Santa Monica Man Sentenced For Swindling VA Out Of $13 Million

SANTA MONICA, CA – A Santa Monica parking lot owner was sentenced for swindling the U.S. Department of Veterans Affairs out of at least $13 million and bribing a federal official who later became a government informant.

Richard Scott, 58, was sentenced Monday to nearly six years in federal prison for conspiracy and wire fraud, and was ordered to pay the VA $12.6 million in restitution, the Santa Monica Daily Press reported.

Prosecutors said Scott kept two sets of books to hide revenue from parking lots that his company, Westside Services LLC, operated at the VA Medical Center in West Los Angeles. The lots were used for the hospital as well as UCLA baseball games, events at the Wadsworth and Brentwood theaters, and the PGA golf tournament at the Riviera Country Club.

After his company obtained a contract to operate the VA parking lots, Scott allegedly began defrauding the VA by failing to properly report income and expenses. He reportedly used the $13 million to purchase pricey real estate, a boat and luxury cars.

Scott's contract required him to provide the VA with 60 percent of the gross revenues from the lots, and he was required to submit annual reports detailing revenue generated by parking fees, as well as improvements and services his company provided that could be used to offset payments due to the VA, according to federal prosecutors.

The investigation determined that one set of Scott's books contained false revenue and expense statements, and a second set contained actual revenues and expenditures, aside from unreported cash, according to the U.S. Attorney's Office.

Scott "intentionally failed to satisfy obligations and services placed upon him by the contract, and intentionally underreported revenue and inflated expenses so that it would appear that the VA owed WSS significant payment," according to the plea agreement, which says his "goal was to pay the VA as little as possible."

As part of the scheme, Scott allegedly began bribing then-VA contracting official Ralph Tillman, who was responsible for overseeing the contract in 2003, paying him a total of about $300,000 in "hush money" until Tillman abruptly retired in 2014 after he was confronted by federal agents.

Tillman, 58, of Whittier pleaded guilty in February to federal tax charges and lying to investigators when he denied taking bribes from a parking lot operator at the VA's Westside medical campus. He faces up to eight years behind bars when he is sentenced Aug. 27.

As a result of the 15-year scheme to defraud the VA, Scott amassed considerable wealth, including three condominiums in Santa Monica, with a cumulative estimated value of $7 million; numerous high-end collectible cars, including several classic Corvettes and three Ferrari automobiles; a Cigarette Top Gun racing boat; and bank and brokerage accounts contained more than $1 million, according to the U.S. Attorney's Office.

When he was arrested last November, authorities seized more than $213,000 from Scott's home -- cash that had been skimmed from the VA parking lots, prosecutors alleged.

As part of the plea agreement, Scott and his wife have agreed to forfeit all of the assets, according to the U.S. Attorney's Office, and he has agreed to pay $12,619,693 in restitution, a figure that takes into account some money already repaid to the VA.

At a detention hearing late last year, prosecutors told the judge that when investigators served a search warrant at Scott's home, they found about $200,000 in cash, including $25,000 and a passport in what was termed a "go bag" – which officials said could have been used for a quick departure.

City News Service and Patch staffer Emily Holland contributed to this post; Image via Shutterstock