One of the first blog posts I ever wrote concerned the City of Bell, California. In 2010, we reported that the Los Angeles County District Attorney had much of Bell’s city government arrested for ripping off city taxpayers. Three years later and we learned that the FBI and IRS also jumped into the fray. In December 2013, former city administrator Robert Rizzo has agreed to plead guilty to filing a false tax return and conspiracy to defraud the IRS. Both are federal felonies.
When we first wrote about the City of Bell, we said the story began in 2010 when the D.A.’s office accused city officials of bilking taxpayers out of $5.5 million. We were wrong. We now believe it started with a whistleblower two years earlier in 2008. More on that below.
Stealing $5.5 million from a small town of just 37,000 mostly blue collar residents sounds like a lot money and it is. Instead of simply embezzling the money, city officials are accused of conspiring to pay themselves outrageous salaries and then hide that fact from voters. If the big salaries were not enough, at least one official simply “loaned” himself additional monies from city coffers.
How high were the salaries? The city manager earned $1.1 million per year. The part-time city council members – $96,000 to $110,000 per year. (The council met just once a month.) And Bell’s police chief, a paltry $457,000. So many city officials were arrested by county prosecutors that Bell was left with just one sitting council member. (Rizzo was making over twice as much as even the president of the United States!)
In addition to the criminal charges, the state also brought a civil suit to recover the pay, loans and benefits.
Fast forward 3 years and now we learn that the feds also charged the city administrator. Prosecutors say that his outrageous million dollar salary apparently wasn’t enough. In addition to deceiving taxpayers about his high salary, the IRS says that Rizzo created a corporation to claim phony rental property deductions. His return preparer, Robert Melcher, already pleaded to his role in the scam.
In April of 2014, Rizzo pled guilty to filing a false tax return and criminal conspiracy. He was sentenced to 33 months in prison and ordered to pay substantial restitution.
After the plea deal was inked, IRS’s Criminal Division Chief Richard Weber said, “It is regrettable that some public officials believe they are above the law. Instead of filing accurate tax returns, Mr. Rizzo claimed bogus corporate losses on his income tax return to illegally reduce his tax liability. Pursuing public servants who corruptly endeavor to circumvent the tax laws to fund their lavish lifestyles is a top priority for IRS Criminal Investigation.”
The IRS charges weren’t the end of his problems, however. A state court judge sentenced Rizzo to an additional 12 years in prison.
At his state court sentencing, Judge Kathleen Kennedy said, “Power tends to corrupt, and absolute power corrupts absolutely.” She also said, “That is the theme of what happened in Bell. There were no checks and balances to control Mr. Rizzo and those that were in power in the city.”
Whistleblower Reports City Misconduct
Bell, California may have been one of the most corrupt cities in America. But just one person standing up to fraud and corruption can make a difference. We now believe this case began when a city police officer stepped forward and reported misconduct.
Robert “Leo” McSweeney joined the United States Marine Corps in 1990. In March of 2004 he joined the Bell Police Department. He switched his military service from active duty to active reserves.
About a year after being hired, McSweeney was ordered to active duty and deployed to Iraq. Under federal law, national guard troops and reservists are protected while on active duty. An employer can’t fire them or discriminate against them for being called to duty.
While in Iraq, McSweeney served in 150 combat missions and was awarded the Navy Achievement medal. Upon his return to civilian life, he should have been treated as a hero. He wasn’t.
Starting on his first day back Officer McSweeney faced discrimination and retaliation. He lost his seniority and his pay increase. His accrued sick time and leave were taken away. His crime? Apparently it was defending our country’s freedom and leaving the city shorthanded. (The city had almost 100 police officers.)
Things really got bad after McSweeney testified against another police officer who he believed threatened an innocent resident. (If we had more officers like Leo McSweeney, George Floyd might be alive today.)
Combat veteran, decorated hero and City of Bell Police Officer Robert “Leo” McSweeney was fired. McSweeney, however, didn’t go quietly into the night. As we already know, he already reported misconduct within the department and having testified against another police officer who he believed was acting unlawfully.
But McSweeney wasn’t done. After suffering retaliation he reported the city’s illegal behavior and sued the city, city manager and the police chief. We believe his actions finally shed a light on what was happening within the city and ultimately resulted in the indictments of all but one of the city’s leaders.
Public Corruption and Whistleblower Rewards
The motto of the City of Bell is “Bell believes in promoting a healthy, balanced and moral lifestyle.” Unfortunately, many of the city’s elected officials never grasped the “moral lifestyle” concept.
Typically, there are no whistleblower rewards for reporting corrupt government officials. There is an exception, however. Depending on where the corruption takes place, some states have state false claims acts that allow whistleblowers to collect a reward for reporting fraud involving state or municipal funds. California, Illinois and New York are prime examples. In states with false claims acts, whistleblowers can receive between 15% and 30% of whatever monies are collected from the wrongdoers. (Exact recovery percentages vary by state.)
And if there is tax fraud, the IRS also has a whistleblower reward program.
Our whistleblower lawyers have helped ordinary folks collect over $100,000,000.00 in rewards. You don’t have to be a decorated combat Marine to collect a reward. The only requirement is that you have inside information about fraud involving government funds or unpaid taxes.
All inquiries are protected by the attorney – client privilege and kept in strict confidence. We represent whistleblowers nationwide.