Southern California prosecutors charged 16 people, including 10 applicants' attorneys. in the first wave of charges stemming from an investigation into payment of illegal referral fees and a capping operation using a call center in El Salvador.
Orange County District Attorney Tony Rackauckas on Monday announced the charges relating to what he described as a "fraud factory" that "targeted and exploited members of the Spanish-speaking community, using them like ATM machines." He said his office estimates insurer losses relating to the scheme exceed $300 million.
According to the DA’s Office, this is the largest group of attorneys to be charged in a single case in Orange County history, and there’s more on the horizon.
Monday’s filings are just “phase one” of a ongoing investigation into an illegal attorney-referral network believed to be the brainchild of Carlos Arguello III and Edgar Gonzalez, Rackauckas said.
Arguello, 35, landed himself in hot water with federal investigators in 2014 when he was indicted on charges of accepting kickbacks from medical providers in exchange for referring patients for diagnostic testing and other services. He pleaded guilty to a single count of conspiracy to commit mail and wire fraud last summer, and he is scheduled to be sentenced by U.S. District Court Judge Cynthia Bashant on Aug. 7.
The federal charges stemmed from Arguello’s operation of various companies doing business as Providence Scheduling, Medex Solutions, Meridian Rehab Care and Prime Holdings International.
Arguello also allegedly established a company called Centro Legal Internacional in 2005. Rackauckas on Monday said the company supposedly offered a “joint advertising program” to attorneys, but it was really “a front for the delivery of an agreed-upon number of clients each month.”
Business & Professions Code Section 6152 prohibits individuals or businesses from procuring clients for attorneys, a process known as “capping.”
Insurance Code Section 750 and Labor Code Section 3215 also prohibit attorneys from paying cappers for referred clients.
Penal Code Sections 549, 550(a)(1) and 550(b)(3) criminalize such conduct.
Rackauckas is accusing attorneys Jon Woods, Payman Zargari, John Jansen, Fari Rezai, Lionel Giron, Dennis Fusi, Jorge Reyes, Rony Barsoum, Robert Slater and Robin Jacobs of having paid monthly fees to Centro Legal International, Justicia Legal International, or Centro de Abogados International — companies owned by Arguello — for client referrals.
The attorneys also allegedly agreed to use copy service companies owned by Arguello and Gonzalez — including USA Photocopy, C&E Technology and Professional Document Management — during their representation of the referred clients.
Arguello supposedly obtained clients for the attorneys through the use of cappers Boris Mikhayovich Dadiomov, Soraida Veronica Castro, Dulce Gallegos and Tania Arguello-Plasencia.
Rackauckas said the cappers would distribute flyers and business cards in predominantly Hispanic neighborhoods, at businesses, swap meets and along the U.S.-Mexico border. They also allegedly published advertisements offering a “free consultation” with an attorney in Spanish-language periodicals and various websites.
A toll-free phone number listed on the advertisements routed callers to a call center in El Salvador. When workers responded to the advertisements, Rackauckas said, the cappers would send a representative to meet with the worker and obtain a signed retainer agreement on behalf of one of the attorneys participating in the referral scheme.
Rackauckas claims the cappers would also schedule a visit with a doctor who had paid for such referrals, and he said charges against those doctors will be coming.
Arguello faces 29 years 8 months in state prison if he is convicted. Gonzalez is looking at 20 years 8 months. The attorneys face sentence ranging from seven years to 25 years 8 months.
Woods, 56, runs the Law Office of Jon M. Woods in Cypress. He was admitted to practice in 1995 and has no public record of discipline.
Jansen, 49, operates G. John Jansen & Associates in Santa Ana. Since earning his law license in 1996, he served a two month suspension in 2010 for having engaged in the unauthorized practice of law in Illinois.
Zargari, 49, is the proprietor of the Law Offices of Payman Zargari in San Diego. He has had no public record of discipline since becoming an attorney in 2000.
Rezai, 39, maintains a law office in Ladera Ranch. He’s never been disciplined by the State Bar since he became a member in 1998, but his office was subjected to a search warrant in 2011 by investigators looking for evidence of kickback arrangements between attorneys and Front Line Medical Services.
Front Line was a business owned by Dr. Munir Uwaydah, a fugitive who is a person of interest in the murder of model and actress Julianna Redding. Redding's father reportedly backed out of a business deal with Uwaydah shortly before she was found dead in her Santa Monica home nine years ago.
Giron, 49, operates the Law Offices of Lionel E. Giron in Pomona. After being admitted to the bar in 1999, he was suspended from practice in 2011 following his conviction for three misdemeanors arising from domestic discord.
Fusi, 73, runs the Law Offices of Dennis R. Fusi in Lakewood. He’s been practicing law since 1976 and has no public record of discipline.
Reyes, 39, is part of Reyes & Associates in Los Angeles. He has no public record of discipline since being admitted to practice in 2004.
Barsoum, 43, is his former law partner and now the proprietor of Barsoum Law. Barsoum also joined the state bar in 2004 and has had no public record of discipline.
Back when Reyes and Barsoum were practicing together, they made headlines in 2015 after accusing the law firm of Knox Ricksen of hacking into the computer network of its vendor HQ Sign-up Services Inc. They dismissed their claim last March.
Slater, 67, practices in Encino. He drew an admonishment from the state bar in 1992, but otherwise he has never been disciplined since he became an attorney in 1975.
Slater said Monday he had seen the press release from the Orange County District Attorney’s Office and steadfastly maintained, “I’m innocent.”
He said he absolutely did not pay for any referrals and “I defy anyone to try and prove otherwise.”
Slater said he did use the copy service providers allegedly owned by Arguello and Gonzalez sometimes, but “I don’t believe that’s a crime.”
He said he was familiar with some of the other people charged with crimes, but he said he doesn’t know any of them personally and couldn’t speak to what they did or did not do.
As for himself, Slater said, “I was not involved in anything.”
The other attorneys could not be reached for comment on Monday afternoon.
Christel Schoenfelder, president of the California Applicants’ Attorneys Association, on Monday said the group "strongly condemns running and capping and all of the behaviors alleged in the complaint” by the Orange County District Attorney’s Office.
“Any attorney found guilty of participating and profiting from fraud should get what they’ve got coming,” Schoenfelder said, since “every dollar fraudulently taken from the system is a dollar that should go to pay for legitimate claims.”
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