Councilman admits taking $2.3 million bribe

November 5, 2013

In a case stemming from what is believed to be the largest bribe ever accepted by a public official in an undercover operation, a former member of the Moreno Valley City Council has agreed to plead guilty to a federal bribery charge for taking a $2.36 million cash payment from an undercover operative posing as a real estate broker, according to a press release.

Marcelo Co, 64, was charged this morning with one bribery count and one count of filing a false corporate tax return. Co agreed to plead guilty to the two charges that could send him to federal prison for as long as 13 years.

“Mr. Co orchestrated an elaborate and brazen scheme to undermine the democratic process in Moreno Valley,” said United States Attorney André Birotte Jr. “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 and resigned from his seat in August after being charged in state court in an unrelated welfare fraud case, is expected to make his initial court appearance in the federal bribery case early next month.

“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,” said Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case was a result of seamless collaboration by the Inland Regional Corruption Task Force, whose members share a mission of rooting out corruption across the Inland Empire.”

The court documents filed this morning outline a bribery scheme in which Co told a businessman and an undercover FBI operative posing as a real estate broker that 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. Co also promised to always vote in favor of land use decisions that would benefit the real estate broker.

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 today concerns a United States Corporation Income Tax Return (Form 1120) that Co filed for his company, Qwik Pack Systems, for tax year 2010. In that filing with the IRS, Co failed to report well over $100,000 in income. This 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.”

At Co’s initial appearance in federal court, which is expected to be in early December, the case will be assigned to a District Judge who will schedule a hearing for Co to formally enter the guilty pleas.