Sacramento City Councilman Sean Loloee indicted on federal charges

SACRAMENTO - CBS13 has confirmed that Sacramento City Councilman Sean Loloee has been indicted by a federal grand jury.

The indictment names Loloee, 53, and Karla Montoya, 42, of Sacramento as the defendants. They're being charged with conspiracy, obstruction of agency proceedings, and possession and use of false immigration documents, according to U.S. Attorney Phillip A. Talbert. Loloee is also being charged with falsification of records and a pandemic relief fraud scheme. Loloee faces 25 charges while Montoya was also named in 19 of those charges.

Loloee owns Viva supermarkets and Montoya is the general manager of the stores. Feds say that since 2008, Loloee and Montoya conspired to hire employees at the stores that consisted of a significant number of undocumented workers, all in an effort to reduce Loloee's labor force costs, including skirting overtime laws.

In October, CBS13 reported that Loloee became the subject of a federal criminal investigation over his businesses dealings after federal agents raided one of his supermarkets.

The indictment also alleges that, in 2020, the U.S. Department of Labor began two investigations at the supermarkets and that Loloee and Montoya obstructed the investigations by doing things like lying to agency investigators, listening in on an employee interview with an investigator in order to influence the employee to make false statements, telling an employee to lie to an investigator about her hire date, and directing some of the workers to in order to prevent them from being questioned by investigators. 

Loloee is also charged with three instances of providing false documents to obstruct the investigations.

Loloee and Montoya were arraigned in court on Friday and both entered pleas of not guilty to 19 counts. At the hearing, Loloee was released on his own recognizance and Montoya was released on bond.

The federal prosecutors alleged that Montoya, an undocumented immigrant was using a deceased person's social security number as personal identification. In addition, Montoya was allegedly helping undocumented immigrants to obtain falsified documents as well.

Also at the hearing, the feds listed Loloee's primary address as the address of this Granite Bay home, rather than his Sacramento residence, something that his attorneys vigorously opposed in court.

Montoya and Loloee were ordered to only have pre-approved communications.

Finally, at the hearing, the judge emphasized the point that Loloee, who doesn't have a criminal record, is innocent until proven guilty.

A 2022 complaint filed with the federal Department of Labor accused Loloee of failing hiring children to work in hazardous conditions, paying employees less than minimum wage, and retaliating against employees who cooperated in the investigation.

The indictment also alleges that Loloee committed wire fraud when he applied to receive COVID-19 relief from the Restaurant Revitalization Fund program (RRF). In May 2021, Loloee submitted applications to the Small Business Administration (SBA) requesting RRF funds for two of his grocery stores. In the applications, Loloee grossly underreported each of his store's 2020 gross revenues, making them look entitled to an award, when they weren't, Talbert says. Loloee requested over $2.2 million, and based on his representations, the SBA awarded Loloee about $1.2 million.

The councilman turned down an interview Friday with CBS13, but issued a written statement in response to the indictment that reads: 

"Today's news comes as a shock, particularly since I came to this country as a teenager in 1989 with absolutely nothing and have worked tirelessly to meet the needs of the underserved in both my grocery stores and as a member of the city council; both of which I will continue to do as I fight these allegations."

Back in October, cellphone video obtained by CBS13 showed that federal agents were inside one of Loloee's Viva Supermarkets. Homeland Security, IRS criminal investigators and California Department of Justice agents were all on the scene gathering evidence.

Loloee has been the target of several federal lawsuits over the years, with the raid marking a turning point and spurred public outcry demanding his resignation.

"We feel he's unfit for office and he needs to step aside immediately," said Fabrizio Sasso with the Sacramento Central Labor Council.

Following that incident, the councilmember's office issued a statement in response, calling it a personal matter related to the Loloee's businesses and not connected to his work at city hall.  

In response to the indictment, Sacramento Mayor Darrell Steinberg said: 

"The charges are very troubling. I talked to the Councilmember this morning and will be speaking with him throughout the day. He has the right to due process, and he also has an obligation to do the right thing by District 2 and by the city. I expect the situation to be resolved within the next 24 hours."

If convicted of the charges, Loloee and Montoya face a maximum of five years in prison and a $250,000 fine for each count of conspiracy to defraud the Department of Labor, to commit immigration document fraud. and to obstruct justice. They would face up to 10 years in prison and a $250,000 fine for each count of possession of false immigration documents or use of a false immigration document. The two also face five years in prison and a $250,000 fine for each count of obstruction of agency proceedings. 

Loloee would face up to 20 years in prison and a $250,000 fine if he is convicted of each count of falsification of records or wire fraud.

Loloee represents Sacramento District 2. According to the city's website, Shahriar "Sean" Loloee was elected to the city council in November 2020. He attended UC Riverside where he received his Bachelor of Science degree in Biology.