Ex-Sacramento City Council member slapped with new federal charges

SACRAMENTO, Calif. (CN) — Sean Loloee, the former Sacramento City Council member who resigned after federal prosecutors accused him of hiring undocumented workers, faces new charges in an indictment unsealed Friday.

Loloee, 53, of Granite Bay, and Karla Montoya, 42, of Sacramento faced initial charges in December of conspiracy, obstruction of Department of Labor proceedings, and possession and use of false immigration documents. Prosecutors have said many workers at Loloee’s Viva Supermarkets stores had no authorization to work in the United States, Additionally, Loloee and Montoya didn’t pay overtime, and interfered with the Labor Department’s investigation.

Loloee also faces falsification of records and pandemic relief fraud accusations.

Friday’s indictment adds more charges and defendants to the case.

Mirwais Shams, 36, and Ahmad Shams, 29, both of Sacramento, each face a charge of conspiracy to defraud the Internal Revenue Service and two counts of filing a false tax return. Ahmad Shams also has two perjury counts, which stem from lying to a grand jury about taxes and off-the-book payments.

Both Shams are accused of manipulating employee data, which lowered Loloee’s payroll, overtime pay, and his overall labor costs. This manipulation happened tens of thousands of times, and was a major percentage of all worker’s recorded time.

Mirwais Shams was controller and financial auditor of the supermarkets. Ahmad Shams had many roles, including human resources director and store manager.

Loloee faces new charges of conspiracy to defraud the IRS, willful failure to collect or pay over withheld taxes, and three counts each of filing a false tax return and money laundering.

Additionally, Loloee faces three counts of money laundering in the new indictment. That’s linked to $1.2 million in Covid-19 relief funds he received from the Restaurant Revitalization Fund program. Prosecutors say Loloee moved the money through several accounts, ultimately using three bank transfers that moved $949,900 into an account in the name of a family member.

Loloee has denied the accusations. He, Montoya and the two Shams appeared Friday afternoon in federal court and pleaded not guilty. Loloee and the Shams remained free that afternoon on their own recognizance. Montoya is free on a $25,000 bond.

The grand jury in the new indictment states that Loloee and Montoya, who herself used fraudulent documents to have the appearance of legality, began their scheme as early as November 2008.

Loloee felt that undocumented workers were easier to control, and he employed different methods of exerting that power over them. He’d say he knew who was “illegal,” creating an atmosphere of intimidation. He’d also threaten employees over their immigration status if they acted against him.

Loloee also said that he knew important people who could investigate his workforce, another intimidation tactic.

The former council member has adamantly declared his innocence since his first indictment was revealed in mid-December. At the time, Sacramento Mayor Darrell Steinberg said Loloee had an obligation to do the right thing. He expected the situation to resolve itself within a day.

Two weeks later Steinberg said that, after asking Loloee repeatedly to resign, he opted to go public with his request.

Loloee, required by court order to stay at his Granite Bay home, was disqualified from serving on the council, as he couldn’t live in Sacramento, Steinberg said. Saying that Loloee had the right to due process of law, the mayor also said that the fraud and corruption charges were incompatible with serving on the council.

Loloee said at the time he wouldn’t resign and vehemently denied the charges. He called politics a rough business, adding that people who opposed his campaign for office had intensified their harassment and attacks toward him and his business.

Days later, on Jan. 4, Loloee resigned.

“I'm stepping down because of the recent politically motivated circus that Mayor Steinberg has created in an attempt to cover up his many shortcomings as a mayor of Sacramento,” Loloee said at the time. “I love this city and my district too much to let the mayor use my situation as a distraction.”

Steinberg said Loloee did the right thing in resigning.

Looking ahead, the mayor said that if a candidate for Loloee’s council seat won a majority of the votes in the March 5 election, the council should appoint that person. However, if no candidate reached that threshold, Steinberg suggested the council appoint a caretaker to the seat. A runoff would happen in November.

As of Friday afternoon, Roger Dickinson had 2,587 votes for Loloee’s seat, or 44%. Second place was Stephen Walton with 933 votes, or 16%. Less than 100 votes remain uncounted.

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