Former Sacramento Councilmember Sean Loloee pleaded guilty to three fraud schemes in connection with his grocery store, federal prosecutors said on Thursday.
Prosecutors said Loloee, 55, pleaded guilty to conspiracy to obstruct a Department of Labor investigation, conspiracy to defraud the IRS, wire fraud, money laundering and three counts of false tax returns.
Between 2008 and 2020, prosecutors said the Department of Labor investigated Viva Supermaket stores, which are owned by Loloee, on three occasions for labor practices.
Prosecutors said Loloee and other coconspirators were aware that many of the supermarket staff did not have the legal authority to work in the United States. Prosecutors said Loloee took steps to discourage employees from complying with the investigation, such as telling them to lie about the aspects of their employment.
Loloee gave the Department of Labor an employee list, knowing that the hire dates were false, in an effort to reduce the amount of back wages the supermarket owed to its employees, prosecutors said. He also lied about the company's history of paying employees off the books, prosecutors said.
Prosecutors added that Loloee had two sets of books used to underreport his federal payroll tax and personal income tax. One book was used to submit filings to the IRS, and the other was called the "excess payroll," used to track hidden payments to undocumented workers and others, including himself, prosecutors said.
Prosecutors said the hidden payments included an in-house check system called "green checks" that were only redeemable at the Viva Supermarkets. This caused a tax loss of about $200,000 to the IRS. He also avoided an individual tax liability of about $32,000 by not reporting wages to himself.
In 2021, prosecutors said Loloee fraudulently applied for a $2.2 million in COVID-19 relief from the Restaurant Revitalization Fund offered by the Small Business Administration. Loloee received $1.2 million and initiated the laundering of funds with 10 checks and moving the money through accounts he controlled, prosecutors said. The laundering was completed by transferring nearly $950,000 to a trust account under a family member's name.
Loloee was elected District 2 supervisor in 2020 before he resigned in 2024 after being indicted by a federal grand jury.
He is scheduled for sentencing on Oct. 15. Each conviction comes with its own possible maximum sentencing, such as money laundering and wire fraud of up to 20 years for each count. However, the sentencing will take into account a number of variables.
Others charged in the scheme include store manager Karla Montoya, controller and financial auditor Mirwais Shams and human resources director Ahmad Shams. They are scheduled to go to trial on Sept. 28.
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