Posted on July 9, 2015

Chicana Service Action Center Executives Charged in $8.5-Million Fraud Case

David Zahniser and Abby Sewell, Los Angeles Times, July 8, 2015

For decades, the Chicana Service Action Center received millions of dollars in taxpayer money to help some of the county’s most disadvantaged residents: the homeless, the unemployed, victims of domestic violence, foster youth looking for work.

The nonprofit organization also played a pivotal role in launching the political career of former County Supervisor Gloria Molina, who described herself as one of the group’s earliest supporters. In the last few years, its influence had gone far beyond its Eastside origins, extending its reach from downtown to the eastern edge of the San Gabriel Valley.

Now, prosecutors have charged three of the group’s executives with embezzlement and conspiracy, accusing them of participating in a “billing scam” that defrauded the county of more than $8.5 million, according to the district attorney’s office.

Dist. Atty. Jackie Lacey’s office alleges that Sophia Esparza, the Chicana center’s chief executive officer, used public funds to pay for expensive cars, homes, meals and even a political campaign fundraiser. Roughly $1.8 million went toward Esparza’s “lavish” lifestyle, prosecutors say, including season tickets to the Dodgers and Clippers and rent on a home in affluent San Marino.

The district attorney’s complaint says Esparza improperly used $35,000 in taxpayer funds to charter a yacht in Seattle; $81,873 to purchase a 2010 Jaguar in Pasadena; and $145,653 to cover five years’ of rent at the Visconti, an apartment complex in downtown Los Angeles. None of those purchases were authorized by the group’s board of directors, the complaint states.

Prosecutors also allege the three defendants created “fraudulent records and/or client files” to support the monthly invoices that were sent to the county’s Department of Public Social Services.

The three defendants–Esparza, Chief Financial Officer Silvia Gutierrez and Vice President Thomas Baiz–are scheduled to appear in court Wednesday for a preliminary hearing. Deputy Dist. Atty. Marian Thompson said in a statement that the defendants “tainted the reputation” of a long-standing nonprofit organization and “betrayed the people they were supposed to help.”

Lawyers for Esparza, 63, and Gutierrez, 69, issued a joint statement Tuesday saying the allegations are “based on a misunderstanding of the facts and a misinterpretation of the law by an overzealous prosecutor.”

“The result is that a wonderful organization has been destroyed leaving hundreds, if not thousands of people without services,” said attorneys Michael Nasatir, Victor Sherman and Matthew Lombard. Chicana Service Action Center, they said, has “cooperated with this investigation from the beginning. We are confident that an objective review of the evidence will demonstrate that they are innocent.”