SACRAMENTO, CA (STL.News) – California Attorney General Xavier Becerra Friday announced the sentencing of Sean Sadgan for creating a false business, Electroconcepts, in order to operate an elaborate fraudulent scheme in Los Angeles County. Mr. Sadgan stole approximately $4 million from 48 companies by establishing lines of credit using false information. After gaining the trust of the companies by purchasing and paying for small quantities of merchandise, Mr. Sadgan then ordered large quantities that he failed to pay for and later sold. The stolen merchandise included mostly electronics and electronics supplies sold on the internet and to various vendors with brick and mortar storefronts.
Friday, Mr. Sadgan was sentenced to a 44-month split sentence. Prior to his sentencing, Mr. Sadgan paid full restitution, including $3,290,201.35 to 44 victims and $401,979 to the Franchise Tax Board for tax, interest, fines, and cost of investigation.
“Operating a company that sells stolen goods will land you in jail, not a booming business,” said Attorney General Becerra. “The California Department of Justice will continue to hold criminals accountable and protect businesses that play by the rules.”
The sentencing follows an investigation conducted by the Los Angeles Police Department, Major Crimes Division, Transnational Organized Crime Section. The Franchise Tax Board Criminal Investigation Bureau and the California Department of Justice’s Tax Recovery and Underground Economy (TRACE) task force assisted in the investigation. The investigation discovered that between 2013 and 2015, Electroconcepts established lines of credit with various merchants and paid for small orders of merchandise to build trust with merchants. After this, Electroconcepts ordered large quantities of merchandise without paying for them and sold the stolen merchandise on eBay.com, Amazon.com, and at various retail store fronts. The merchandise included electronics such as electronic tablets, printers, toners, and cameras.
On April 4, 2018, Attorney General Becerra filed a felony complaint in Los Angeles Superior Court. On December 19, 2018, Sadgan pleaded guilty to two counts of grand theft, four counts of money laundering, one count of failure to file income tax return, and admitted to white collar crime and money laundering enhancements.
The TRACE task force was created to ensure multi-agency collaboration and combat wage theft, tax evasion, and other crimes in the underground economy. The task force consists of attorneys, investigators, and special agents from the Department of Justice, the Department of Tax and Fee Administration, the Franchise Tax Board, and the Employment Development Department. Since its creation, its investigative teams have recovered $25 million in lost tax revenue, victim restitution, and investigation costs.
On February 22, 2019 Attorney General Becerra and Assemblymember Lorena Gonzalez unveiled legislation, AB 1296, which would substantially strengthen and expand the TRACE program. The legislation, which renames the program the Tax Recovery in the Underground Economy Criminal Enforcement Program (TRUE), would enhance the multi-agency collaboration between the several governmental entities to further crackdown on underground economic crimes in the state.