Date: September 18, 2023 Contact: newsroom@ci.irs.gov A former Compton city councilman was arrested today on a federal grand jury indictment alleging he and his consulting client paid $70,000 in bribes to a member of the Baldwin Park City Council in exchange for that official's votes and support for commercial marijuana permits. Isaac Jacob Galvan, of Compton, who served on the Compton City Council from 2013 until May 2022, was arrested at his residence this morning on a 10-count indictment filed on September 13 and unsealed today. Special agents with IRS Criminal Investigation and FBI today also arrested Yichang Bai, of Arcadia, the owner and operator of W&F International Corp., a Diamond Bar-based import-export business and a consulting client of Galvan's who allegedly helped orchestrate the bribery scheme. The indictment charges Galvan and Bai with one count of conspiracy, one count of bribery and eight counts of honest services wire fraud. The defendants are expected to be arraigned this afternoon in United States District Court in downtown Los Angeles. "Former Compton City Councilmember Isaac Galvan stands accused of paying tens of thousands of dollars to a corrupt member of the Baldwin Park City Council in order to enrich himself and a client with a marijuana business," said United States Attorney Martin Estrada. "This case is yet another example of my office's determination to root out public corruption and backroom deals that corrode our political system. We will continue to pursue politicians who violate their sacred oaths by placing their own desires ahead of their constituents' needs." "Mr. Galvan, a former Compton City Councilman, and Mr. Bai are accused of undermining the process of fair and open competition when they by allegedly paying bribes to Baldwin Park City Councilman Ricardo Pacheco in exchange for securing marijuana permits for Mr. Bai's corporation, W&F International," said Tyler Hatcher, IRS Criminal Investigation Special Agent in Charge of the Los Angeles Field Office. "City Councilmen hold positions of trust. That trust is broken when these public officials commit crimes like bribery, but when they do IRS Criminal Investigation, and our law enforcement partners will be there to seek justice on behalf of the citizens." "Today, the FBI arrested Isaac Galvan for allegedly using his position of power to bribe an elected city official in order to enrich himself and a client," said Donald Alway, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "As these actions erode the public's trust and harm the communities these officials were elected to serve, FBI Los Angeles will continue to investigate them and those individuals who enable their corrupt schemes." In June 2017, Baldwin Park began permitting the cultivation, manufacture, and distribution of marijuana within its city limits. Soon afterward, then-Baldwin Park City Councilman Ricardo Pacheco, of Baldwin Park, began soliciting bribes from businesses seeking marijuana development agreements and related permits in the city, according to court documents. In exchange for the illicit payments, Pacheco agreed to use his position in city government to assist the companies with obtaining marijuana permits, including voting in their favor. According to the indictment, Galvan first paid Pacheco a $10,000 bribe in August 2017 to secure Pacheco's support for a future consulting client's marijuana permit. Then, after securing W&F as a client, Galvan facilitated $70,000 in bribes from Bai to Pacheco. Pacheco served on Baldwin Park's city council from 1997 until his resignation in June 2020, and he was the city's mayor pro tempore in 2018. Galvan allegedly paid the bribes in exchange for Pacheco's political support of and promise to deliver Baldwin Park's approval of marijuana permits for W&F. Pacheco then delivered, voting in favor of W&F's marijuana permit and later voting in favor of W&F's bid to relocate its operations. Throughout the scheme, Galvan and Bai allegedly took steps to cover up their illegal payments to Pacheco by concealing Bai and W&F's connection to the payments for Pacheco. For example, Bai collected checks from third parties who owed him money and then – at Galvan's direction – gave Galvan the checks with blank payee lines. Galvan then gave the checks to Pacheco, who then arranged for them to be cashed, either by him or third parties. An indictment contains allegations that a defendant has committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. If convicted of all charges, Galvan and Bai would face a statutory maximum sentence of five years in federal prison for the conspiracy count, up to 10 years in federal prison for the bribery count and up to 20 years in federal prison for each honest services wire fraud count. Pacheco pleaded guilty in June 2020 to one count of bribery for accepting tens of thousands of dollars in bribes – including $20,000 in cash – from a Baldwin Park Police officer working at the FBI's direction, in exchange for the councilmember's political support of the Baldwin Park Police Association's contract with the city. Pacheco's sentencing hearing is scheduled for June 17, 2024. In November 2022, prosecutors secured a guilty plea to a bribery charge from Gabriel Chavez, of Upland, a former San Bernardino County planning commissioner who admitted to funneling bribes through his company to Pacheco in exchange for the politician's votes and influence over the city's cannabis permitting process. Chavez's sentencing hearing is scheduled for December 11. Both Chavez and Pacheco have signed plea agreements in which they have agreed to cooperate in the government's ongoing investigation. IRS Criminal Investigation and the FBI are investigating this matter. Assistant United States Attorneys Thomas F. Rybarczyk, Michael J. Morse, and Lindsey Greer Dotson of the Public Corruption and Civil Rights Section are prosecuting this case.
