Before state Sen. Ronald Calderon (D-Montebello) turned himself in to federal authorities Monday and later pleaded not guilty to public-corruption counts that could send him to prison for 396 years, a 69-year-old Corona del Mar businessman admitted to orchestrating the wide-ranging conspiracy and illegal-kickback scheme.
Michael D. Drobot, the former owner of Pacific Hospital in Long Beach, filed a plea agreement Friday that will have him testifying against Calderon and copping to two counts that could send him to federal prison for as long as 10 years.
Swept up in the case have been Calderon, his brother Thomas, a former Democratic California assemblyman out of Montebello, and Ron Calderon's son and daughter. There have also been Drobot family ripples as Michael D. Drobot, his son Michael R. Drobot and some of their companies have been sued by the State Compensation Insurance Fund for allegedly jacking up the costs of implants that Pacific Hospital used in surgeries so they could receive higher reimbursements from the state.
The Drobot stink was enough to force state Senate President Pro Tem Darrell Steinberg (D-Sacramento) to resign from Roxborough, Pomerance, Nye & Adreani last year, because the law firm represents Michael R. Drobot in the insurance fraud case.
In the Calderon case, Drobot allegedly bribed the state senator to preserve California's so-called "spinal pass-through law," which allowed his hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries–medical hardware that had been provided by companies Drobot controlled, at highly inflated prices. Calderon allegedly arranged for Drobot to meet other public officials and helped lobby other legislators to maintain the spinal pass-through law.
Drobot has admitted to lavishing Calderon with plane trips, golf outings and expensive dinners. The businessman also said he paid $30,000 over the course of three summers for Calderon's college-age son to work at his company, although the younger Calderon showed up for only about 15 days of work each summer, according to the federal indictment.
As part of his plea agreement, Drobot has agreed to cooperate in the government's ongoing investigation of the health care fraud scheme known as "Operation Spinal Cap" and to testify against the Calderon brothers, according to a statement from the U.S. Attorney's office in Los Angeles.
"Drobot has agreed to plead guilty in the health care fraud scheme, and as part of this agreement, he admits paying bribes to Ron Calderon in exchange for the senator's help in keeping alive a law that brought massive profits to Drobot's companies," says U.S. Attorney André Birotte Jr. in the release. "Drobot also paid kickbacks, which are illegal under both California and federal law because they corrupt the doctor-patient relationship and may encourage medical professionals to recommend procedures that are not necessary, not in the patients' best interest, or actually harmful to the patient."
Separate from the Drobot scam, the government accuses Ron Calderon of soliciting bribes from others, including people he thought were associated with an independent film studio seeking an expansion of a state law that gave tax credits to studios that produced independent films in California. They were actually undercover FBI agents.
The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Ron Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the indictment. The court documents add Calderon signed an official letter indicating that he supported a lower threshold, met with other state senators to discuss the benefits of lowering the threshold, and "caused legislation to be introduced in the Senate, which he intended to use as a vehicle to create a separate tax credit."
In exchange: Calderon's daughter was to be paid $3,000 a month for a job he knew she simply did not perform; his son was to receive $5,000 for college tuition; and $25,000 was to go to Californians for Diversity, a non-profit political organization operated by Tom Calderon, according to the feds.
Ron Calderon is charged in a 24-count indictment with mail fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering, and aiding in the filing of false tax returns. Conviction on all counts could send him to federal prison for 396 years although, looking at his figure, I don't think he'd make it that long.
Tom Calderon, who surrendered to the feds Friday, is charged with money laundering conspiracy and seven other money laundering counts. He faces up to 160 years in prison but has also pleaded not guilty.