Robert Rizzo, the former Bell city manager who was caught in a public corruption scheme in 2010, agreed to plead guilty to evading hundreds of thousands of dollars in federal income tax.
In a plea agreement filed Thursday in U.S. District Court, Rizzo, 59, admitted guilt on two felony charges: corruption and filing a false federal tax return with the Internal Revenue Service.
The agreement, which comes 10 weeks after Rizzo entered a no contest plea to 69 state criminal counts related to a scheme to enrich himself and other Bell employees, was announced in a news release by the U.S. Attorney’s Office for the Central District of California.
In the agreement, Rizzo admitted to falsifying tax returns for a company called R.A. Rizzo Incorporated, which he created in 2002.
“Instead of filing accurate tax returns, Mr. Rizzo claimed bogus corporate losses on his income tax return to illegally reduce his tax liability,” IRS Criminal Investigation Chief Richard Weber said in a news release.
Using R.A. Rizzo Incorporated, the former city manager claimed “losses” in the hundreds of thousands of dollars, using his company as a shield to hide a lavish lifestyle.
Between 2006 and 2009 alone, nearly $410,000 was fraudulently deducted in tax returns filed by Rizzo’s corporation. The returns claimed the losses were related to a “purported rental property in Auburn, Washington,” the U.S. Attorney’s Office news release stated.
In 2010, Rizzo used his corporation to pay for $120,000 in construction work on his Huntington Beach home and $80,000 in personal expenses, he admitted.
Robert J. Melcher, Rizzo’s tax preparer, assisted his client in the scheme, prosecutors said. Melcher has pleaded guilty to charges of co-conspiracy and faces up to three years in federal prison.
Rizzo was expected in federal court for an upcoming hearing, where he faces a maximum prison sentence of eight years, authorities said.
According to the DA’s Office, he was also set to formally accept his 69 state criminal counts of public corruption — and up to 12 years in state prison — at a sentencing hearing scheduled for March 12.