Politics & Government

Feds Say Former Moreno Valley Councilman Took 'Largest Bribe Ever'

Marcelo Co allegedly told a businessman and an undercover FBI operative posing as a real estate broker he would control a voting majority of the Moreno Valley council and be able to guarantee land use decisions, authorities said.

A former Moreno Valley city councilman has agreed to plead guilty to a federal bribery charge for taking a $2.36 million cash payment from an undercover informant posing as a real estate broker, an alleged transaction captured on video, federal officials and the Riverside County D.A. announced Tuesday.

The staged payoff "is believed to be the largest bribe ever accepted by a public official in an undercover operation" in FBI history, U.S. Attorney André Birotte Jr. and FBI Special Agent in Charge Timothy Delaney said.

"To watch this actually occur it was like watching reality tv," District Attorney Paul Zellerbach told reporters at a news conference Nov. 5 in Riverside. "It was astonishing nonetheless."

Marcelo Co, 64, was charged Tuesday morning with one bribery count and one count of filing a false corporate tax return, according to the Inland Regional Corruption Task Force, which includes Justice Department, FBI, D.A. and Treasury officials.

Co's attorney, Torrance-based Brian A. Newman, signed the plea agreement for Co on Sept. 10. Newman was in federal court in San Francisco according to his secretary. Co and Newman could not be reached to comment for this report.

"The defendant will be directed to appear in court, we think Dec. 4," Thom Mrozek of the U.S. Attorney in Los Angeles said after the news conference.

In court documents filed Tuesday morning in U.S. District Court in Riverside, Co agreed to plead guilty to the two charges that could send him to federal prison for as long as 13 years, task force officials said.

"Mr. Co orchestrated an elaborate and brazen scheme to undermine the democratic process in Moreno Valley," Birotte said. "Whether he was motivated by power or greed, these crimes constitute a wholesale violation of his oath to work for the citizens who elected him."

Co, who was elected to the City Council in November 2010, resigned from his seat in August after being charged in state court in an unrelated welfare fraud case, task force officials said.

"It is a very sad day for the citizens of Moreno Valley when one of their elected council members sacrifices his legal and ethical obligations for power and greed," Zellerbach said. "This type of unlawful conduct by Mr. Coe undermines the very fabric of good government and what we all hope and expect from our elected officials."

The case against Co resulted from an ongoing investigation.

"Mr. Co regularly traded votes, land and confidential information in exchange for cash to fund his personal bank account, rather than what was in the best interest of the residents of Moreno Valley," Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, said in prepared remarks.

Court documents filed against Co outline a bribery scheme in which he allegedly told a businessman and an undercover FBI operative posing as a real estate broker he would control a voting majority of the Moreno Valley City Council and would be able to guarantee land use decisions that would benefit the businessman and the land broker, task force officials said.

"Co also promised to always vote in favor of land use decisions that would benefit the real estate broker," task force officials said.

Here's more from a task force statement:

Co solicited campaign donations from the businessman, who was cooperating with the investigation, and the FBI undercover operative. Co eventually received payments of $5,000 and $10,000 that he said were to be used to finance the campaigns of individuals who would vote with him on land use issues. In the fall of 2012, Co met with the undercover operative to discuss a multimillion dollar sale of a 30-acre parcel that he owned.

Co told the real estate broker that once he had control of the City Council, he could change the zoning of the property and the land value would dramatically increase. With the City Council election in November 2012, Co told the undercover investigator that he had the votes to alter the zoning and increase the value of Co’s 30-acre parcel, which had been appraised at $710,000.

Co proposed that the undercover operative purchase the property for $5.36 million, which would include a cash payment of $2.36 million. At a meeting on January 30, 2013, Co agreed to sell the property for $5.36 million, but that the publicly filed documents would reflect a sale price of only $3 million.

At this meeting, Co accepted $2.36 million in cash.

The tax charge that was filed Nov. 5 concerns a U.S. Corporation Income Tax Return (Form 1120) that Co filed for his company, Qwik Pack Systems, for tax year 2010, task force officials said. In that filing with the IRS, Co failed to report well over $100,000 in income. The tax charge is not related to the bribery scheme.

"Mr. Co's intentional omission of more than $112,000 in taxable income – and failure to pay $31,000 in tax to the IRS – was committed for his own private gain and was an insult to honest taxpayers and the citizens of Moreno Valley," said Joel P. Garland, Acting Special Agent in Charge for IRS - Criminal Investigation, Los Angeles Field Office.

"Today's action is an example of IRS-CI's vigilance when it comes to enforcing tax laws, particularly when it involves our public officials. IRS-CI, in partnership with our law enforcement partners, is committed to bringing to justice public officials who use their political office to commit crimes," Garland said.

Co's initial appearance in federal court is expected in early December.


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