July 12--An insurance broker worked hand-in-hand with Pechanga Resort and Casino's former chief financial officer to bilk more than $4 million out of the tribe in hidden overcharges, a prosecutor told jurors Wednesday, July 11.
The complicit executive received $130,000 in kickbacks that he used to pay gambling debts, Supervising Deputy District Attorney Jeanne Roy said in her opening statement.
The two men, former broker James William Riley, of Murrieta, and ex-financial officer Ryan Jay Robinson, of Temecula, are accused of grand theft and commercial bribery. Riley also is charged with money-laundering. A grand jury indicted them in February 2010.
During her talk with jurors, Roy outlined a pattern in 2006 and 2007 of overcharged insurance invoices signed by Robinson that put the alleged illicit money in Riley's pocket -- with subsequent cashier check payments back to Robinson.
Roy said when the two men were questioned, they said insurance prices were much higher as a result of insurance companies' losses due to 2005 Hurricane Katrina destruction along the Gulf Coast.
The alleged scheme began to unravel in late summer 2006 after an employee noticed irregularities with one invoice, triggering an investigation by casino financial executives, Roy said.
Robinson was continuing to sign inflated insurance invoices even after he left the resort and went to work for the Pechanga Government Center, a separate entity that has nothing to do with resort and casino operation, Roy explained.
Riley's defense attorney stood by the explanation his client and Robinson gave during initial inquiries.
"He did his job, saving his client, his largest client, Pechanga Resort and Casino, millions of dollars," defense attorney Souley Diallo said. "And he was well-compensated for it. That's the reason we are here."
Riley, of the firm Riley, Garrison & Associates in Murrieta, served as the broker for the majority of the tribe's insurance until ties with him were severed in early 2007.
Roy told jurors that in one instance, the invoice finagling amounted to $2.8 million in money stolen from the resort and casino operation, and in another instance, $1.4 million.
Roy told jurors that the $1.4 million reduction in insurance fees from an earlier 2006 invoice was not reflected in a subsequent invoice.
"Instead of (the money) going back to Pechanga, or showing the decrease, that reduction becomes the agency fee," she said.
The $2.8 million, she said, was masked in an invoice that was challenged by Interim Chief Financial Officer Jerry Konchar, who approved it anyway because he faced losing an important insurance contract in the tough post-Katrina market.
Diallo said he would show jurors how one of the theft charges simply involved the discrepancy between a listed down payment and a subsequent invoice. "We will explain what the difference is, and why that difference does not constitute a theft."
He also said the $2.8 million to Riley came after he took a chance on a competitive $11.6 million policy that could have resulted in little or no commission for him. "It turns out he was able to get that policy for less, about $2 million less, and, yes, he made a lot of money off that deal, but took a substantial risk."
Roy said forensic accounting traced the alleged bribe money that went from Riley's personal account to cashier's checks made out to Robinson, who signed them over to a man named Thomas Lavalle.
"Tom Lavelle was a person that carried money," Roy said. "He's a money man, or a bag man, whatever you want to call it, for a bookie. Mr. Robinson was gambling, and the amount that Mr. Robinson was paying was increasing."
Diallo said he did not dispute that Riley gave Robinson what he called substantial amounts of money. He said it was to help Robinson through a divorce in 2005 and then, in 2006, as a gift to help him buy a business. He said there would be testimony that Riley had no knowledge of Robinson's purported gambling problems.
He also said Robinson did not unilaterally sign off on the invoices; they also required board member approval.
Robinson's attorney, Chris Jensen, said there would be no evidence that his client knew anything about the inner workings of Ryan's insurance agency.
Like Diallo, he told jurors Robinson "did not have a checkbook in hand, he did not have unfettered discretion" in paying the insurance invoices, but needed board approval. He also acknowledged there were payments from Riley to Robinson, but there was no documentation about what those payments were for.
The trial is expected to last until the end of the month. Both men are free on bond.
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