Councilman's fraud conviction surfaces

Councilman's fraud conviction surfaces

Michele Ellson and Steven Tavares
Stewart Chen

City Councilman Stewart Chen. Photo from the City of Alameda website.

City Councilman Stewart Chen’s official biography offers the storybook journey of a man who immigrated from the Philippines as a teen and made his way onto the Alameda City Council, dedicating his time to a long list of Alameda and Oakland community organizations over more than a decade and, for a quarter century, to his work as a chiropractor.

But Chen’s official story omits a potentially embarrassing episode: A highly-publicized 1993 arrest on charges Chen, 51, was involved in a fraud ring that, investigators believed, may have bilked insurance companies of as much as $1 million.

Chen ultimately pleaded guilty to two misdemeanor insurance fraud counts and was placed on two years’ probation and ordered to pay $50,000 in restitution, an investigation conducted by The Alamedan and the East Bay Citizen found. His chiropractor’s license was also placed on probation for five years, the investigation found.

Information about Chen’s arrest surfaced in late January when someone posted a link to a Los Angeles Times story detailing the arrest of Chen and others in the fraud case on a story on the East Bay Citizen website. The identity of the poster – and their motives for posting the information – are not known.

As the third-highest vote getter in the 2012 City Council race, Chen won the right to complete the remaining two years of Rob Bonta’s term when Bonta was elected to the state Assembly. Chen has said that he plans to run again for the council in the fall; since he won only a half term in the last election, he is still eligible for two full, four-year terms if elected.

Despite the guilty plea and conviction, Chen maintains his innocence.

“I did not do anything wrong,” Chen said in an interview this week. “They didn’t have anything on me.”

It was his belief, Chen said, that the convictions would be expunged from his record after two years if he agreed to plead guilty. The charges were officially dismissed after Chen completed his probation and paid restitution.

“It will be over in two years,” he said his lawyer, Lincoln Mintz, told him, “and you will still have your practice. You have nothing to worry about.

“This was decades before I started my community service,” Chen added. “In my mind, dismissing (the convictions) means it never happened.”

Chen laid much of the blame for his predicament from two decades ago on the legal advice of his former attorney. Mintz was disbarred in 2000 after a pair of suspensions and a probation, The State Bar of California’s website shows. The San Francisco Chronicle reported that the Oakland criminal defense attorney had “mishandled several cases and abandoned some of his clients.” Mintz died in 2012.

A court transcript reviewed by a reporter quoted Mintz as saying Chen faced the possible revocation of his chiropractor’s license as a result of the fraud case. The transcript quoted Mintz as saying conviction on lesser misdemeanor charges “will put you in a much better posture as to that license than if you were to be convicted of a felony.”

The arrest and accusations against Chen and 10 other people, including the scheme’s apparent ringleader, two other attorneys, a pair of doctors, an insurance agent and an office manager believed to be involved in the insurance fraud ring, were announced in an April 15, 1993 press release issued by the California Department of Insurance. It said cases were being pursued in both Alameda and San Francisco counties.

“Today we have successfully put a major insurance fraud ring out of business,” then-Insurance Commissioner John Garamendi was quoted as saying in the release.

The arrests were the result of a multi-agency investigation that began in September 1991 when the Alameda Police Department reported a suspected staged auto accident, the release said. It said the purported ringleader, Chung Dinh “Tony” Tran of Oakland, recruited people to stage the accidents and then generated phony insurance claims out of law offices he managed.

Chen, who got his chiropractor’s license in 1988, was accused of falsifying medical records that were included in claims to insurance companies for two May 1990 accidents that prosecutors said had been staged, billing for treatment he never provided. Investigators executed a search warrant on Chen’s office on April 24, 1992, seizing a computer with case information and a daily ledger of charges and treatments, court records show.

The Alameda County Grand Jury indicted Chen on 16 felony insurance fraud-related counts and two grand theft charges. In all, six people were indicted by the Alameda County grand jury, on 88 counts related to four accidents that prosecutors believed had been staged. Additional charges were brought against some of the defendants in San Francisco.

Witnesses who testified before the grand jury said they would sometimes show up at Chen’s office, sign in and then leave without receiving treatment; they also said under oath that some of the signatures attributed to them were not theirs. One witness said she received treatment from Chen’s staff about half the time she went to his office, for pain unrelated to the staged accidents; the other half of the time, she signed in and left, without receiving treatment.

An accusation the California attorney general’s office filed with the state’s Board of Chiropractic Examiners said Chen’s license should be suspended or revoked because he had pleaded guilty in 1994 to two misdemeanor counts of insurance fraud. The board placed his license on probation.

“During 1990 respondent prepared false billing statements and medical reports which inflated the amount of treatment he actually rendered to various insurance claimants who were involved in staged auto accidents,” the accusation says.

Alameda County court records show Chen hasn’t been arrested or faced any additional charges here since his 1994 conviction. The Board of Chiropractic Examiners shows his license as being valid.

Over the past decade and a half Chen has engaged in political activity that has included stints on the Alameda Social Service Human Relations Board, the Alameda County Human Relations Commission and the Alameda Health Care District Board of Directors, a position he was elected to in 2010. He has also served a long list of community groups in Alameda and Oakland, including the Alameda Sister City Association.

The city’s municipal code doesn’t prohibit someone with a prior criminal conviction from serving on the council; only sitting council people who are convicted of a felony while serving are stripped of their seats.

Chen said he wished he had taken his case to trial, despite the advice of his lawyer. “They had a weak case,” he said of the prosecution.

There were other extenuating circumstances that occurred during the ordeal that shadowed his decision to plead guilty, he said, citing the death of his father shortly after his 1993 arrest.

Heading into an election season later this fall, Chen said he expects prospective challengers for his seat to use the disclosure of his two misdemeanors against him. No one else has announced plans to run for the seat now occupied by Chen, or the one that will be vacated by Lena Tam, who’s termed out.

“I’m surprised they didn’t already,” he said. “But I hope voters will look at my track record for contributing to the community.”

With a number of large development projects currently under the City Council’s direction, including the massive Alameda Point project, Chen said the public should not conflate his past conviction with his current duties as a council member.

“For me to defraud the city – it’s a democracy,” he said. “I’m only one out of five on the council. Everything is based on the decisions of the council, as a whole, and our city staff. I can’t twist their arms.”

Steven Tavares is the editor of the East Bay Citizen, Alameda County’s preeminent political news website.

Comments

Submitted by Tony Daysog, Al... (not verified) on Wed, Feb 12, 2014

Stewart Chen is my colleague and friend on Alameda's City Council. I know he's doing a good job for the residents and tax payers of Alameda. He's a dedicated hard worker -- and I see that he loves his wife dearly and his children. I want to make sure that, in this probably obvious difficult moment, he's a got a friend in me.

Submitted by dave on Wed, Feb 12, 2014

Give the firefighters' union some credit. They know which horse to bet on....

Submitted by Tracy Zollinger (not verified) on Wed, Feb 12, 2014

Having worked with Stewart Chen on the Alameda Hospital community relations committee for years, I can say he is very committed to the community and each of his constituents. Hopefully people look at what he has stood for over the last decade and all the work he has done for the community to decide their vote. He certainly has my support!

Submitted by marian on Wed, Feb 12, 2014

Apparently, his supporters have not read the posted documents. It is troubling that Chen actively participated in an auto insurance fraud ring a mere 2 years after getting his license to practice and he chose as his only attorney of record one who already had a substantial disciplinary record. This was not "decades before he started community service." I hope Stewart has a better explanation than "I did nothing wrong".

Submitted by Tom (not verified) on Wed, Feb 12, 2014

This is very disturbing. It was not uncovered prior to the election and Chen seems to portray himself as a victim in the matter. It diminishes confidence in city government.

“I did not do anything wrong,” Chen said in an interview this week. “They didn’t have anything on me.”

It was his belief, Chen said, that the convictions would be expunged from his record after two years if he agreed to plead guilty. The charges were officially dismissed after Chen completed his probation and paid restitution.

“It will be over in two years,” he said his lawyer, Lincoln Mintz, told him, “and you will still have your practice. You have nothing to worry about.

Submitted by Nancy (not verified) on Wed, Feb 12, 2014

Shady!

Submitted by Steve Gerstle on Thu, Feb 13, 2014

Many employers do a criminal background check before hiring. We should do the same for those seeking elective office. A criminal offense may not disqualify a candidate, but it is something that the employer needs to consider.

I have no doubt that the Alamedan is taking an incredible amount of heat over this story -- good, that shows that you are doing your job. A free press is essential to a functioning democracy. A free press is mentioned prominently in our Constitution. If the press isn't creating waves, then it isn't doing its job. In this year's election, I hope to see all candidates for public office receive intensive scrutiny. In a democracy, our elected official are drawn from the general population. None of us is a saint, but we do have the right to know as much as possible about those we elect to represent us.

Submitted by John (not verified) on Fri, Feb 14, 2014

Hello Mr Chen do you recall the hearing for a landlord that was trying to raise rent for a tenant He had not raised for years and you publicly humiliated by calling Him a bad business man , it does happen that bad business man has sponsored youth sport ever since he was in business and yes I Bam talking about McGee on park street , these are honest people which make Alameda, When you studied for chiropractor you took a mandated legal course/class , you hired a sleazy Attorney {or one with such reputation} Excuse us but Alameda deserve better .

Submitted by Michael (not verified) on Sat, Feb 15, 2014

Arrested for fraud, pleads guilty, convicted, pays fine, receives 2 years probation. Not someone that I would want representing me at City Hall. But worse: Hiding the facts and the lies to justify a serious criminal offense - this is what undermines public confidence in elected officials. Mr. Chen should resign.

Submitted by Washington (not verified) on Fri, Feb 21, 2014

“For me to defraud the city – it’s a democracy,” he said. “I’m only one out of five on the council. Everything is based on the decisions of the council, as a whole, and our city staff. I can’t twist their arms.”

Is that supposed to be reassuring? That he won't defraud the city only because he can't act alone?

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