Irvine attorney Sandeep Baweja, the 39-year-old money man for that town's "progressive" political boss Larry Agran and a former official with Al Gore's 2000 presidential campaign, agreed in court papers to plead guilty to two felony charges related to a scheme where he ripped off nearly all of the $2.7 million he'd previously won for his clients, the FBI announced today.
In a plea agreement prosecutors filed late Thursday in United States District Court in Los Angeles, Baweja indicates he will plead guilty to one count of wire fraud and one count of obstruction of justice, which carry a statutory maximum penalty of 30 years in federal prison.
As the sole proprietor of Baweja Law Group, which was based in Los Angeles until August 2008, when it relocated to Irvine, Baweja filed a class-action lawsuit on behalf of current and former real estate agents of ZipRealty, Inc. in May 2007. The complaint filed in U.S. District Court in Santa Ana alleged that ZipRealty denied about 800 employees certain sales commissions, refused to reimburse business expenses and made unlawful wage deductions.
Baweja and ZipRealty reached a settlement in the fall of 2007 under which the company agreed to dole out $3.55 million. On March 10, 2008, U.S. District Judge S. James Otero finalized the judgment in the case, which prompted ZipRealty to pay the $3.55 million settlement, a quarter of which--$660,000--went to attorney's fees for Baweja and his co-counsel. The $2.5-million balance was to be paid to the 800 claimants on a pro rata basis.
After the settlement money was deposited into a bank account that Baweja controlled on behalf of the class, Baweja set up his own online stock brokerage account and began transferring most of the settlement proceeds into that trading account, according to court documents.
The FBI, which investigated the case, alleged that although Baweja had no experience as a trader in the stock market, he used the misappropriated funds to day-trade securities on margin. During the course of the scheme, the FBI says, Baweja concealed his activity from his clients, Otero, an administrator hired to oversee processing claims, his co-counsel, ZipRealty and its attorneys.
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By December 2008, the value of Baweja's stock account had shrunk to around $55,000, meaning that Baweja had lost virtually all of the settlement money that he had held in trust for his clients.
Those claimants began complaining to ZipRealty that they were not receiving their portions of the settlement. ZipRealty, having already paid up, brought the matter to the attention of Otero, who was told by Baweja that he was making the disbursements from the settlement. However, he essentially had run out of money after only giving about $121,500 of the settlement to 46 of the approximately 800 claimants. The attorney finally reported to the court and law enforcement that he had lost his clients' money.
During the ensuing court proceedings, Baweja played the dumb card, saying he invested the money in the stock market without knowing what he was doing, apologizing for his knuckleheaded conduct in papers filed in U.S. District Court in Los Angeles and remorsefully vowing to notify prosecuting authorities and the State Bar of California of his actions and comply with their investigators.
The same fellow who now admits to mishandling $2.7 million that did not belong to him and playing the market without a clue as to how to do so was listed as the treasurer of Irvine's Yes on R and S campaigns in the November 2008 city elections.
R, which validated the council's handling of the Great Park, and S, an "ethics" reform to restrict the use of e-mail addresses the city collects, both sailed to victory. Their main source of funding was a controversial fake newspaper called Irvine Community News and Views, which was actually a slate mailer for the campaigns of R, S and the so-called "Agran slate" of city council candidates: incumbents Agran, Beth Krom, Sukhee Kang and upstart Todd Gallinger.
Irvine watchdog Stephen C. Smith previously blogged that Baweja's office was next door to fellow attorney Gallinger's. The Council on American-Islamic Relations (CAIR) has been among the clients Gallinger represented. Both were at the center of Baweja's most showy role in November's election. During a Sept. 23 City Council meeting, Baweja was among the speakers lashing out at the "racism" of Councilman Steven Choi, who was seeking reelection, at a candidate forum five days earlier. Choi had criticized Gallinger, a Muslim convert, for having represented CAIR, which Choi referred to as "a dangerous Islamic organization."
When Gallinger revealed to the media that his office received a death threat days after Choi made those remarks, the incident received international attention and has been listed by some civil-rights groups as among the most hateful things to have happened in the U.S. in 2008.
Baweja also sat on the board of the Irvine Public Schools Foundation, one of the largest education non-profits in California. At the urging of Kang, who was campaigning for the mayor's seat he would eventually win, the City Council donated $1 million in taxpayer funds to the foundation to ostensibly be held in reserve for cash-strapped schools.
After the city grant, the foundation was set to host a campaign fund-raiser for the Agran slate, but media exposure over the inappropriateness of a non-proft holding a political event killed it. During the campaign, Councilwoman Christina Shea, who ultimately lost the mayor's race to Kang, called on the foundation to immediately release the city funds to schools, something she alleged had not yet been done. Kang deflected those concerns by labeling himself the education candidate (and now education mayor) and Shea and others as being anti-schools.
Irvine's election was not the only one Baweja has been involved in. Having grown up in Seattle after immigrating to the U.S. from India at age 3, he was field coordinator for Al Gore's 2000 presidential campaign in Seattle.