Agran Crony and Gore Campaigner Agrees to Guilty Pleas in Federal Wire Fraud Case
In a plea agreement prosecutors filed late Thursday in United States District Court in Los Angeles, Baweja indicates he will plead guilty to one count of wire fraud and one count of obstruction of justice, which carry a statutory maximum penalty of 30 years in federal prison.
As the sole proprietor of Baweja Law Group, which was based in Los Angeles until August 2008, when it relocated to Irvine, Baweja filed a class-action lawsuit on behalf of current and former real estate agents of ZipRealty, Inc. in May 2007. The complaint filed in U.S. District Court in Santa Ana alleged that ZipRealty denied about 800 employees certain sales commissions, refused to reimburse business expenses and made unlawful wage deductions.
Baweja and ZipRealty reached a settlement in the fall of 2007 under which the company agreed to dole out $3.55 million. On March 10, 2008, U.S. District Judge S. James Otero finalized the judgment in the case, which prompted ZipRealty to pay the $3.55 million settlement, a quarter of which--$660,000--went to attorney's fees for Baweja and his co-counsel. The $2.5-million balance was to be paid to the 800 claimants on a pro rata basis.
settlement money was deposited into a bank account that Baweja
controlled on behalf of the class, Baweja set up his own online stock
brokerage account and began transferring most of the settlement
proceeds into that trading account, according to court documents.
The FBI, which investigated the case, alleged that although Baweja had no experience as a
trader in the stock market, he used the misappropriated funds to
day-trade securities on margin. During the course of the scheme, the FBI says, Baweja
concealed his activity from his clients, Otero, an administrator hired to oversee processing
claims, his co-counsel, ZipRealty and its attorneys.
By December 2008, the value of Baweja's stock account had shrunk to around $55,000, meaning that Baweja had lost virtually all of the settlement money that he had held in trust for his clients.
Those claimants began complaining to ZipRealty that they were not receiving their portions of the settlement. ZipRealty, having already paid up, brought the matter to the attention of Otero, who was told by Baweja that he was making the disbursements from the settlement. However, he essentially had run out of money after only giving about $121,500 of the settlement to 46 of the approximately 800 claimants. The attorney finally reported to the court and law enforcement that he had lost his clients' money.During the ensuing court proceedings, Baweja played the dumb card, saying he invested the money in the stock market without knowing what he was doing, apologizing for his knuckleheaded conduct in papers filed in U.S. District Court in Los Angeles and remorsefully vowing to notify prosecuting authorities and the State Bar of California of his actions and comply with their investigators.
The same fellow who now admits to mishandling $2.7 million that did not belong to him and playing the market without a clue as to how to do so was listed as the treasurer of Irvine's Yes on R and S campaigns in the November 2008 city elections.