Ex-Sacramento council member Sean Loloee faces dozens of new federal tax, laundering charges

(FOX40.COM) — Former Sacramento council member Sean Loloee is facing dozens of new federal charges related to grocery stores that he owns.

According to the Department of Justice, Loloee is facing 58 additional charges related to tax fraud and money laundering following a superseding indictment returned from a federal grand jury.
•Video Above: Loloee walks into court for a status hearing (From Feb. 2024)

In addition to the new charges, two brothers, Mirwais Shams and Ahmad Shams, are added to the indictment for their alleged involvement.

Loloee and the two brothers are being arraigned Friday afternoon.

According to the indictment, Loloee’s charges include conspiracy to defraud the IRS, willful failure to collect or pay over-withheld taxes, filing a false tax return and money laundering.

Mirwais and Ahmad Shams, who held executive positions for Viva Supermarkets, are each charged with conspiracy to defraud the IRS and filing a false tax return. Ahmad Shams is facing additional charges of lying to a federal grand jury about taxes and off-the-books payments.

More news about Sean Loloee’s indictments
• What does the December indictment accuse Loloee of doing?
• A timeline of Loloee’s business ventures, federal investigations
• What will happen to Loloee’s council member seat?

The DOJ said Loloee and both Shams brothers filed a false tax return that underreported their income.

Loloee and Viva Supermarkets general manager Karla Montoya were originally indicted in December for several charges related to unfair labor practices at the grocery stores.

After a court appearance in February, Loloee claimed his innocence and said he was “looking forward to the day in court.”

According to the new indictment, Mirwais Shams served as Viva Supermarkets’ controller and financial auditor while Ahmad Shams held various positions under Loloee’s ownership, including as the human resources director.

Loloee’s supermarkets employed around 150 individuals at any one time, the DOJ said.

The new court documents say that starting around November 2017, “At the direction of Loloee, Mirwais Shams and Ahmad Shams modified the number of hours of Viva Supermarkets employees recorded on the time clock in tens of thousands of instances, representing a significant percentage of all punch-clock recorded worker time. This deprived employees of overtime pay and deprived the IRS of the payroll tax obligation that Loloee would bear if true hours were reported.”

Former council member Sean Loloee claims he’s innocent in federal court case

Regarding the accusations of false federal taxes, the documents say that, between November 2017 and October 2023, Loloee unlawfully reduced his individual and corporate payroll tax liabilities by paying himself off the books, shaving employees’ hours to reduce his employer payroll tax liability, and moving “a substantial part of his workforce off the books” and paying them in cash or green checks that were not reported to the IRS.

Between 2017 and 2019, Loloee also allegedly reduced his personal income tax liability by paying himself off the books, something Mirwais is also accused of doing, the documents say.

The documents also say that at Loloee’s direction, the Shams brothers helped in the tax scheme by keeping a second set of books that tracked cash and green check payments, manipulating time entries to reduce hours that were worked, transferring money from the stores to an entity for payroll to be paid from there, and disguising the off-the-books payments to take deductions.

Court documents also say Loloee fraudulently applied for $2.2 million in COVID-19-related pandemic relief funds from the federal Restaurant Revitalization Fund program (RRF) in May 2021. The DOJ said Loloee received $1.2 million from the program.

“After receiving the $1.2 million, Loloee initiated the laundering of funds with 10 checks all bearing the same issue date of June 18, 2021, moving the money through multiple accounts that he controlled,” the DOJ said. “Loloee completed the laundering with three bank transfers that moved $949,900 into a trust account in the name of one of his family members.”

Loloee was still a member of the Sacramento City Council when the December indictment was issued, leading to Mayor Darrell Steinberg and other city council members to call on him to resign.

Loloee officially announced his resignation from his District 2 seat in January.

In the March 5 primary election, Roger Dickinson is leading the race for the vacant seat, but is far short of the 50% needed to win it outright.

The remaining city council members have been interviewing candidates who seek to be appointed to the remainder of the existing term.

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