1969 Corvette L88, two high-end Mercedes-Ben­zes and a Shelby Su­per Snake Mus­tang.

Scott was taken into cus­tody Wed­nes­day at his Santa Mon­ica home and later ap­peared in U.S. District Court in down­town Los Angeles, where he was or­dered held overnight un­til a de­ten­tion hear­ing Thurs­day to con­sider setting bail. He did not en­ter a plea.

“He was tak­ing money

from vet­er­ans,” said Jesse Creed, ex­ec­u­tive direc­tor of Vets Ad­vo­cacy, a non­profit group work­ing with the VA to re­build the 387-acre West Los Angeles campus to house vet­er­ans. “The VA didn’t have its house in or­der.”

The VA said it co­op­er­ated fully in the in­ves­ti­ga­tion. New lead­er­ship in­stalled since the al­leged plot was un­cov­ered “has worked hard to en­sure checks and bal­ances for all land-use ar­range­ments have been put into place,” said Ann R. Brown, direc­tor of VA Greater Los Angeles Health­care Sys­tem.

The charges fol­low the long and con­tentious his­tory of leases at the West Los Angeles VA land, which was orig­i­nally deeded as a home for old sol­diers.

Over the decades, campus build­ings de­te­ri­o­rated and emp­tied, and the VA let more than a dozen leases to com­mer­cial in­ter­ests and schools, in­clud­ing UCLA and the exclusive Brent­wood School.

In 2011, the ACLU Foun­da­tion of South­ern Cal­i­for­nia in Los Angeles and oth­ers filed suit against the VA, al­leg­ing mis­use of the prop­erty and fail­ure to pro­vide hous­ing and treat­ment for home­less vet­er­ans.

Two years later, a fed­eral judge ruled that the VA had abused its dis­cre­tion by leas­ing land for pur­poses “to­tally di­vorced from the pro­vi­sion of health­care.”

West­side Ser­vices owner Richard Scott ‘was tak­ing money from vet­er­ans. The VA didn’t have its house in or­der.’

— Jesse Creed, ex­ec­u­tive direc­tor of Vets Ad­vo­cacy, a non­profit group work­ing with Vet­er­ans Af­fairs on a hous­ing project

The VA agreed to set­tle the case by end­ing non-vet­eran-fo­cused leases and de­vel­op­ing the prop­erty as a model vet­eran com­mu­nity, with at least 1,200 hous­ing units.

Un­der Scott’s lease, the lots were used to store con­struc­tion equipment, rental cars, buses and car dealership and film pro­duc­tion ve­hi­cles.

Scott also ran event park­ing for UCLA’s base­ball sta­dium, the L.A. Marathon, a golf tour­na­ment and the Brent­wood and Wadsworth the­aters.

In 2014, an FBI agent work­ing on the un­der­re­port­ing case con­fronted Till­man, who abruptly re­tired and even­tu­ally agreed to record con­ver­sa­tions with Scott, Tor­bic’s af­fi­davit said.

Till­man even­tu­ally ad­mit­ted he con­tin­ued to take what he called “hush money” af­ter his re­tire­ment, the af­fi­davit added.

In one of their con­ver­sa­tions, Scott al­legedly said to Till­man, “I told you and I told you, make sure you’re not de­posit­ing this.”

Scott, who paid him­self $3.1 mil­lion a year and ran up ex­or­bi­tant travel and en­ter­tain­ment ex­penses, amassed three Santa Mon­ica con­do­mini­ums val­ued at $2.3 mil­lion each, a house in Mal­ibu and bro­ker­age ac­counts, Tor­bic al­leged.

Creed said what he de­scribed as a thor­ough in­ves­ti­ga­tion was a good sign the VA was hold­ing it­self ac­count­able.

De­spite the charges, West­side Ser­vices, un­der an agree­ment with the VA, will con­tinue to op­er­ate the West Los Angeles lots un­til Jan­uary, Creed said.

A VA rep­re­sen­ta­tive did not re­spond when asked why the West­side Ser­vices lease was still in ef­fect.

Ge­naro Molina Los Angeles Times

DE­SPITE FED­ERAL charges against its owner, the com­pany West­side Ser­vices will still op­er­ate park­ing lots at the Depart­ment of Vet­er­ans Af­fairs’ 387-acre West Los Angeles campus, seen above in 2015, un­til Jan­uary.

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