FBI Investigation Uncovers VA Bribery Scandal in Palo Alto

A years-long probe into a bribery scheme at the Veterans Affairs offices in Palo Alto and Sacramento resulted in probation and prison time for seven people.

Federal authorities launched the investigation in 2011 in response to a “culture of corruption” at the Palo Alto VA, according to indictments handed down a few years later.

The FBI found that the agency’s former contracting officer, Tracy Marasco, accepted cash, trips and gifts from companies in exchange for expensive contracts. She was sentenced to six months in prison and another six under house arrest.

Colleagues Xerxes “Ike” Zapata and Russell Allgire also pleaded guilty to accepting bribes. Zapata, sentenced to 16 months in prison and a $25,000 fine, confessed to taking cash, plane tickets and credit card payments from contractors for construction and maintenance work. Allgire—sentenced to three years probation, a year of home detention and a $7,500 fine—said he took money and car payments in exchange for putting a good word in for construction jobs.

Conrad Alfaro admitted to allowing the same contractor installing a new MRI scanner at Palo Alto’s VA hospital to re-roof his house. A federal judge gave him five years probation, a year of house arrest and a $25,000 fine.

Jack Stringer, a construction contractor, came away with three years of probation, eight months of home detention and a $27,500 fine. Stringer copped to giving cash and gifts to several VA insiders, including entertainment tickets, gift cards, vacations and credit card payments.

According to court records, Stringer paid off Marasco, Zapata and Allgire so that they would give more contracts to his family companies, Aero Drywall Construction and HUM/V Construction.

Stringer paid up to $8,300 to Marasco, Zapata’s $1,159 airline tickets and a $2,533 credit card bill; and a grand total of $21,000 to Allgire.

Another contractor, Jacobo Herrera, admitted to giving cash, Disneyland tickets, and hotel stays to VA officials. His sentence was lighter than Stringer’s.

Justin Tolentino, a third contractor, got sentenced to three years probation and a $5,000 fine after pleading guilty to providing a gratuity to a public official. Tolentino said that he gave flight and hotel accommodations to a VA official on three separate occasions.

Nationally, the VA has been ensnared in scandal since 2014, when it was found that dozens of veterans in Phoenix died while waiting for medical care. This spring, a new issue arose as Sen. Chuck Grassley (R-Iowa) decried a VA policy that prevented a quarter-million veterans who are on a “mentally defective” roster from owning firearms.

Weeks before Memorial Day, Grassley proposed an amendment that would have required the VA to prove a veteran is a danger to himself or others before reporting names to the National Criminal Instant Background Check System. Consideration of the amendment was blocked by Senate Democrats.

The VA construction bribery scandal, announced last week, came just before House Veterans Affairs Committee Chairman Jeff Miller requested information as to why VA legal settlements have more than tripled over the past five years.

Annual payments jumped from $98 million in 2011 to $338 million in 2015, according to Treasury Department data obtained via a Freedom of Information Act request. These documents also revealed that many of the legal settlements were caused by medical wrongdoing and mismanaged construction cases similar to the one in Palo Alto and Sacramento. 

Rep. Miller (R-Florida) told the VA that he wants “copies of any disciplinary actions imposed on any of the VA employees entrusted with the care of these veterans.”

Since all defendants were prosecuted, the U.S. Department of VA, the Palo Alto VA and the Sacramento VA Medical Center have not released any statements.

UPDATE: A press release sent out Tuesday afternoon announced that VA Palo Alto Health Care System employees will picket outside of the office Wednesday to raise awareness of potential VA hospital closings proposed by the controversial VA Commission on Care.

9 Comments

  1. I go to the VA Palo Alto and the former director, Lisa Freeman, who just retired last week has degree in Civil Engineering and FBI should check her out too!

  2. FBI….your next investigation should be on Bay Pines/C.W. Bill Young VA, Saint Petersburg, Florida.

    Director: Suzanne Klinker
    Assistant Director: Kristine Brown
    Chief of Staff: Domonique Thurriere
    Human Resources: Cecil Johnson, Mark Rosas, Ronald Plemmons
    Attorneys: Tanya Burton and Ms. Savage

    EO staff at facility
    Union staff at facility

    South East Regional EO/ORM office staff: Dan Cuff and John Henely.

  3. Google Bay Pines VA Police. The Chiefs are out of control and should lose their jobs.

  4. Take a look at the VA Wilmington, Delaware from 2008 to 2013! Contractors brought in from California to hang pictures and a whole lot more! Would make for a very interesting investigation!

  5. Stop complaining. I am the one who initiated this investigation. One of the people worked for me and I knew all of them.