Parking Lot Operator Accused Of Defrauding VA Out Of $11M

LOS ANGELES (CBSLA) – A Westside businessman was arrested Wednesday on charges of bilking the U.S. Department of Veteran's Affairs out of more than $11 million, authorities said.

Prosecutors say Richard Scott, 58, the owner of Westside Services LLC (WSS), was arrested without incident this morning at his home in Santa Monica.

According to a criminal complaint filed earlier this month, Scott obtained a contract to operate parking lots on the campuses of the VA Greater Los Angeles Healthcare System (VA GLAHS), and soon after began defrauding the VA by failing to properly report income and expenses.

The vast majority of the activity authorized under the contract took place at the West Los Angeles VA Medical Center near Westwood, according to prosecutors.

The affidavit says for more than a decade, Scott has had a contract with the VA requiring him to provide the agency with 60 percent of the gross revenues from the parking lots.

But prosecutors say investigators determined that Scott maintained at least two sets of financial books: one which contained false revenue and expense statements, and a second set of books maintained by Scott's tax preparer containing the actual revenues and expenditures, except for unreported cash.

According to officials, Scott under-reported revenue to the VA by a minimum of $4,689,081 and over-reported expenses to the VA by a minimum of $8,219,762, which caused a direct loss to the VA of $11,397,779.

Following Scott's arrest, authorities moved to seize his assets, including a racing boat, three Ferraris, a 1969 Corvette L88, two "high-end" Mercedes-Benz vehicles, and a Shelby Super Snake Mustang.

As part of the scheme to defraud the VA, Scott allegedly began bribing the VA contracting official responsible for overseeing the contract in 2003 and continued to bribe him on a regular basis until the official abruptly retired in 2014 after he was confronted by federal agents, according to the affidavit.

Scott was expected to make his first court appearance Wednesday afternoon in downtown Los Angeles.