Michael Drobot a Newport Beach resident and former owner of a Long Beach-based spinal surgery hospital, paid $28,000 in bribes to state Sen. Ron Calderon, according to an FBI affidavit published Wednesday by Al Jazeera America.
The alleged bribery is part of a sweeping corruption investigation into the Calderon political dynasty, a family of Democrats based in southeast Los Angeles County who have held seats in the state Legislature for more than 30 years.
In June the FBI raided the Capitol office of Ron Calderon, D-Montebello, looking for evidence related to the bribes. His brother, Tom Calderon, was also named in a federal subpoena seeking records from a water district.
Last week, Voice of OC reported the Calderon investigation’s connections to Orange County, including consulting fees that Drobot’s Industrial Pharmacy Management LLC, which dispenses medications to patients in doctors’ offices, had paid to Tom Calderon’s political consulting firm, The Calderon Group.
The 124-page affidavit, filed in Sacramento, was done to obtain the search warrant that led to the FBI raid at Ron Calderon’s Capitol office.
The FBI alleges in the affidavit, which remains under seal and was apparently leaked to Al Jazeera America, that Drobot’s company defrauded the state’s workers compensation program by inflating the cost of implantable medical devices.
Drobot made the bribes to Ron Calderon in an effort to thwart legislation that would have plugged loopholes in state law that allowed his company to commit the fraud, the affidavit alleges.
The affidavit also details a FBI sting operation in which agents posing as independent movie executives seeking special tax credits paid $60,000 in bribes to Ron Calderon.
The FBI this year obtained federal court authorization to search Ron Calderon’s email, iCloud and telephone texts for “evidence” regarding the movie bill and Drobot’s “healthcare fraud scheme.”
The affidavit does not provide details of the related FBI investigation of Central Basin Municipal Water District, which has paid Tom Calderon hundreds of thousands of dollars in consulting fees. An Aug. 5 subpoena delivered to the water district and obtained by Voice of OC requests documents related to an underground water storage project and in addition to Anaheim-based “Willdan,” names Tom Calderon, his consulting firm, “Pacifica” and engineering firm HDR.
Two generations of the Calderon family have served in the Legislature, representing sections of Los Angeles County that generally run from the city of Bell east to the Orange County border.
Charles Calderon, 63, was elected to the state Senate in 1982 and re-elected until 1998, when he was required to step down because of term limits.
That year his brother Tom, 59, was elected to the Assembly and served until 2002, when he stepped aside. The youngest of the three Calderon brothers, Ron, 56, was elected to succeed Tom in 1998 and served in the Assembly until 2006, when he won election to the state Senate, where he continues to serve.
The second generation of Calderons joined the Legislature with election to the Assembly in 2012 of Charles’ son, Ian Calderon, 28, D-Whittier.
FBI agents began investigating Drobot and his hospital, Pacific Hospital of Long Beach. for health care fraud in August 2010, according to the affidavit. Drobot’s scheme essentially was to inflate the cost of implantable medical devices and pay illegal kickbacks to doctors performing the spinal surgeries.
Drobot exploited a part of the state’s workers’ compensation program that allows separate invoicing of the implantable devices, according to the affidavit. Drobot and others purchased the devices from a third party who would inflate the cost, and then submit invoices to the State Compensation Insurance Fund, among other insurance providers, for up to ten times the actual cost of the devices, according to the affidavit.
When the claims were paid, Drobot paid his surgeons kickbacks of up to $20,000 per surgery, according to the affidavit. Between 2008 and 2010, the hospital “performed more workers’ compensation related spinal fusion surgeries than any other California hospital,” the affidavit states.
Fraud by health industry providers costs taxpayers $60 billion annually, according to the affidavit. Special federal task forces are operating in areas of the nation where it is especially a problem, including the Los Angeles region.
To keep up the scheme, Drobot needed help from friends in the state Legislature who could thwart bills that would end the separate billings for the implantable devices, and that help came from the Calderons, according to the affidavit.
Ron Calderon bragged to an undercover agent posing as a movie executive that the Calderons had been “keeping [Drobot] in business for the last four years” by countering the governor’s efforts to cut funding for the spinal surgeries.
The affidavit quotes Ron Calderon as saying: “You know … we’ve kept them going. We’ve pushed it off, pushed it off, pushed it off …”
Part of the $28,000 went to Ron Calderon’s son, Zachary Calderon, during his summer vacations from college. Payments to Ron Calderon’s children is a common thread between both bribery schemes. His daughter Jessica Calderon also received payments from undercover agents to work for the studio but never actually did.
The investigation into the Calderon family began in 2007 based on information received from the Fair Political Practices Commission “and other sources.”
The investigation initially involved a $1-million check Tom Calderon received from Drobot for consulting services related to the state’s compensation insurance fund. Drobot was seeking money from the fund he believed was owed to his companies. The fund settled with Drobot in early 2004 for $27.5 million, according to the affidavit.
The affidavit states that the “exceptionally large and unusual payment” caught the FBI’s attention because it showed that Tom Calderon might be “using his brothers’ political influence to favor Drobot in return for monetary compensation, that is, a bribe.”
Senior Reporter Tracy Wood contributed to this report.
Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek