Former Sacramento City Council member Sean Loloee faces new tax fraud, money laundering charges

Former Sacramento City Councilmember Sean Loloee is facing new charges of tax fraud and money laundering in connection to an alleged COVID-19 pandemic relief fund fraud at his chain of grocery stores, according to federal prosecutors.

Loloee, who owns Viva Supermarket grocery stores, now faces additional charges of conspiracy to defraud the IRS, multiple counts of money laundering and filing false tax turns, according to the 58-count superseding indictment returned by a federal grand jury on Thursday.

The indictment also charges Mirwais Shams, 36, and Ahmad Shams, 29, for their alleged involvement in the fraud case. According to court documents, Mirwais was the controller and financial auditor of Viva Supermarkets. Ahmad Shams was the human resources director and held various other positions within the business. 

Mirwais and Ahmad Shams are each charged with conspiracy to defraud the IRS and two counts of filing a false tax return. Ahmad Shams is also charged with two counts of perjury. 

Mirwais and Ahmad Shams are accused of implementing various strategies to manipulate employee time data to lower Loloee's on-the-books payroll, overtime pay, federal payroll tax obligation and labor costs overall beginning in November 2017, according to Thursday's indictment. Court documents allege Loloee directed Mirwais and Ahmad Shams to falsify timecards for Viva Supermarkets employees in tens of thousands of instances, depriving employees of overtime pay and the IRS of the payroll tax obligation Loloee would have owed. 

The new money laundering charges against Loloee stem from COVID-19 pandemic relief funds. In May 2021, Loloee allegedly fraudulently applied for $2.2 million and received $1.2 million in COVID-19 relief from the Restaurant Revitalization Fund program. Investigators with the United States Attorney’s Office allege Loloee's money laundering efforts began when Loloee dispersed the funds amongst 10 checks and moved the money through multiple accounts that he controlled and ended with three bank transfers that moved $949,000 into a trust account in the name of one of his family members, according to court documents. 

Loloee, Marwais Shams and Ahmad Shams will be arraigned in court on Friday.

Thursday's indictment is not a first for Loloee. 

In December 2023, Loloee and Karla Montoya, the general manager of his Viva Supermarket grocery store businesses, were served a 25-count indictment alleging that they obstructed investigations by the U.S. Department of Labor, falsified immigration documents, withheld overtime wages and fraudulently obtained COVID-19 business relief funds. The former councilman pleaded not guilty to the charges on December 15. 

Loloee ultimately resigned from his position as a City Councilmember representing District 2 three weeks later. Though, at the time, Loloee stated he resigned due to "political pressure" from Sacramento Mayor Darrell Steinberg and, what he called, false allegations. 

“I’m stepping down because of the recent politically-motivated circus that Mayor Steinberg has created in an attempt to cover up his many shortcomings as the mayor of Sacramento,” Loloee said in a video posted to YouTube in January. “I love this city and my district too much to let the mayor use my situation as a distraction. It is not fair to Sacramento and its constituents.”

Now that Loloee has resigned, the council must appoint someone to fill his City Council seat for the remainder of his term, which was set to end in December 2024. He represented Council District 2, which includes Old North Sacramento, Hagginwood, Woodlake and Del Paso Heights. 

The council has yet to appoint someone to fill the District 2 vacancy. According to the City Council agenda for Tuesday, March 26, the council will appoint a representative to serve in Loloee's former seat beginning April 2 until December, what would have been the end of Loloee's term.