Two former officials of the Mexican American Community Services Agency known as MACSA, the community organization which used to run the El Portal Leadership charter school in Gilroy, pleaded guilty to fraudulently using employees’ retirement savings for unauthorized expenses Friday.
The two officials – Olivia Soza Mendiola, 56 of San Jose, and Benjamin Tan, 62 of South San Francisco – also agreed to pay back $170,000 in compensation for retirement funds they illegally diverted from the agency’s workers, according to a press release from the Santa Clara County District Attorney’s Office.
The plea of guilty to the charge of grand theft and the reimbursement agreement were part of a plea bargain with prosecutors, with Superior Court Judge Philip Pennypacker presiding, the DA’s statement said.
Soza Mendiola was MACSA’s Chief Executive Officer, and Tan was Chief Financial Officer at the time they illegally used the retirement funds, authorities said.
From 2004 to 2009, the two officials used money that was supposed to fund employee retirement accounts to pay other MACSA expenses, including iPods, Jazzercise classes, walkie-talkies and meals at Chuck E. Cheese, authorities said. They did this knowing that their employees’ paycheck stubs falsely represented this money was going to their retirement accounts.
Soza Mendiola and Tan faced a maximum sentence of three years in jail, but avoided time in custody with the plea agreement announced Friday.
The two must pay the full $170,000 back to the employees within 90 days, according to authorities.
The repayment, which is split evenly between Soza Mendiola and Tan and includes statutory prejudgement interest of $58,898, works out to be $85,473 each, according to the DA’s office.
If the two have not jointly paid the amount by the agreed deadline May 1, 2013 deadline, they will not be permitted to withdraw their guilty pleas and will be sentenced without promises. If either defendant fails to pay half of the amount specified, both defendants will loose their settlement offer and face jail time, according to Deputy DA John Chase, who heads the chief prosecutor’s public integrity unit.
More than 100 MACSA employees were affected in this case, he said.
“Most of the victimized employees in this case cannot afford to hire an attorney to enforce individual restitution orders of a few hundred to a few thousand dollars,” Chase added. “By repaying the retirement money deducted from their paychecks, the defendants will relieve these employees of the significant burden of collecting these amounts themselves.”
At least some of those diverted retirement funds even contributed to $20,000 in extra take-home pay for Soza-Mendiola, according to a “statement of probable cause” in support of an arrest warrant issued by the DA’s office in April 2012.
MACSA is a San Jose-based organization, with an office, employees and social programs in Gilroy that continue to serve the community. It’s El Portal Leadership Academy on IOOF Avenue in Gilroy shut down in 2009, shortly after the allegations against Soza Mendiola and Tan came to light.
The ensuing investigation which culminated in Friday’s guilty plea was conducted by the DA’s Office and the U.S. Department of Labor.
“I am very pleased that MACSA’s employees will soon be receiving all of the money deducted from their paychecks and illegally diverted, plus interest,” said Chase. “Securing payment of large sums of restitution is often difficult, but it is accomplished with this settlement.”
