Sacto 9-1-1

By Denny Walsh

Five members of a prominent San Joaquin County family will plead guilty to federal tax charges stemming from years of pocketing unreported cash proceeds from their agriculture packing and shipping operation, one of the San Joaquin Valley's largest, court papers show.

Lawrence Sambado and his wife Beverly, their sons Timothy and Richard Sambado, and Timothy's wife, Marie Josee Dusablan-Sambado, are due to be arraigned before U.S. Magistrate Judge Dale A. Drozd.

They are charged in five informations filed March 21 by prosecutors Benjamin Wagner and Matthew Segal.

Lawrence, Timothy and Richard Sambado are charged with filing false income tax returns, and Beverly Sambado and Marie Dusablan-Sambado are charged with structuring monetary transactions with financial institutions so as to avoid federal reporting requirements imposed on the institutions.

Their undoing grew out of the separation of Richard and Anne Sambado. In January 2004, in the midst of their divorce proceedings, she and her lawyer walked into the Internal Revenue Service and spun a mesmerizing tale of skimming, according to court papers.

Anne Sambado told the agency of her own use of cash and cashier's checks totaling in the tens of thousands of dollars to decorate her home, buy pool and spa supplies, and pay for stays at luxury resorts in Carmel Valley and Hawaii.

Subsequent investigation by the IRS turned up the family's cash expenditures for foreign travel, household maintenance, home improvements, food, clothing, child care and housekeeping services, court papers say. They say many of these outlays showed up on the Sambado brothers' corporate books as business expenses, some labeled "packing and shipping labor."

Approximately $341,738 in corporate checks were used for the construction of a Stockton home for Timothy and Dusablan-Sambado but, when Anne Sambado's lawyer made a demand for documents in connection with the divorce proceedings, the checks were transferred from the company's expense accounts to a loan account for Timothy Sambado, the records say.

The Sambados own and operate a large plant in Linden, a tiny community 13 miles northeast of Stockton. The plant houses Prima Frutta Packing Inc., a fresh fruit packer owned by the brothers; Primavera Marketing, Inc., a marketer and shipper of fruits and vegetables owned by the father and sons and a fourth partner; and A. Sambado & Son, Inc., the original farming enterprise owned now solely by Lawrence.

According to court papers, Lawrence and his father, Alex Sambado, were farmers in the Linden area, but by the early 1980s their joint venture had become "a ranch packer of cherries, apples and walnuts." Lawrence and Beverly "then decided to transform the....operations to compete directly in the world export markets."

As part of their plea deals, the five family members will be required to make restitution to the government and file amended returns. But much of the taxes on unreported income will never be recovered because it is impossible to calculate how much was skimmed over the years and spent for then personal benefit.

There is no estimate in court papers of how much income was secreted from the government, and much of the skimming falls outside the statute of limitations on federal tax crimes.

It will be up to the IRS to negotiate a settlement with the family.

Court papers say the money at issue was derived from the sales of "peddler fruit," that is fruit of inferior quality that does not meet U. S. Department of Agriculture standards. Peddlers - often operators of roadside stands - came to the plant and paid cash for this fruit, primarily cherries and apples.

On the morning of Oct. 6, 2004, IRS agents raided the corporate offices and seized documents, computerized records and other materials. In support of the search warrant, a 48-page affidavit of IRS Special Agent Scott Friesen lays out the investigation.

Friesen says in the affidavit that, after nine months of looking into Anne Sambado's allegations, he concluded the five defendants - during an unknown period but dating back at least 15 years - evaded taxes:

- "....by skimming currency obtained through the sale of fruit to fruit peddlers and diverting that currency to their own personal benefit without reporting" it as income.

- "....by making numerous....expenditures for their own personal benefit and deducting such expenditures as corporate expenses, without reporting the expenditures as income."

The agent also concluded that Lawrence and Beverly Sambado and Marie Dusablan-Sambado "structured transactions to evade reporting requirements by purchasing multiple cashier's checks with currency in amounts less than $3,000" on different days at different banks or branches, "preventing the financial institutions from properly recording the....transactions."