(FOX40.COM) — Former Sacramento city councilmember Sean Loloee pleaded guilty Thursday to three fraud schemes he committed as owner of a local supermarket chain.
Loloee, 55, agreed to a plea deal with federal prosecutors. He pleaded guilty to three counts of filing false tax returns, one count of wire fraud, one count of money laundering, one count of conspiracy to defraud the IRS and one count of conspiracy to obstruct a Department of Labor investigation.
The department investigated him three times between 2008 and 2020 over allegations that the company he owned, Sacramento-based Viva Supermarket, hired immigrants ineligible to work in the U.S. in order to reduce labor costs.
During the investigation, Loloee and others discouraged employees from complying with the federal investigation, the U.S. Attorney’s Office for the Eastern District of California said. That included asking them to lie to investigators about aspects of their employment.
Loloee also falsified hire dates on a list of employees in an attempt to avoid revealing the supermarkets’ undocumented staff and lied about paying workers off the books, prosecutors said.
Along with co-conspirators, Loloee used what prosecutors described as “irregular payment methods” to underreport payroll taxes and his own income tax. He allegedly used two sets of books: one to submit IRS filings and a second set to track secret payments to himself and his undocumented employees.
Loloee went as far as paying those workers in “green checks” — vouchers that were only redeemable at Viva stores.
Through the double-book system, Loloee paid about $200,000 less in taxes to the IRS, along with another $32,000 in individual taxes, according to prosecutors.
The final fraud Loloee committed came after the COVID-19 pandemic. In May 2021, he fraudulently applied for $2.2 million in relief from the Restaurant Revitalization Fund, a Small Business Administration program.
After receiving $1.2 million, prosecutors said Loloee laundered those funds through multiple accounts, transferring the money to a trust in the name of a family member.
Under the plea deal, Loloee will repay $1.2 million to the Small Business Administration and $240,000 to the IRS; he will also forfeit other funds and assets to the government. In exchange, prosecutors will recommend a shorter sentence.
Loloee is set to be sentenced Oct. 15 by U.S. District Judge Troy Nunley.
Co-conspirators Karla Montoya, Mirwais Shams and Ahmad “Shah” Shams will go on trial Sept. 28, prosecutors said. They face other charges stemming from the alleged fraud.
Loloee was indicted on 25 charges in December 2023. He resigned from the Sacramento City Council on Jan. 4, 2024.
He was elected to the District 2 seat in 2020. During his time on the council, he faced questions over whether he actually lived in the district, which encompasses the northern Sacramento areas of Del Paso Heights, Hagginwood and Robla.
Loloee said he lived at a District 2 home shared with several employees, although his wife owns a home in Granite Bay, which is located outside of Sacramento County. The DOJ referred to Loloee as a Granite Bay resident in court filings.
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