Wednesday, April 09, 2014

Corruption: Los Angeles - Man guilty in $2.8 bribery scam defrauding Coachella Valley Indian Tribe

U.S. Attorney’s Office 
Central District of California

LOS ANGELES—A Central California man who was hired to advise the Twenty-Nine Palms Band of Mission Indians has become the third person to plead guilty to participating in a kickback scheme that defrauded the Coachella Valley Tribe.

David Alan Heslop, 76, of Templeton, who was hired by the tribe to oversee some tribal business, pleaded guilty yesterday to conspiracy to commit bribery. Heslop admitted that he paid hundreds of thousands of dollars to bribe Gary Edward Kovall, an attorney acting as general counsel for the tribe.

Kovall, 67, of Ely, Minnesota, pleaded guilty last month to conspiracy to commit bribery.

A third defendant in the case—Paul Phillip Bardos, 58, a general contractor from Rancho Cucamonga—pleaded guilty last month to tax evasion.

As outlined in a 20-page factual basis filed in relation to Heslop’s plea agreement, Kovall and Heslop formed companies, and Kovall convinced the tribe to award construction and consulting work to those companies. To disguise Kovall’s interest in those companies, Heslop paid Kovall’s share to Peggy Anne Shambaugh, who at the time was Kovall’s girlfriend (and is now his wife). Over a period of about 18 months that ended in mid-2008, the tribe paid these companies approximately $2.8 million. Heslop, in turn, paid Shambaugh approximately $300,000 to influence and reward Kovall.

Bardos performed and subcontracted much of the work awarded by the tribe. He admitted to depositing income he earned into his personal checking account, concealing this money from his accountant and not reporting it on his tax returns.

Heslop is scheduled to be sentenced on June 30 by United States District Judge Michael W. Fitzgerald. At sentencing, Heslop faces up to five years in federal prison.

Kovall and Bardos both are scheduled to be sentenced by Judge Fitzgerald on September 29, at which time each defendant faces up to five years in prison.

Shambaugh, who was also indicted in this case, is being evaluated for pretrial diversion. If found suitable for the diversion program, Shambaugh will be supervised by a court officer for a specific period of time. If she complies with the program, the charges against her will be dismissed.

This case was investigated by IRS-Criminal Investigation and the Federal Bureau of Investigation.