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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of California

FOR IMMEDIATE RELEASE
Friday, March 18, 2016

Three Charged in Arson Fraud Scheme Involving Seven Sacramento Area Commercial Buildings

SACRAMENTO, Calif. — Three Sacramento-area men have been charged in a 60-count indictment for a scheme to commit multiple arsons for profit, United States Attorney Benjamin B. Wagner announced.

The indictment returned by a grand jury on February 25, 2016, and unsealed today, charges Jamal M. Shehadeh, 57, of Sacramento, with all counts: seven counts of arson, 52 counts of mail and wire fraud, and one count of money laundering. Brian J. Stone, 57, of Elk Grove, is charged with 13 counts of mail fraud or wire fraud, and Saber A. Shehadeh, 73, of Sacramento, is charged with three counts of mail fraud. As a result of the scheme, the defendants and their associates received over $1.5 million in insurance proceeds.

According to court documents, the defendants participated in an arson fraud scheme that ran from at least December 2009 through September 2013, involving seven fires at six commercial buildings in Sacramento and Carmichael. Jamal Shehadeh owned and operated various businesses, many of which burned in commercial structure fires. Saber Shehadeh owned Tru Value Market and a nearby corner property, which were destroyed in two of the fires. Brian Stone provided business consultant services that included assisting with the insurance claims.

The dates and locations of the fires are as follows:

  1. 1007 E Street and 427 10th St., Sacramento — December 27, 2009

  2. 511 Broadway, Sacramento — June 9, 2010

  3. 427 10th St., Sacramento — August 15, 2010

  4. 6964 65th St., Sacramento — April 23, 2012

  5. 5725 Marconi Avenue, Carmichael — September 24, 2012

  6. 910 University Avenue, Sacramento — October 15, 2012

  7. 2764 Fulton Avenue, Sacramento — June 16, 2013

According to the indictment, Jamal Shehadeh and others working with him and at his direction obtained insurance policies that covered fire damage for businesses owned and controlled by the defendants and their associates. In some cases, false statements were made to insurance representatives in order to obtain insurance coverage. Once Jamal Shehadeh knew that insurance policies existed, he deliberately set fires or caused fires to be set that damaged the businesses and at least one vehicle.

According to the indictment, after the properties were destroyed and damaged by fire, the defendants submitted insurance claims. Those claims contained false statements regarding the amount, cost, value, and true ownership of property damaged and destroyed in a particular fire, as well as the prior income of the business, the amount of lost business income, and whether a business had reopened.

As part of the scheme, the defendants made false statements regarding the identity of the company doing the post-fire cleanup, the relationship between the insured and the company doing the cleanup, the actual cost of the cleanup, and whether other companies had been consulted to do the cleanup work and had submitted bids and estimates. In some cases, the defendants used a company that Jamal Shehadeh controlled for the cleanup, while misrepresenting to the insurance companies that it was a third-party company.

In furtherance of the scheme, the defendants personally, and through their associates and companies and accounts that they controlled, received insurance proceeds from the insurance companies.

This case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation with assistance from the Sacramento Metropolitan Fire District and the City of Sacramento Fire Department. Assistant United States Attorneys Michael D. Anderson and Christopher S. Hales are prosecuting the case.

If convicted, the defendants face the following possible penalties: The maximum statutory penalty for mail fraud or wire fraud is 20 years in prison and a $250,000 fine. The statutory penalty for arson of property used in commerce is five to 20 years in prison and a fine up to $250,000. There is a mandatory minimum sentence of 10 years in prison for the first count of arson to commit a federal felony, a mandatory 20 years in prison consecutive to any other sentence for each subsequent count and a fine of up to $250,000. The maximum statutory penalty for money laundering is 10 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

2:16-cr-038 MCE
Topic: 
Financial Fraud
Updated March 18, 2016