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12Sep/130

Embezzlement Defendant Wants District He Stole From to Pay For His Defense

Brett Richards

Former general manager of the Ross Valley Sanitary District Brett Richards is attempting to get the district to pay for his legal defense in a related civil suit.

In May, the Ross Valley district sued Richards for fraud and breach of contract. He was located and arrested in the Philippines in July, and s being held in the Martin County Jail to await his trial.

His nine felonies include misappropriation of public funds, embezzlement, and multiple counts of money laundering. He is accused of taking a $350,000 housing loan from the district that was never used for its intended purpose. If found guilty, Richards faces a maximum of ten years in prison and over $1.5 million in fines.

Jai Gohel, the San Francisco lawyer representing Richards in his case, is pressing the district to pay for his client's defense. This claim is based on an indemnification clause in Richards' employment agreement with the district. It reads, ""District shall defend, save harmless, and indemnify Richards against any tort, professional liability claim or demand or other legal action or other proceeding, whether groundless or otherwise, arising out of an alleged act or omission occurring in the performance of Richards' duties as district manager for the period of his employment with the district."

Christian Picone of Berliner Cohen, the San Jose law firm representing the sanitary district, said in response to the claim, "The indemnification clause is pretty general in employment agreements. It arises out of a situation where a district gets sued, and they also name the general manager. So the district indemnifies the general manager for any liability related to his official duties."

Picone states that the clause only protects Richards within the normal course and scope of his employment, and does not extend to willful wrongdoing. Jack Govi, counsel to the Central Marin Sanitation agency believes that the district isn't obligated to pay for Richards' defense, as they are filing a suit against him for fraud, which is not protected by the indemnification clause.

The district's civil suit asserts that Richards avoided supplying a deed of trust as security for the loan by artfully deceiving the district's board of directors and interim legal counsel when the agreement was negotiated. According tot he suit, Richards allegedly intercepted an email from Sanford Skaggs, the sanitary district's interim legal counsel at the time, which was sent to board members alerting them that the agreement lacked a deed of trust requirement.

Richards has made some payments on the loan, but the civil suit states that his debt to the district exceeds $338,00. The district seeks to recover interest, investigation costs, legal fees, and punitive damage. According to an affidavit filed by Marin Country District Attorney Ed Berberian to secure Richards' arrest warrant, the prime of the $350,000 loan had been spent on living expenses, a new truck, and several trips to Barcelona, Paris, and Venice.

(Source:Marin Journal)

11Oct/110

Richmond Costco and Kaiser Employees Busted for Insurance Fraud

CostcoSixteen of 22 total defendants were arraigned Thursday as part of a suspected Contra Costa County insurance fraud ring case resulting in a 289-count felony indictment. The case is thought to be the largest such case in county history.

The indictment charges defendants who defrauded 11 insurance companies of at least $345,000 and attempted to defraud more than $1 million more through staged residential and auto burglaries, motor vehicle accidents, and personal injury and wage-loss claims, according to Contra Costa County deputy district attorney Alison Chandler.

Most of the defendants are Contra Costa County residents, but some are from Solano County and two currently live in New York and Nebraska. The defendants are employees of the Richmond Costco and Richmond Kaiser Permanente hospital, their friends, family members and associates. The presentation by the DA's office consisted of three weeks of evidence given to a Contra Costa grand jury to wrap up a two-year investigation lead by the California Department of Insurance Fraud Division. The indictments were handed down Sept. 22; arrest and search warrants were executed Wednesday.

"There was dozens of insurance claims that include tens of thousands of pages of documents and span over 10 years," Chandler said.

No one arraigned Thursday in Martinez entered a plea to the charges; they return to court to do so Thursday. The group's collective bail is set at more than $18 million. Each of them is charged with conspiracy to commit insurance fraud, while additional charges include insurance fraud, attempted and actual grand theft, and commercial burglary, plus charge enhancements.
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The three most "heavily involved" parties who recruited others into the ring are Hercules resident and former Kaiser employee Kelechi Charles Chukwueke , and former Costco employees Paul Onwuvuariri, formerly of Antioch, and his brother Bede Onwuvuariri, of Hercules, Chandler said.

According to the prosecutor, some of the Costco employees would buy high-priced items at their employer's store, such as a $10,000 diamond ring, then alter and photocopy the receipt and return the item. The fraudulent receipt would then be used for multiple bogus residential burglary loss claims in Contra Costa County, Chandler said. She added that employees at Kaiser and Costco would pretend to be injured in a traffic accident and then make wage-loss claims, but continue to work.
Personal Accident Insurance

Authorities launched an investigation into the ring in July 2009 after companies noticed "red flags" such as large claims by recent policy holders and numerous suspect claims within the same time period.

(Source: Contra Costa Times)